Virtual Goods and Social Networks

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Virtual Goods and Social Networks by Mind Map: Virtual Goods and Social Networks

1. user lifecycle

1.1. David King

1.1.1. sees lot of continued engagement

1.1.2. 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

1.2. Andrew Trader

1.2.1. 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

1.3. Shervin Peshivar

1.3.1. fluffFriends has multiple currencies and rare items that appreciate

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

2. external impacts on app design?

2.1. David King

2.1.1. relates Google Adwords to virtual goods

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

2.2. Andrew Trader

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

2.2.2. iPhone fantastic social device not all potential is unlocked yet

2.3. Shervin Peshivar

2.3.1. did real world fluffFriends toys reverse of WebKinz

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

3. what's needed from SocNets?

3.1. Shervin Peshivar

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

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

3.2. John Hwang

3.2.1. would welcome more control over users

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

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

3.3. Andrew Trader

3.3.1. Fraud is a big deal

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

4. lessons learned

4.1. Andrew Trader

4.1.1. YoVille: it's about self-expression led to sharing the app with their friends Habbo style events organized by users e.g. beauty pageants

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

4.2. David King

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

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

4.2.3. bar will keep raising & apps evolving

4.3. John Hwang

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

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

4.3.3. MySpace took on board FB platform learnings when they launched

4.4. Shervin Peshivar

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

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

5. Q&A

5.1. user experience at the point of purchase

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

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

5.1.3. 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

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

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

5.3. secondary markets on Facebook

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

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

5.3.3. 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

5.4. customer retention

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

6. Panelists

6.1. John Hwang, RockYou

6.1.1. Director of Products Automotive vertical

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

6.2. Andrew Trader, Zynga

6.2.1. EVP bizdev, co-founder

6.2.2. ~25 applications on 5 SocNets

6.2.3. 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

6.3. David King, (lil) Green Patch

6.3.1. Founder

6.3.2. green-themed game donates part of proceeds to preserving rainforests

6.4. Shervin Pishevar, Social Gaming Network

6.4.1. Ceo & Co-Founder

6.4.2. 130M virtual good/gift transactions

6.4.3. recently acquired TopFriends

6.4.4. more games around item sales model coming

6.4.5. first iPhone just released

6.5. Mark Wallace, Wello Horld

6.5.1. Founder & CEO

6.5.2. previously a journalist covering virtual worlds

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

7. what's the market like

7.1. Shervin Pishevar

7.1.1. demographics are very wide teens, moms etc

7.1.2. 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)

7.2. Andrew Trader

7.2.1. early days for micropayments on SocNets

7.2.2. items need to be valuable for players YoVille demographics mirror FB's overall demos 250k daily users 4-5 k$ / day

7.2.3. 3-5% paying customer sounds very high

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

7.3. David King

7.3.1. HotOrNot pioneered vgoods by selling virtual flowers that you give somebody

7.3.2. there is a business to be built here

7.3.3. very small % of users pay

7.3.4. ARPU across all users is in the pennies

7.4. John Hwang

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

7.4.2. 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

7.4.3. 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

7.4.4. vgoods currently 30-40% of revenues rest is advertising

7.4.5. economy will come with fraud

7.4.6. 3-5% paying customers sounds feasible

7.4.7. 10% of users start to buy currency, 10% of that actually purchase

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

8. Vgoods on SocNet vs. a standalone setting

8.1. John Hwang

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

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

8.2. Andrew Trader

8.2.1. 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

8.3. Shervin Pishevar

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