Hi5’s initial dedication to the world of social gaming is really paying off, with the social network announcing $14 million in its second round of funding. The round was led by Crosslink Capital, with hi5 planning to use the funds for expanding its social gaming and virtual goods efforts. This brings hi5’s total amount of funding to $32 million.

Early on hi5 launched its own virtual currency, creating a platform around which third parties could plug their games. The direction was preemptive in many regards, with Facebook still sluggish on creating such centralized game platform outlets at the time. Now, hi5 will be looking to really rev things up, pushing virtual goods via gifts and games, and monetizing an ad network around these combined efforts.

Growth and challenges ahead

Will it be enough for hi5 to better position itself for the future of social gaming and virtual goods? In the past year, Facebook has also taken measures to control more of the exchange that’s created a virtual economy within its social networking walls. It will be difficult for hi5 to unseat Facebook (as perhaps hi5 would like), given the number of users and global strategies Facebook is putting into play.

Nevertheless, hi5 has helped to lead the charge for virtual goods’ integration with social networks, which are becoming hefty business opportunities with even heftier rewards. Finding ways to connect social games with small price points has rolled engagement, entertainment and outreach into one really sweet marketing package.

Google has only given us a glimpse of what it has in store with its substantial investment in Zynga’s social gaming platform. Yahoo has had the benefits of Offerpal Media looking to develop on its game platform, while MTV Networks has recently made a strategic acquisition to increase its social gaming efforts as well.

Real virtual business opportunities

While games have become wildly popular on social networks, we still have to see how the business of it all fleshes out. There are countless paths a developer could take in generating revenue around this type of social consumerism, with the focus lying squarely on the virtualization of goods and services themselves. Facebook is looking to stay steps ahead of sites like hi5 in terms of platform offerings, with recent tweaks raising the barrier to entry on its network.

That leaves plenty of opportunity for developers to look to other networks, like hi5, and the mobile front, as social gaming and virtual goods continue to become incorporated into the sites and products we frequent on a regular basis.