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Getting real revenue from virtual goods by Mind Map: Getting real revenue from virtual goods
5.0 stars - 1 reviews range from 0 to 5

Getting real revenue from virtual goods

Panelists

Adam Caplan, Super Rewards

President

monetizes vgoods thru CPA (e.g. surveys), also payment processing

Matt Mihaly, Sparkplay Media

CEO & Creative director

ceo of Iron Realms from 1996-2008, text muds, pioneered Vgoods already in 1998

David Perry, Acclaim

co-founder, Chief Creative Officer

video game veteran, e.g. Shiny studios, 25 years

Anu Shukla, Offerpal Media

founder

previously CEO & founder of MyBuys

monetizes vgoods thru CPA (e.g. surveys)

Joel Brodie, Gamezebo

moderator

founder & CEO

Previously bizdev at Yahoo! Games

editorial site, community for casual games

vgood market stats

market size

Adam Caplan, $1,5-2bn primary market globally seems about right, secondary market perhaps $0,5-1bn, $150m market in social networks this year

David Perry, did some industry survey and stopped counting at around 400 MMOs, this is gonna 10x in the future, free to play will come to video game consoles, soonish

Anu Shukla, looked at all apps on SocNets, % that use vgoods, monetization in those and came up with:, $2,5bn total availalbe market, $6bn by 2010

Matt Mihaly, agreed on the growth will be huge

is there a virtual good bubble?

so many people entering this space

Anu Shukla, virtual economies are doing well despite the economic downturn, engaged players make take up even 40-50 CPA offers a month, vgoods are skewed towards younger audience, they don't have jobs, so what's going to go wrong anyway?, there will be an impact of advertisement, even there CPA would still be better as it is measurable and you are paying for customer's actions (vs. display ads)

Matt Mihaly, there is no demand for virtual items, but demand for games, that translates into demand to vgoods to augment the experience, so your first focus is the great user experience / game, difference to last crash, is that consumer confidence dropped now, still vgood monetization seems to work

David Perry, people want choice, more items, more that & this, honest business model, you only get money if people play the game a lot and then decide to start buying

Adam Caplan, game industry as a whole is relatively counter-cyclical, just look at what EA's stock did during the last downturn (2002 and onwards), Free to Play is even better as the individual purchases are smaller

Demographics

is there a specific demograph/market, or many?

David Perry, wanted to be a television network, you'd find something that appeals to you on their launch page, some of the games are then very very targeted for a particular demo

Matt Mihaly, it is about game's demographics

Anu Shukla, any demographic can be valuable, advertisers come with enough volume, CPA audience skews to young people and males, how to monetize international audiences, there are big SocNet audiences, but hard to monetize, need to find advertisers in those markets

Adam Caplan, as they support also payments, they have a broader demo

what's bigger? Games or SocNets?

David Perry

is there a difference?, FB is a platform, iPhone is a platform ...

flash games e.g. Kongregate are quite basic often, they are not really thinking big at all, hard to find the good ones, will change as people invest into Flash games, around 30k portals around the world, they'd make money from the ads, give you distribution, you make money from microtransactions

augmenting Flash with served based computing, e.g. AI running on the server

Matt Mihaly

will be hard to distinguish between games and SocNets as they borrow features from each other

Adam Caplan

agreed

Anu Shukla

engaging games attempt almost always to take customers from SocNets to their own destination sites

metrics

conversion to paying

Adam Caplan, 30-35 million monthly unique users among SocNet apps that use them, 12-15M would come to the SuperRewards offer page, 50% would click on one offer, 20-25% would then complete the offer, = 5% of users converted to paid

Matt Mihaly, can't me a binary distinction between paying & non-paying, somebody being 5$ over 2 years is

Anu Shukla, dependings on game genre, e.g. engaging multiplayer game, could target even 50% conversion, e.g. a softer avatar based game, 5% conversion, the more sinks you have sinks for your virtual currency, the more you can encourage the transition, use free items to get people started, then promote them to pay for premium items, whitepaper with 20 tips to increase the paying rate, offered to share it if you get in contact with here

