Virtual goods forum_uk__vikas_v1_6-17-10


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Vikas Gupta, CEO of Social Gold, presented customer spending behavior insights at Virtual Goods Forum in London, on July 24, 2010.

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  • Virtual goods forum_uk__vikas_v1_6-17-10

    1. 1. Real Money in Virtual Goods: Consumer Spending Habitsand Strategies for Growing the Pie<br />Powering Virtual Economies Worldwide<br />
    2. 2. Agenda<br />About Social Gold<br />Quick recap of Social Gaming<br />Virtual Currency: The spend driver<br />Consumer Behaviors & Habits<br />Growth Strategies<br />
    3. 3. About Social Gold<br />The leading virtual goods monetization platform<br />Launched in Sept 2008<br />Grew 2000% in revenue in 2009<br />Founded by ex-Amazon veterans<br />In-game payments, Secure in-Flash payments<br />
    4. 4. About Social Gold<br />A platform that allows you to . . . <br /> monetize through virtual currency<br /> merchandise your virtual goods<br /> optimize your virtual economy<br />
    5. 5. The Social Gold PlatformAll the Critical Tools to Help Manage Your Virtual Economy<br />Micropayments<br />&<br />Subscriptions<br />Virtual Currency<br />&<br />Inventory Mgmt <br />Analytics<br />&<br />Reporting <br />PLUS:<br /><ul><li> Fraud Management
    6. 6. Customer Service</li></li></ul><li>About Social Gold<br />Social Games | Casual Games | Virtual Worlds<br />
    7. 7. Virtual Goods & Social Games<br />Timeline<br />2007 Facebook platform<br />Casual Apps<br />SuperPoke, FunWall, Hug Me<br />2008: Dawn of the Games<br />Green Patch, Mob Wars, Friends for Sale<br />MySpaceplatform<br />2009: Flash Based Games<br />Farmville, Pet Society, Happy Aquarium<br />
    8. 8. Virtual Goods & Social Games<br /><ul><li> Bite sized chunks of engagement
    9. 9. Timed visits
    10. 10. Casually Immersive</li></ul>Users pay for power-up, faster ways to grow in the game<br />
    11. 11. Virtual Goods & Social Games<br />What makes this space so exciting?<br />Social Networks are an Engaged Audience<br />Games act as fillers – perfect fit<br />Distribution via News Feed leads to low cost viral growth<br />Social Networks provide Distribution<br />Games provide engagement + monetization <br />
    12. 12. Some Examples of High Spenders<br />$14,794<br />$11,635<br />$25,540<br />$13,960<br />$19,054<br />
    13. 13.
    14. 14. Defining Virtual EconomyWhy do people buy Virtual Goods?<br />
    15. 15. Virtual Currency: Means to an Experience<br />
    16. 16.
    17. 17. Why Virtual Currency?<br />Separate “Value” from “Cost”<br />Virtual currency is “cheaper” than “money”<br />Train User Behavior<br />Economy around user generated content<br />
    18. 18. Defining Virtual Economy<br />Lessons from the Real World Economy<br />“Labour is the real measure of exchangeable value.<br />Wealth is power of purchasing labour.”<br /> Value in your economy is in your goods.<br /> Currency is a means, not the end.<br />
    19. 19. Consumer Behaviors & Habits<br />How Much do People Spend on Virtual Goods?<br />
    20. 20. Some Caveats<br />Data spans publishers on Social Gold network<br />LTV and behavior in games varies considerably<br />Social Gold tends to drive higher LTV and user spending<br />
    21. 21. Virtual Goods enable much higher spending behavior in loyal users<br />
    22. 22. Loyal Repeat Purchaser: $250<br />One time purchaser: $12<br />Loyal purchasers spend the same as about20<br /> one time purchasers <br />
    23. 23. Highest Spender: $25,000<br />Loyal Spender: $250<br />One high spender spent the same as about100 loyal spenders. <br />
    24. 24. Strong Global LTV Anchored by Europe & NA<br />Average LTV: $60<br />
    25. 25. Average Spender: $60<br />Roughly 2-4% of all your users spend money<br />“Revenue potential” from virtual currency per user:<br />$1-$2 <br />What is your cost of customer acquisition?<br />What does it cost you to serve this user?<br />
    26. 26. How do you grow the pie?<br />Get more users (peasants)<br />Convert more users to spenders (farmers)<br />Get spenders to spend more money (knights)<br />Serve and retain your high spenders well (kings and lords)<br />
    27. 27. Growing more users<br />Viral Growth<br />Viral Factor > 1 implies exponential growth<br />Good Viral Factor in new games: 0.7<br />Build Friends into the game<br />Focus on the User Experience<br />Retention reaps bigger rewards than pure viral<br />Cross promote, Buy traffic<br />
    28. 28. Functional Goods drive more users to pay<br />Experiment with price points<br />Understand your user demographics and customize for them<br />Keep them engaged for longer<br />
    29. 29. “Sales” and “Specials” drive people to spend more money<br />
    30. 30. Make repeat purchase experience extremely seamless<br />“Encourage” higher price points<br />Make sure the game is still engaging<br />
    31. 31. How many?<br />Average: 50% of all spenders  9%<br />Best Farming Game: 30%  15%<br />Worst Farming Game: 63%  4%<br />Best Social Game: 36%  51%<br />
    32. 32.
    33. 33. Growth StrategiesTop 5 Strategies to Grow the Virtual Goods Pie<br />Increase conversion of “like customers” (CRM 101)<br />Expand offerings to reach different consumer segments<br />Increase ARPPU<br />Merchandising<br />Promotions (price, seasonal, etc)<br />Loyalty programs (recognize “high click pressure”, feed it, reward it)<br />Increase stickiness / addictiveness of the experience (eg, product innovation)<br />Cross-promote and migrate users to new experiences<br />
    34. 34. Summary<br />Focus on Experience, Retention, Economy<br />Loyal purchasers spend $250 for virtual goods<br />Building seamless purchase experience (e.g., Social Gold in-Flash) builds more loyal repeat purchasers<br />How much a user spends depends on the experience you provide them<br />
    35. 35.<br />Powering Virtual Economies Worldwide<br /><br />