Simon Guild's Presentation

Creating value out of virtual goods
Simon Guild
Chairman, Bigpoint

Introduction - Bigpoint
The Company
The Figures
Founded 2002
Number of Employees 550+
Concept
Free-to-Play (F2P) browser
Optional premium services on demand
LocationsHamburg, Germany
Berlin, GermanySan Francisco, USA
SãoPaulo, Brazil
Malta
60 active games, 30 languages
More than 150 million users
250,000 registrations per day
Awards Winner
Best Gaming Portal 2010
Best Browser Game 2010
International Business Award 2010
Deloitte Rising Stars 2009
European Business Award 2009
Best Gaming Website USA 2009
MTV Games Award 2009

What is a virtual good?
Virtual goods are non-physical objects that are purchased for use in online communities or online games.
They have no intrinsic value and, by definition, are intangible.
[thanks to wikipedia]

On the 14th of December 2009 the Crystal Palace Space Station was listed on public auction and in later that month it sold for 3,300,000 PED which is equivalent to $330,000 USD. The winning bidder was Erik Novak aka 'Buzz Erik Lightyear' from Canada. Buzz is already well established in Entropia as one of the most skilled crafters. He owns and supplies a chain of department stores across Planet Calypso. Owning the Space Station means he will now earn tax when players mine and hunt in the station.

Why focus on games?
Source: comScore
46% of all Internet
traffic is generated
byonline game sites.

The economics of online gaming…

Maximize revenue by
perfectly aligning demand
with consumers marginal
willingness to pay
Caps total revenue by
excluding those unwilling to commit to recurring revenue
Limiting those willing to pay more.
Price
Subscription
Price
Demand
Demand
Quantity
Quantity
Subscription vs. Micro-Transaction

The 10% Rule
REVENUE
USERS
Generate
80% of revenue
10% of users
Generate
15% of revenue
15% of users
Generate
5% of revenue
75% of users

The 10% Rule: Transaction ROI
Revenue
Transaction Volume
$5 Item
$75 Item
$100 Item
$2 Item
$10 Item
$20 Item
$50 Item

The 10% Rule: The Standard Model
10 %
10 %
10 %
10 %
Total Views
Registrations
Active
Pay
Heavy Pay

The 10% Rule: Example
Customer lifetime must be > 9 months!

So how does this actually work (traditionally)?

Importance
Impatience

Importance: I want better kit

Impatience: get me to level 8 now!

So how does this actually work (in a social world)?

Vanity
Self-Expression
Gifting
Socializing
… because Social Context provides meaning and emotion

Vanity …

Self-Expression …

Gifting …

Socialising …

Virtual Goods evoke real emotions…
… in a well-understood social context
Virtual Goods enable self-expression…
… and enhance social activities
Virtual Economies drive ongoing use…
… and turn a game or website into a service

So let’s go back to the real world

The traditional marketing mix
Product
Price
Promotion
Place

Product, Price …

Promotion …

Distribution …

So how do we create value?

Game
Mechanics
Social
Context
Value
Marketing
Mix

For additional information contact us!
BIGPOINT Inc.
2 Bryant Street
Suite 220
San Francisco, CA 94105
USA
Tel +1 646.350 0860
Fax +1 646.350 0863
BIGPOINT GmbH
Christoph-Probst-Weg 3
20251 Hamburg
Germany
Tel +49 40.88 14 13- 0
Fax +49 40.88 14 13- 11
info@bigpoint.net
www.bigpoint.net

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