David Perry, 7M users, $70-75 lifetime value, $30-35 cost of acquisition, feel there is a lot of improvement room, moving to Flash, looking to Flash 11 for full 3D, a new game with 4GB client coming, that's just crazy

split of revenue source

major customers vs. regular customers

Matt Mihaly, very hard core game for niche audience, saw even $1000 item purchases, the more engaged you are, the more you are going to spend money, it's the same as real world hobbies (e.g. golf)

David Perry, Halo is a missed opportunity, setting the limit at $50 / game, MMO from Asia will spend up to $2000, no probs, we haven't yet seen what the limit is to purchase per game, e.g. GTA, Gears of War, Halo with microtransctions

Adam Caplan, seen people spend $500 a day on a virtual slot machine, no prizes, no major social recognition, agrees on David Perry's comments

Anu Shukla, Friend for Sale, didn't accept cash, somebody from Saudi Arabia wanted to spend $10 000 to buy everybody from his country =)

what's needed to open the customer's wallet?

David Perry

met Japanese' leading dev Giant, "make them game as horrible as they can so that money can fix it", extreme view

all of the retail/merchandising tricks needed, e.g. limited time offers, offer something for something very low price, e.g. Giant has 5 cents payment to gamble, what's most valuable to you, offer it at an emotional moment

the first dollar out from the customer's pocket is the hardest

Adam Caplan

try before buy, use CPA before you have to take out your credit card, get used to pay without needing currency yet

offer it at around 5-8 minute mark for SocNet app, familiar with app, but not yet bored

Matt Mihaly

agreed on other panelist

have a feature loan items to your friends safely for a limited time, creates demand for these items as you get to try them out

Anu Shukla

engagement comes first (free playing)

then comes the competition of the game, nothing works as well as competition, you still need a level playing field, "you can't allow paying for instant wins"

virtual gifts apps can also work well, e.g. dating, "it's a show of appreciation"

what's happening in five years?

David Perry

Flash will be fully 3D

100M players in one game, how did they do it?

Matt Mihaly

government regulation, taxes, cash payouts, currency conversions

Adam Caplan

investment bankers trading virtual currencies

derivate industries will emerge

Anu Shukla

will be much more global

mobile will be important

share your most interesting vgood story

David Perry

how about charging cheaters to get out of jail

Dance online, if you don't dance, your character gets fat, you can buy a slimming potion, there's also a fattening potion

matt Mihaly

a customer paid $2000 to be a god

Adam Caplan

$800 in Friends for Sale game to get to the top of the game

Anu Shukla

the Saudi Arabian offer for $10 000 in Friends for Sale-like game

people send "lapdances" as gift to their friends

a baby making game, spend a lot of money to avoid labeled "a baby neglect'er"

Q&A

thoughts on payment methods

Matt Mihaly, have as many as possible!

David Perry, agreed, especially for international audiencies, steer people to most desirable payment method, e.g. offer credit card when they click on "pay on home phone"

Adam Caplan, all is best, but you can consider your demos to optimize the roll out schedule, CPA works well in SocNets

Anu Shukla, word of warning, e.g. PayPal has no management for virtual good fraud, watch out for overheads, management of payment processors, mobile is getting better also in USA, started internationally, rates are becoming more reasonable

how to price

David Perry, heavy analytics on existing games, always go high, you can always discount

Anu Shukla, test multiple price point, exchange rates for virtual currency, sometimes results can surprise you, watch out for inflation

Matt Mihaly, started with auctions in 1998, there were no comparables, agreed with Dave, go high first

CPA upselling, what happens after they've already taken 10 offers etc

David Perry, game industry has tried around 31 different ways of monetizing, available at dperry.org, there are a lot of ways, and you combine some of them

Anu Shukla, if you don't want to CPA, just pay using e.g. PayPal, have currently ~2000 offers, add 100-150 a day, don't expect customers to run out of offers, you can also buy e.g. T-Shirts from GAP and get OfferPal rewards

Adam Caplan, never had a user that would have run out of offers, CPA is becoming attractive for new advertisers