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Virtual Goods and Social Networks by Mind Map: Virtual Goods and Social Networks
4.0 stars - 1 reviews range from 0 to 5

Virtual Goods and Social Networks

Panelists

John Hwang, RockYou

Director of Products, Automotive vertical

creator of Speed Racing, competition & self-expression (pimping the car up)

Andrew Trader, Zynga

EVP bizdev, co-founder

~25 applications on 5 SocNets

nexon's maple story did $36 million in vgoods sales in year 2007, believe that if niche product can do this, then there is definitely potential

David King, (lil) Green Patch

Founder

green-themed game, donates part of proceeds to preserving rainforests

Shervin Pishevar, Social Gaming Network

Ceo & Co-Founder

130M virtual good/gift transactions

recently acquired TopFriends

more games around item sales model coming

first iPhone just released

Mark Wallace, Wello Horld

Founder & CEO

previously a journalist covering virtual worlds

quotes market estimates that place the market at $1,5-2 bn, unclear if this is primary, secondary, both?, panelists agree on the scale

what's the market like

Shervin Pishevar

demographics are very wide, teens, moms etc

free to play, ARPU is quite good, most item-based games on FB/MySpace are profitable, should do well in this economic climate, smaller payments, need to continue to invest to keep the game fresh, e.g. adding new content, hosting events (e.g. pirate's day)

Andrew Trader

early days for micropayments on SocNets

items need to be valuable for players, YoVille, demographics mirror FB's overall demos, 50/50 male/female, 1/3 international, 250k daily users, 4-5 k$ / day, CPM, virtual good trades

3-5% paying customer sounds very high

users will go extreme lengths to exploit, e.g. building your own bots to exploit certain behaviour

David King

HotOrNot pioneered vgoods by selling virtual flowers that you give somebody

there is a business to be built here

very small % of users pay

ARPU across all users is in the pennies

John Hwang

vgoods not yet in mainstream in US, but very close to getting there, more accepted in some foreign countries

game needs to be fair regardless if you are buying or not, speed racer has local (friends) and global leaderboards, to be good, still need to work your way in the game

transactions valued at $3-4 happening all the time, e.g. catching up to your friends, if you started the game later than you friends

vgoods currently 30-40% of revenues, rest is advertising

economy will come with fraud

3-5% paying customers sounds feasible

10% of users start to buy currency, 10% of that actually purchase

ARPU $20-30 / 1000 daily active users, has seen other apps with $75-200 / 1000 DAU

Vgoods on SocNet vs. a standalone setting

John Hwang

SocNet's user base continues to grow --> impacts directly Speed Racing's user growth

new content drives new users, but not as much as the growth of SocNets

Andrew Trader

disadvantages to SocNet, you don't control your users, you can utilize info, but harder to fight fraud & cheating, SocNets should provide the payment processing as an alternative for existing methods

Shervin Pishevar

thinks people need to start investigating standalone sites, allows for much more features, different types of content --> drive engagement, Facebook Connect supports this!

user lifecycle

David King

sees lot of continued engagement

first a light weight experience, but deeper as you go, a bit like treadmill, if you visit once a week, there is going to be something new for your

Andrew Trader

user-to-user trading really powerful for building community, makes the market more liquid, gives raise to rare items, e.g. seasonal items will appreciate over time

Shervin Peshivar

fluffFriends has multiple currencies and rare items that appreciate

find your core community & focus on them, understand what they want, keep them happy, give them new content

external impacts on app design?

David King

relates Google Adwords to virtual goods

monetization depends always on what kind of app you have, lil Green Patch very different to YoVille

Andrew Trader

use real world merchandising as basis on how to merchandise in YoVille

iPhone, fantastic social device, not all potential is unlocked yet, contacts, GPS

Shervin Peshivar

did real world fluffFriends toys, reverse of WebKinz

iPhone, looking forward to FB Connect on iPhone, to add more social functionality, first game had 2M downloads

what's needed from SocNets?

Shervin Peshivar

Payment system #1 priority, would make it similar to iPhone AppStore impulse buys

discovery process could be improved, users to find better, engaging content, e.g., recommendations from friends, a games channel

John Hwang

would welcome more control over users

Payment system #1 priority, would make it similar to iPhone AppStore impulse buys

users' don't want to create another account for payments

Andrew Trader

Fraud is a big deal

Payment system #1 priority, lots of costs in customer service etc

lessons learned

Andrew Trader

YoVille: it's about self-expression, led to sharing the app with their friends, Habbo style events organized by users, e.g. beauty pageants, the vgoods created to support this didn't work out, be careful to remain authentic

barriers to entry are raising quickly, production quality going up, depth of content, complexity

David King

still thinks the market is open for new entrants, this is just the first round

FB platform now encourages higher quality products, compared to spammy products of the past

bar will keep raising & apps evolving

John Hwang

FB's changes have been for good, prevents apps abusing it

the market is open, but growth is no longer 2x / day like it was in early

MySpace took on board FB platform learnings when they launched

Shervin Peshivar

market not closed, but not as open as it used to be

games that don't rely on production quality can still be done by individuals, e,g, MobWars

Q&A

user experience at the point of purchase

Andrew Trader, for YoVille, the amount of options is important, e.g. 100 different sunglasses

Sherin Peshivar, community & social ties key to tipping people into buying

John Hwang, your real world car affects the virtual car for set of users strongly, buying a virtual lamborghini can be really satisfying if you are driving a Chevrolet in the real world

pros & cons on using $$$ vs. points/credits

John Hwang, using points/credits makes it easier to spend, you are not thinking "this virtual spoiler costs 5 bucks!"

secondary markets on Facebook

why hasn't it exploded on FB like it does on Virtual Worlds

David King, FB platform is still early, will happen, players have same motivations like in VWs

Andrew Trader, C2C transactions don't always generate direct revenues for the developer, but adds to the community, enforces social ties etc, users will start working on creating their own items

customer retention

David King, improve the app, features, fun, content, customer retention >> customer acquisition