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Social Network Hi5 Cuts Staff, Turns To Virtual Goods For Revenue

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Unable to raise additional capital from investors, one of the world’s largest social networks has laid off half of its staff and is adding a new twist to its business strategy. Taking a cue from gaming companie, hi5 b>today entered into a partnership with games network Mochi Media to distribute games across its social network and make money by selling virtual goods within the games to hi5’s audience. The layoffs bring the number of employees down to about 50 from about 100. (Via VentureBeat.)

The company started selling virtual goods in December and launched 40 games on its platform in February, but the Mochi partnership adds 200 games to its offerings, significantly adding to the ways the social network can charge for virtual goods. With 63 million unique visitors a month, hi5 is in a great position to drive commerce among its audience and if the experiences of Tencent are translateable here (the Chinese social net sold almost a billion dollars of virtual goods), users are more than willing to lay down real cash for virtual goods.

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