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Simon Guild's Presentation

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  • 1. Creating value out of virtual goods
    Simon Guild
    Chairman, Bigpoint
  • 2. 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
  • 3. 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]
  • 4. 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.
  • 5. Why focus on games?
    Source: comScore
    46% of all Internet
    traffic is generated
    byonline game sites.
  • 6. The economics of online gaming…
  • 7. 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
  • 8. 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
  • 9. The 10% Rule: Transaction ROI
    Revenue
    Transaction Volume
    $5 Item
    $75 Item
    $100 Item
    $2 Item
    $10 Item
    $20 Item
    $50 Item
  • 10. The 10% Rule: The Standard Model
    10 %
    10 %
    10 %
    10 %
    Total Views
    Registrations
    Active
    Pay
    Heavy Pay
  • 11. The 10% Rule: Example
    Customer lifetime must be > 9 months!
  • 12. So how does this actually work (traditionally)?
  • 13. Importance
    Impatience
  • 14. Importance: I want better kit
  • 15. Impatience: get me to level 8 now!
  • 16. So how does this actually work (in a social world)?
  • 17. Vanity
    Self-Expression
    Gifting
    Socializing
    … because Social Context provides meaning and emotion
  • 18. Vanity …
  • 19. Self-Expression …
  • 20. Gifting …
  • 21. Socialising …
  • 22.
    • 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
  • 23. So let’s go back to the real world
  • 24. The traditional marketing mix
    Product
    Price
    Promotion
    Place
  • 25. Product, Price …
  • 26. Promotion …
  • 27. Distribution …
  • 28. Distribution …
  • 29. Distribution …
  • 30. So how do we create value?
  • 31. Game
    Mechanics
    Social
    Context
    Value
    Marketing
    Mix
  • 32. 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