Hi5 is in the middle of a big transition. It’s trying to be more of a “social entertainment site” and less of a social network. Part of that means more games for its gaming section — yesterday, it announced a deal with Playdom, a company that builds gaming applications for social networks, following another recent announcement with RockYou. These games are using Hi5′s virtual currency, and could make money for the company eventually, but they are just a piece of the larger strategy. The site has also quietly just introduced two more ways to take advantage of its site-wide virtual currency. And expect others to come.
One is a flirting sub-site that it introduced earlier this week, where you can using Coins, the site’s virtual currency to buy gifts for romantic prospects (other users who have set up flirting profiles) in hopes of wooing them into conversation and maybe more. The other service, called Supporter, lets you pay Coins to block most advertising on the site.
Coins are a promising revenue stream, the company hopes, after it struggled to make ends meet with advertising. Like virtual currencies on social networking applications, users can either buy them directly using real money through PayPal, or earn them through taking advertising offers. Hi5 has already been integrating Coins into third party games for RockYou. The deal with Playdom — a company that has grown large on MySpace, and is also expanding into Facebook — means more proven games on the platform. To begin with, Playdom is introducing a poker application called Poker Palace.
Hi5 is cutting deals with more gaming companies, and the company tells me it is negotiating different revenue agreements with each one. As opposed to the company’s application developer platform, these games are hand-selected, and get special integration into Hi5′s site. These games appear, sometimes highlighted, in its gaming sub-site. Users can click to begin playing them without having to click “install” as they do with applications.
Hi5′s virtual currency for third parties is also interesting for another reason. It is an early implementation of the Open Social virtual currency standard. This format that will allow developers to build games that use a single virtual currency across any social network or site that already uses the Open Social developer platform standard. RockYou, and presumably Playdom, are already taking advantage of this.
More generally, San Francisco-based Hi5 has said it has even more planned for its social entertainment initiative. User avatars, for example, are coming soon, it says. No doubt, those avatars will include clothes and other virtual goods that you can buy using coins.