Getting real revenue from virtual goods

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Getting real revenue from virtual goods by Mind Map: Getting real revenue from virtual goods

1. metrics

1.1. conversion to paying

1.1.1. 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

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

1.1.3. 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

1.1.4. 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

1.2. split of revenue source

1.2.1. major customers vs. regular customers

1.2.2. 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)

1.2.3. 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

1.2.4. 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

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

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

2.1. David Perry

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

2.1.2. 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

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

2.2. Adam Caplan

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

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

2.3. Matt Mihaly

2.3.1. agreed on other panelist

2.3.2. 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

2.4. Anu Shukla

2.4.1. engagement comes first (free playing)

2.4.2. 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"

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

3. what's happening in five years?

3.1. David Perry

3.1.1. Flash will be fully 3D

3.1.2. 100M players in one game, how did they do it?

3.2. Matt Mihaly

3.2.1. government regulation taxes cash payouts currency conversions

3.3. Adam Caplan

3.3.1. investment bankers trading virtual currencies

3.3.2. derivate industries will emerge

3.4. Anu Shukla

3.4.1. will be much more global

3.4.2. mobile will be important

4. share your most interesting vgood story

4.1. David Perry

4.1.1. how about charging cheaters to get out of jail

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

4.2. matt Mihaly

4.2.1. a customer paid $2000 to be a god

4.3. Adam Caplan

4.3.1. $800 in Friends for Sale game to get to the top of the game

4.4. Anu Shukla

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

4.4.2. people send "lapdances" as gift to their friends

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

5. Q&A

5.1. thoughts on payment methods

5.1.1. Matt Mihaly have as many as possible!

5.1.2. 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"

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

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

5.2. how to price

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

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

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

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

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

5.3.2. 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

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

6. Panelists

6.1. Adam Caplan, Super Rewards

6.1.1. President

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

6.2. Matt Mihaly, Sparkplay Media

6.2.1. CEO & Creative director

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

6.3. David Perry, Acclaim

6.3.1. co-founder, Chief Creative Officer

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

6.4. Anu Shukla, Offerpal Media

6.4.1. founder

6.4.2. previously CEO & founder of MyBuys

6.4.3. monetizes vgoods thru CPA (e.g. surveys)

6.5. Joel Brodie, Gamezebo

6.5.1. moderator

6.5.2. founder & CEO

6.5.3. Previously bizdev at Yahoo! Games

6.5.4. editorial site, community for casual games

7. vgood market stats

7.1. market size

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

7.1.2. 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

7.1.3. 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

7.1.4. Matt Mihaly agreed on the growth will be huge

7.2. is there a virtual good bubble?

7.2.1. so many people entering this space

7.2.2. 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)

7.2.3. 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

7.2.4. 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

7.2.5. 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

7.3. Demographics

7.3.1. is there a specific demograph/market, or many?

7.3.2. 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

7.3.3. Matt Mihaly it is about game's demographics

7.3.4. 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

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

8. what's bigger? Games or SocNets?

8.1. David Perry

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

8.1.2. 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

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

8.2. Matt Mihaly

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

8.3. Adam Caplan

8.3.1. agreed

8.4. Anu Shukla

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