This document discusses virtual goods and virtual gifts. It outlines four key drivers for adopting virtual goods: self-expression, competitive advantage, social gestures, and status. It also discusses where virtual gifts work best, such as in community sites and social networks. Examples of virtual gifts on Facebook and Hot or Not are provided. The document estimates the US market size for virtual goods in 2008 was over $200 million, with the largest segments being casual MMOs/virtual worlds and social networking applications.

1. VIRTUAL GOODS AND
VIRTUAL GIFTS
Engage Expo – March 10th, 2009

2. Understanding Virtual Goods
People spend their time, energy, and money on the

things that are important to them
 Engaged users  virtual goods potential

3. Virtual Goods
Four key drivers for virtual goods adoption

 Self-expression
 Competitive advantage
 Social Gestures
 Status

4. Self-Expression
Scrapblog Premium Templates Gaia Online

5. Self-Expression
Meez IMVU

6. Competitive Advantage
MobWars (Facebook) Friends for Sale (facebook)

7. Social Gestures
Hot or Not Facebook

8. Status
Xbox Live Achievements Kongregate

9. Payment and Virtual Goods
Payments are still a challenge in virtual goods

 Credit cards
 Incentivized offers
 Pre-paid cards
 Mobile solutions

10. VIRTUAL GIFTS

11. Virtual Gifts
Gifting in real life

 What makes for a good gift?
 Why do people give gifts?

12. Where Virtual Gifts Work Best
Community Sites

 Social Networks

13. Virtual Gifts - Examples
Facebook

 Social proof
 Expressive
 Strength of relationship
 Relatively inexpensive

14. Virtual Gifts - Examples
HotorNot

 Analog equivalent
 Attention-seeking
 Status symbol

15. Market Sizing Overview (US)
Conservative Estimate

 Casual MMOs /Virtual Worlds = $50MM-$75MM
 Social Networking Applications = $50MM-$75MM
 Other FTP games = $50 million
 Console games = ?
 Hardcore MMOs = ?
 Non-game applications = ?
Total = $200 million+ in 2008


16. Blogs and Resources
Jeremy Liew, Lightspeed Venture Partners

 Andrew Chen, Futuristic Play
 Virtual Goods News
 Inside Facebook
 Virtual Goods Summit