GDC: Imvu Lessons From The Inside

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Presented at the Game Developers Conference 2010, San Francisco, CA 3/9/2010 …

Presented at the Game Developers Conference 2010, San Francisco, CA 3/9/2010

Virtual goods are all the rage at the moment, but what does it take to actually build a successful, growing business around them? In this difficult economy, many businesses are looking into virtual goods sales as a new and lucrative revenue stream, but what challenges and pitfalls should these companies consider when launching or growing such efforts? A leading 3D virtual world and social network, IMVU’s 40 million registered users purchase a wide range of user-generated virtual goods, from clothing for their avatars to furniture for their virtual rooms. These products are made by over 100,000 registered developers, all outside the company, but they drive 85% of IMVU’s growing revenue. Via real-world examples and data-driven learnings, this session will share practical insights from IMVU's years of experience successfully building and monetizing the world's largest catalog of user-generated virtual goods.

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  • We are one of a handful of virtual world companies that is past most startup risks – market, technology, and management IMVU CONFIDENTIAL
  • We are one of a handful of virtual world companies that is past most startup risks – market, technology, and management IMVU CONFIDENTIAL
  • We are one of a handful of virtual world companies that is past most startup risks – market, technology, and management IMVU CONFIDENTIAL
  • In closing, I’m confident you will agree with me that IMVU is a company to watch.
  • In closing, I’m confident you will agree with me that IMVU is a company to watch.
  • In closing, I’m confident you will agree with me that IMVU is a company to watch.
  • In closing, I’m confident you will agree with me that IMVU is a company to watch.
  • Deciding what to build and how to build it On IMVU, we answer both of those questions with our advanced user-generated economy Sometimes plenty can be more engaging and exciting than a scarcity strategy…most “programmed” virtual goods are really like luxury goods that only a few people in the economy have, but with a UGC model you may get lots of different items that appeal to a wider set of users and can engage more people. Derivation economy in which you can develop new virtual goods from other products…
  • Fairly common now to have multiple currencies that are earned by user engagement or purchased with cash Predits get spent first…so our engagement currency is empowering for users who may not have the means to acquire credits with cash… If UGC, do you let users cash them out… IMVU has a very evolved set of payment methods, but there are still opportunities (international, international subscriptions, and unbanked users)…we recently allowed users to sign up for our subscription program via prepaid cards and it increased our daily subscriptions by 25%... And don’t forget the power of a one-click billing relationship…
  • Do your goods actually lend themselves to creating a diverse community and allowing users to express themselves? Example of Farmville fields in which users have created patterns to express themselves… Do your goods help stratify that community? You need to make sure that brand-new users look different from more tenured users, to build status and prestige. Are there easy ways for users with like-minded interests to find each other and get together? And a real driver for virtual goods usage is if you can create a gifting culture…On IMVU, it’s “etiquette” for people to leave a small gift for others just for visiting someone’s homepage… And more importantly, it’s a huge driver for monetization…we had one user the other day spend $5500 in one day because she likes to gift a lot to her friends!
  • Virtual identity theft is a real issue…you have an account, that account has credits, which means value, so people probably want to try to steal it….and they’ll go to great lengths to do it, including impersonating IMVU staff! And you need clear policies to manage UGC, but there are second order issues that you have to deal with once those policies are in place…for example, if a product is not in line with your policy and then is purchased prior to it being flagged, then once that product is reclassified as inappropriate, you need to refund the credits to the user who purchased it as it wasn’t they’re fault, and take it away from the creator of that product. And secondary markets also need to be managed…
  • In closing, I’m confident you will agree with me that IMVU is a company to watch.
  • In closing, I’m confident you will agree with me that IMVU is a company to watch.

Transcript

  • 1.
    • Lessons from the Inside: Building and Optimizing a Virtual Goods Business
    • Lee Clancy
    • SVP Product Management & GM Direct Revenue
    • IMVU Inc.
  • 2. Agenda
    • About IMVU
    • Lessons from IMVU on Virtual Goods
    • Q & A
  • 3. What’s IMVU? An online community where members use 3D avatars to meet new people, chat, create and play
  • 4. Company Overview
    • Founded in April, 2004
    • Based in Palo Alto, CA
    • 70 employees
    • 3 institutional rounds
    • $30M raised
  • 5.
    • 3D avatars
    • Virtual goods
    • 45M registered users
    • 10M uniques/month
    • $30M+ revenue run rate
    • Profitable
    Business Snapshot Cumulative Registrations
        • Registered Users
  • 6. Attractive Demographics Cumulative Registrations
        • 70% Female
        • 60% 18+ yrs old
        • 60% USA
  • 7. User-Generated Content 3+ Million Virtual Items
  • 8. Celebrating with Mohawks
  • 9. Shameless Promotional Plug We’re Hiring! www.imvu.com/jobs
  • 10. Lessons from IMVU on Virtual Goods
  • 11. IMVU > Life?
    • Virtual yes, but no less real…
    … with complex social dynamics… … and its own evolved economy
  • 12. IMVU on Virtual Goods Success Currency Controls Creative Community
  • 13. Creative Decision Considerations Which virtual goods are valuable to users?
    • Are you going to pick the hits?
    • What role do brands play?
    • How should they be priced & promoted?
    How should they be built?
    • In-house vs. outsourced vs. user-generated?
    • How often do you need new content?
    • If UGC, what creation tools do you support?
    What properties do they have?
    • Are they scarce or plentiful?
    • Do they last forever or expire?
    • Can they be traded, sold, stolen, or copied?
  • 14. Currency Decision Considerations What is your currency strategy?
    • Purchased currency vs. earned currency?
    • Do you need more than one currency?
    • Can users transfer or gift currency?
    How should the economy be structured?
    • Can you measure supply & demand?
    • If users cash out currency they earn?
    • Can third-parties sell your currency?
    How can users pay for the currency?
    • International & “unbanked” solutions?
    • How many payment methods are enough?
    • Do you have a one-click billing relationship?
  • 15. Community Decision Considerations Which segments can you serve?
    • Do your goods appeal to multiple segments?
    • Are there venues for self-expression?
    • How well does each segment monetize?
    How do virtual goods drive stratification?
    • What benefits do premium members get?
    • Value of goods for new vs. tenured users?
    How can you facilitate connection?
    • What venues exist for users to self-organize?
    • Can you foster a gifting etiquette/culture?
  • 16. Controls Decision Considerations How much customer support is necessary?
    • How to protect against virtual identity theft?
    • How much support for free vs. paid users?
    • When to moderate user-to-user issues?
    What policies and policing are necessary?
    • If UGC, what goods are appropriate or not?
    • If UGC, what if a good is reclassified?
    • Legitimate flagging vs. griefer flagging?
    How will fraud be managed?
    • In-house vs. outsourced?
    • What percentage of orders require review?
    • How should secondary markets be managed?
  • 17. IMVU on Virtual Goods Success Currency Controls Creative Community
  • 18. Q & A