#VGS09 Virtual Goods Summit/From The Twittersphere

29Oct09

Virtual Goods Summit is in full swing with 500+ at the Westin but I am locked down in another universe and just can’t make it over.  Luckily, the Twitter stream has been strong. Special thanks to @lcddave, @killcreek, @jnusser, @joecotellese, @melissaliton, @traffichoney and all the other awesome #VDC09 tweeps, here’s a summary of what was said:

Amy Jo Kim, Shufflebrain – activities enhanced by VG:  socializing, decorating, shopping, gifting, enhanced gameplay, motivations: fun, feel important, self expression, build relationships, show they care, feel good about themselves, VG lets you monetize your most engaged players” – need scale (million), a meaningful context, freebies at start, create demand, needs contented, range of price point, easy to purchase, teen problem, VG selling emotions, keep VG fresh, only meaningful in a social context, profiles are a form of identity which draws people into the virtual world, can be important to VG. Virtual economies the key to sustaining users in social gaming.  Brian Balfour, Viximo – Context, content, currency, conversion, who is the audience and the behaviors they value.  Context – social and gaming aspects drives value of VG – winning, status, socializing.  Content – ongoing service, costly to keep running but known marketing, merchandising business models can work like using real-time data to maximize value of storefront.  Currency in social gaming = cash and time, time is money when you do reward/action base , never start with just currency. Jinen Kamdar, Ning – launched VG 2 days ago, strong metrics out of the gate, rev share on virtual gifts, not disbursing VG revenue til 2010, continuing to generalize platform allowing users to create own VG (custom images with prices), Questions? contact @lauraoatning.  Vikas Jambool, Social Gold – Separate value from money. Engagement before money.  Virtual currency must be integral to user experience.  We’ve always been in an experience economy, we’ve finally evolved to where we an accept more experience virtually.  Barriers to entry for creating a virtual economy and currency are far less than a real currency.  David Jesse, Gaia Online – talked about paying customers trading exclusive items with non-paying customers on secondary market for VG, dual currencies to balance high activity low spend vs. high spend, less activity, one currency to create engagement, the other to monetize the engaged deep pocket directly, allowing marketplace transactions between the two currencies helps with engagement and monetization of non-paying users, Gaia allows conversion from bought currency to earned through item sales, but not the other direction to prevent fraud, marketplace risks include fraud, laundering and gambling.  Jameson Hsu, Mochi Media – microtransactions are the future of online games, #1 mistake – set exchange rate too high with big VC balances (1-800 coins), price matters, keep exchange rate variable, SAS Zombie Assault 2 – $7-10 revenue per thousand game plays (RPM). $20K in first two months. Can’t just bolt on VG to existing game, people like bundles, better value, high multiples of virtual currency don’t work as well cause of perception of high prices, so 80 coins to $1 is better than 800 to 1 from a user perspective, downside of using platform virtual currency, harder to integrate secondary earned currency with paid currency.  Lee Clancy, IMVU – IMVU revenue mix 80% consumer direct, 20% advertising on site and offers, 69% female, 58% 18+, 62% US, 60min/day usage per user, user-generated VG economy, 175,000 items sold daily with very high engagement, one game made $20,000 in first 2m from VG like flame thrower, IMVU is making money and attracting investors, IMVU avoids exchange rate problem by letting developers resell credits at a discount to users, VG are consumer products just like in the real world, need to allow users to try them out, cant build a VG business without flexible payment options (paypal, prepaid, sms mobile..), average order size is $10-20, that’s not really a microtransaction, all UGC at IMVU is reviewed by the community before being added to the catalog, IMVU doubled mobile payments revenue after switchnig to Zong to monetize VG.  