Friday, June 22, 2007

Virtual Goods Summit: Virtual Goods Success Stories

The growing market for virtual goods has already produced a number of success stories. Are you curious about what it takes to build a successful community or entertainment site with a strong virtual goods component? Our panel of industry experts will share their stories about how they grew their businesses and how virtual goods played a role in driving their success.

» Paul Thind, Habbo
» David Wallerstein, Tencent
» Kyra Reppen, MTV Networks
» Min Kim, Nexon
» Justin Hall, Passively Multiplayer (moderator)

Wallerstein: Number one portal in China, by page views. The core strength of the company - started in instant messaging - and grew out of it; radiated out from instant messaging. At the core, it's about connected community with 254M active users. Number one casual gaming portal in China, with QQ.com and QZone.

What's big in China is premium instant messaging - a better IM experience with more storage, security. It's about $1/month.

All games are multi-user, no single users. And, yes, the virtual goods parts are making money, as is the company.

Reppen (Neopets): Neopets bought by MTV two years ago, and the synergy is great. It's about building loyal communities, and part of the kids and family group (like Nick.com, Nick Jr, etc.) MTV follows its audience, and it is clearly going digital. And, gaming is more than 600M a month across those sites.

More than 40M users registered, with 30K daily activated new accounts, and 11M average monthly unique visitors.

And, the working in the community reflects real life - realities in virtual world that the tweens can relate to (control, money, friends, etc.)

Advertising and sponsorships, premium subscriptions, licensing (Harper Collins for books, games), and virtual items - all revenue models.

Neopets is launching the NC Mall to sell virtual goods - in fact, Tweens have $60B of disposable income - and they are allowing kids to try before they buy (like at the mall itself).

Kim: Nexon is bigger and making more money than Facebook - $230M in sales - they have a large number of games and networks that cross male/female demographics and ages.

South Korea's largest privately-owned online game company, a casual games leader specializing in the development, publishing and servicing of online games.

The games are free - no monthly fees, nothing - but the virtual goods are sold. That's where the company makes money. Decorate backgrounds, character - there are different layers to customize the experience. Plus, you make money in the games themselves - where is it meaningful to buy something in the game.

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Kartrider just launched in the US, and they are looking at the data. Going to heavily look at ads, but they are selling the items in-game, and those continue to do well in the US as well.

In Korea, Kartrider hooked up with Coke, giving away points with Coke cans to redeem on Kartrider. Worked with Mini Cooper to make the Karts branded.

Maple Story has been brought to the US - 3.5M and $1.6M goods sold (600,000 items sold).

Thind: Real-time social networking in the hotel rooms at Habbo, and building on top of the core environment to stimulate the users.

Habbo brings in celebrity guests to hang out with the teens online, be a part of the community, without getting mobbed in real-life. It's about easy-access for every day consumers.

90 percent of revenue generated through users - they sell more furniture than IKEA.

Unique visitors worldwide: 7.5M
Average age is 15 years old.

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A lot of what was seen during the presentations was customization, and in game environments is it about gifting or customization? It's a combination of both.

The interesting part of all the businesses that presented was globalization - they are all worldwide companies. 50 percent of the users tend to be English speaking, but the paying users are not there yet in some markets, but the focus is on those markets to work with local marketing partners to express what the environment is about.

The users are different that the power of parity is different in China. There's a willingness to purchase virtual goods, and the users have accepted that not everything is free. Branded items, cross-marketed items - there is an economics question, but you can see what can be done in the US and other countries, and how the marketing opportunity does extend globally.

It's just becoming more and more prevelant, with people buying virtual goods is going hand-in-hand with more and more adoption of the Internet.

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