What Hollywood Needs To Know To Get In The Game



25Oct10

With the advent of the paywall on Hulu, YouTube, Boxee and other video platforms, Hollywood could learn a lesson from the online gaming industry on just what it will take to get to epic profitability – tapping the consumers all-important willingness to pay.

The online gaming industry is exploding into a substantial second economy as the multi-billion dollar global virtual goods marketplace grows exponentially year after year driven by consumers voracious appetite to express themselves, increase stature and deepen relationships where they live online.  Whether this is being achieved by the acquisition of items that enable one to level up in-game like Nike’s flying sneakers, rule the party like Snoop Dogg’s DJ set, or flirt as a fashionable avatar wearing Paris Hilton’s wardrobe, one thing is clear, value is being perceived in acquiring things that advance aspirations and status.

By contrast, consumers have shown extreme resistance to pay for the mere passive entertainment experience of viewing music and videos which seem to exist in abundance for free.  They’re less inclined to pay for a song unless productized into a ringtone or game unless certain conditions are met, and therein lies the challenge for the video paywall.

The ripest videos to monetize right now are live sports and concerts that are either tentpole events that draw global audiences in the millions or hyperlocal happenings with niche groups of superfans who will do anything for access.  Additionally, the much sought after young gamers and mommies will pay for demographic specific content.  By understanding the visceral triggers of consumption behavior, the media industry can make significant money.  The answer lies in weaving game mechanics into the fabric of the viewing experience.

Here are the three things Hollywood needs to know:


1.  Start with FREE

Provide consumers with choice of ways to pay and play and they’ll spend more – that’s the tenet of the gaming industry’s freemium model.

By offering free-to-play levels, in-game commerce and seed currency, the massively multiplayer role playing game Dungeons and Dragons Online substantially grew daily active users, average revenue per user and lifetime value per user, while simultaneously dropping their cost of acquisition.  By no longer setting a ceiling price on participation, players actually spent more on in-game microtransactions than they did when the game was subscription only.

Having the option to become engaged in free video previews before being prompted to pay gives the viewer a chance to get hooked.  If presented in a cinematic showcase with a clean user interface, the freemium model encourages time spent snacking.  Then when prodded to pay during a compelling moment, the value proposition of immediate gratification to clickthrough to pay becomes overwhelmingly evident.

2.  Give it NOW

The likelihood of conversion from a free viewer to a paid viewer is highly dependent on the platform’s ability to capitalize on the viewer’s impulse to buy while in the moment.  The video player must allow for one-click payment after the preview time has been sampled.  The transaction must be frictionless, fun, and as quick and easy to pay for as it is to buy Farmville feed, a Kindle book or an iTunes app, or the purchase simpy will not occur.

The key is keeping the viewer engaged in the experience and not distracting their attention with a multi-step process to set up account information and pay which leaves too much time for the viewer to decide to do something else.

3.  Use PLAY MONEY

The reason why virtual currency is becoming so widely popular is because prepaid, stored value currency makes impulsive, frictionless one-click purchasing possible.

Since most virtual currency is gifted, won through brand offers, earned as allowance or bought at a discount, the owner treats the virtual currency as play money and the Vegas effect takes over.  In order to reap rewards from acquiring it, the owner of the currency must spend it.

Also, there is a very large non-credit, cash-based population that needs a way to spend online in their local currencies.  A company like PlaySpan has millions of gamers globally using their ubiquitous, universal virtual currency because they offer over 85 ways to pay around the world including a prepaid card sold at major retailers like Game Stop, 7 Eleven, Walmart, etc.  PlaySpan is able to drive their vast installed base to play, upload and pay for games and videos in their marketplace and on their content partners’ platforms because the wallet balances of their audience makes them automatically ready-to-spend.

As consumption behavior evolves, even buying physical goods with virtual currency will become mainstream since payment processing fees to the platform are substantially less than with credit card and SMS fees.

WINNING The Game

In summary, what use to be distinct universes, that of social, mobile, gaming, film, tv and music, are converging into the new gestalt and what succeeds at the nexus will depend on how responsive industry is to understanding the entertainment experiences people value and the ways in which they want to consume them.  The tremendous success in social gaming is a clue for what media needs to do to create economically sustainable models that will continue to fund blockbuster production in the quality only Hollywood can deliver.

Martine Paris, Editor of Content NOW, is the Head of Content Acquisition for PlaySpan Marketplace and Manager of Business Development for PlaySpan’s Video Monetization Platform.  She blogs and speaks extensively on content monetization trends and has been a freelance writer for AOL properties including Spinner.com.

Advertisements


No Responses Yet to “What Hollywood Needs To Know To Get In The Game

”

  1. Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: