Simon Guild's Presentation

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Simon Guild's Presentation

  1. 1. Creating value out of virtual goods Simon Guild Chairman, Bigpoint
  2. 2. Introduction - Bigpoint The Company The Figures Founded 2002 Number of Employees 550+ Concept Free-to-Play (F2P) browser Optional premium services on demand Locations Hamburg, Germany Berlin, Germany San Francisco, USA São Paulo, 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. 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. 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. 5. Source: comScore Why focus on games?
  6. 6. Subscription vs. Micro-Transaction Caps total revenue by a)excluding those unwilling to commit to recurring revenue b)Limiting those willing to pay more. Subscription Price Quantity Demand Maximize revenue by perfectly aligning demand with consumers marginal willingness to pay Price Quantity Demand
  7. 7. The 10% Rule USERS REVENUE 10% of users Generate 80% of revenue 15% of users Generate 15% of revenue 75% of users Generate 5% of revenue
  8. 8. The 10% Rule: Transaction ROI $2 Item $5 Item $10 Item $20 Item $50 Item $75 Item $100 Item Revenue TransactionVolume
  9. 9. The 10% Rule: The Standard Model Total Views Registrations Active Pay Heavy Pay 10 % 10 % 10 % 10 %
  10. 10. Description User $ Revenue $100,000 Customer lifetime must be > 9 months! The 10% Rule: Example ARPPU $10 Paying User 10,000 Active User 100,000 Registration 1,000,000 Visitors 10,000,000 CPC $0.10 Cost per Lead $1 Cost per Paying User $100 Profit ??? -$900,000 Total Costs $1,000,000
  11. 11. So how does this actually work (traditionally)?
  12. 12. 1. Importance 2. Impatience
  13. 13. Importance: I want better kit
  14. 14. Impatience: get me to level 8 now!
  15. 15. So how does this actually work (in a social world)?
  16. 16. 1. Vanity 2. Self-Expression 3. Gifting 4. Socializing … because Social Context provides meaning and emotion
  17. 17. Vanity …
  18. 18. Self-Expression …
  19. 19. Gifting …
  20. 20. Socialising …
  21. 21. • 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
  22. 22. So let’s go back to the real world
  23. 23. Product Price Promotion Place The traditional marketing mix
  24. 24. Product, Price …
  25. 25. Promotion …
  26. 26. Distribution …
  27. 27. Distribution …
  28. 28. Distribution …
  29. 29. So how do we create value?
  30. 30. Game Mechanics Social Context Marketing Mix Value
  31. 31. For additional information contact us! BIGPOINT GmbH Christoph-Probst-Weg 3 20251 Hamburg Germany Tel +49 40.88 14 13- 0 Fax +49 40.88 14 13- 11 BIGPOINT Inc. 2 Bryant Street Suite 220 San Francisco, CA 94105 USA Tel +1 646.350 0860 Fax +1 646.350 0863 info@bigpoint.net www.bigpoint.net

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