Twitter whacks 'Mafia' opportunity

Twitter has grown by nearly 1,500% in a year.

NEW YORK (CNNMoney.com) -- A new Mafia video game has presented Twitter with an offer, but it's one that Twitter thinks it can refuse.

On Tuesday, a Twitter-based game called "140 Mafia" became the first to use "virtual currency" on the social networking site, providing a money-making platform that experts believe could fuel Twitter's success.

Designed by a company called Super Rewards, the virtual currency lets users pay for game-playing advantages. For instance, in the popular role-playing game "140 Mafia," players will now be able to visit a character named the Godfather to buy virtual health, money and ammunition with their real credit cards or bank accounts.

Although most virtual currency users pay $15 to $20 per transaction, some have paid thousands of dollars playing the original Facebook version, "Mob Wars," which debuted in March 2008, and immensely popular "Mafia Wars" sequel.

Super Rewards Chief Executive Jason Bailey said his company is currently on track to make close to $100 million in revenue this year through the games' success on Facebook and MySpace, as well as iPhone applications.

"This is a tremendous opportunity for Twitter, and they can make a ton of money" said Bailey.

Apple (AAPL, Fortune 500) takes a cut of its app sales. Social networks like Facebook and NewsCorp's (NWS, Fortune 500) MySpace use an advertising model to generate revenue -- driving up site traffic as gamers use more and more virtual currency.

Facebook began selling "Facebook credits" that game players can use for virtual currency, but many analysts say they came too late to the table to be successful.

Bailey believes that Twitter, which is new to the virtual currency frontier, could lay down Apple-like ground rules for future games and make a killing off of it.

But, he added that, "Twitter seems content to not make money. It's all about eyeballs with them."

They're getting those eyeballs. Twitter is by far the fastest-growing social networking Web site. The site attracted 18.2 million unique visits last month, up 1,448% from a year ago, according to the latest data from Nielsen. Average time spent on the site increased 175% during that same time period.

Excitement about Twitter has grown rapidly in the past few weeks, as the social network has gotten a lot of free press amid its role in broadcasting the post-election Iranian protests. Iran's tight restrictions on outside news coverage of the protests have led the global media to turn to protesters' 140-character "tweets" to find out what is happening on the ground.

Next Google or Craigslist? Twitter continues to turn down opportunities to make money off of its popular Web site. It has no advertising. It allows third-party developers to use the social network's platform to make games and applications, but it doesn't charge those companies a fee. And it doesn't seem interested in revenue sharing with virtual currency companies either.

Many analysts believe that the company taking a Google-like path, generating millions of users as it figures out its business model. Google, which some believe is a prime candidate to buy Twitter, was popular for many years before it figured out the key to online advertising.

"Twitter absolutely wants to have a long-term sustainable business once they find their business model," said Ray Valdes, social network analyst at Gartner.

Others wonder if Twitter is becoming the Craigslist of social networks. Craigslist is an online classified Web site that famously does not monetize its business.

"I don't know who puts hippies in charge of these companies," said Bailey, who noted that he has begun making far more money with Twitter than Twitter itself.

Twitter not budging. Twitter appears to be content where it is.

Though the company declined to comment for this story, co-founder Biz Stone has previously said publicly that Twitter does not need to generate revenue for the time-being, since it has still yet to blow through the more than $50 billion it has raised from venture capitalists.

"They are passing by the pennies on the path for the real dollars further down the road," said Valdes. "As long as they provide opportunities for others to have an ongoing engagement with Twitter users, they can monetize later."

Valdes said Twitter is getting buyout offers from several companies for close to $1 billion. But he does not believe Twitter is interested in selling quite yet. Instead, Valdes said Twitter will likely take advantage of its unique position in the social networking world, as a kind of live-updating news service for millions of followers, as highlighted by the Iran protests.

Experts are mixed on how the company's business model will eventually pan out, but most say virtual currency and charging users to follow certain content could likely be a part of that.

"Twitter is a new kind of broadcasting, with millions of people listening in real time on their cell phones and computers," said Valdes. "There's money to be made on all sides of Twitter interactions."