IMVU knows they sell less credits than their resellers – future work for the company to optimize, when we reached $2mm in revenue we celebrated by everyone getting mohawks!  Bill Grosso, Live Gamer – real economies, money circulates endlessly, virtual economies are different, have sources and sinks, also have perfect information, precision data limited only by the size of the hard-drive, RPU is lame when you have perfect data, individual stats are better, Live Gamer system means you don’t need ARPU, you know exactly what one user is spending, build a price based on how long you hold a user, ok to charge men more in virtual economies, discrimination is perfectly legal in virtual economies (really?), the incremental cost of another gif is zero, you can control content rollout, seasonality, accessibility by level…think about how users pay, how they earn.  Melinda Byerley, Linden Lab – Second Life revenue streams – % of initial currency exchange, microtransactions/classifieds, future:  phone calls, 1B voice minutes/month, 100min per login, 60% outside US, 100+mm VG, $L legal definition – grants a license to use something, not purchase, Philip Rosedale left recently, Linden Labs doesn’t allow you to sell cash back to Linden, only user to user, why? cash reserves. Mark Rose, PlaySpan – DDO went from $14.99 sub to hybrid sub/F2P w VG, give players choices – unlimited access or a la carte with toll gates, better to err on the side of more toll gate at launch than too few, the move to F2P users went up 10x, rev 3x Asia, it was a lot of work to convert game to hybrid – game changes, store, billing, login.. Turbine outsourced commerce to PlaySpan. F2P switch lowered acquisition cost 3x, subs are up 15% (40% reacq of alums), higher engagement, 22% of players transact in store incl free points, 70% cart to checkout, DDOs highest grossing item isnt exclusive content, its time currency, 400+ VG in DDO store, many ways to price and market them within the game, (Detail on DDO, read here.)  Payments PanelLex Bayer, PlaySpan, Adam Caplan, Super Rewards, Ron Hirson, BOKU, Will O’Brien, TrialPay, Roger Wood, ORCA – offers, mobile, credit, gamecards, conversion rates for F2P games 3-4%, need volume and ecosystem to privde value to paying customers, publishers need to watch CPA rates carefully, quality matters and too many bad leads hurts the offer providers and publishers, budget and test between different offer and mobile providers – only way to find ones that work best for your game.  Super Rewards – How to A/B/C test, split users into equal bucket, dont show all on same window, could become a CS nightmare, as consumers lose novelty of payment methods (sms, offers) customer experience will matter more.  Evaluating offer-based vendors – cost, CS, user experience, LT: deliver high LTV to advertisers.  Friendly fraud – chargebacks where users clam not to receive VG or services, VISA & MC make you stay under 1% of transactions.  Fraud is a cat and mouse game, the longer a vendor has been in business, the longer they’ve had to hone fraud rules.  Will O’Brien, TrialPay – est rev for FB game $10 ARPU-DAU, upwards of 10% conversion rates with some of their clients, so a game with 5mm daus has annual rev potential of $50mm, Charles Hudson, Serious Business – PayPal accounts for 50% of game revenue now, Roger Wood, ORCA – PayPal is the dominant force in VG now but its optimized for ecommerce and bidding not games.  Siqi Chen, Serious Business – small changes add up but use metrics to judge the change, tests and measurements need to be cheaper than arguing about it, data needs to be auditable by another service provider.

And that’s a wrap for today, follow on Twitter tomorrow at #VGS09 or stop by the Westin, 50 3rd/Market in San Francisco to register for the rest:

F 10/30, Virtual Goods Summit
9:30, Charles Hudson, Serious Business, Tim Chang, NVP
9:45, Justin Smith, Inside Social Games
10:15, Benjamin Joffe, +8* (Plus Eight Star)
10:45, David Wallerstein, Tencent…
11:30, Geoff Cook, MyYearbook, Jon Earner, Playfish, Steve Meretzky, Playdom, Keith Rabois, Slide, Andrew AT Trader, Tim Chang, NVP
12:30, Lunch
2, Zhan Ye, Gamevision/Giant
2:30, Philip Yun, mig33…
3:15, John Smedley, Sony Online Entertainment
3:45, Break
4:15, Bigpoint, Outspark, WildPockets, IGG…
5, PayPal, Incomm, Zong, Offerpal…
6, Offerpal Afterparty at Harlot (46 Minna)

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