Random Musings
my last panel of the conference
- Adam Caplan, Super Rewards
- Matt Mihaly, Sparkplay Media
- David Perry, Acclaim
- Anu Shukla, Offerpal Media
- Moderator: Joel Brodie, Gamezebo
Q: Is there the danger of a virtual good bubble?
AS: Virtual economy still appears to be healthy even though regular economy is tanking. People have different entertainment profiles, so they develop loyalties towards certain worlds.
MM: There is no demand for virtual goods. There is a demand for games, which will cause gamers to start valuing the context of the game.
DP: People just want choice.
Q: Conversion rate from free to pay to play?
AC: In social networking space, we have about 30-35M monthly active users. approx 12-15M come to super rewards offer page on monthly basis, 50% would click on one of the offers. 20-25% would complete the offer. in sum, = 5% of users are converted.
MM: This is a bad distinction. a $5 paying player is essentially a free player and a $2000 player is not.
AS: you must separate by game type. an engaging multiplayer game at its height of popularity, close to 50% of users will be paying in some way. if its just a virtual good or softer avatar game, then 5%.
DP: we have 7M users, $70-$75/player - lifetime, but there is also a cost per player. we do not feel like we are doing a great job - we are listening to people talk about the “funnel” and that is really important.
Q: What is the psychology of getting someone playing for free to convert to paying?
DP - charge a very low amount to do the first option. ex: $0.05 to gamble.
AC: allowing users to try before they buy, by having them fill out a survey, etc., so they are not pulling out their credit card, but they are participating. you want to try to reach them at the 8 minute point, where they have played with the game enough to like it but not get bored with it.
AS: you need to let the user first get engaged with the game. so there must be some levels for free. then you want them to compete to reach a higher level. competition ultimately makes people pay. but if its a competitive game, then you must make sure there is a level playing field - you cannot buy your way into a skill game. also, dating games have a different psychology - you want to impress someone.
Q: What % of revenues are from hardcore players (whales) versus avid or casual user?
DP: Console games which do not have this additional virtual goods layer, then they are missing a crucial revenue opportunity. Imagine Halo or Gears of War with a vitual good aspect.
Q: How do you set your price points?
DP: Start high because you can always adjust down, but users hate it when you adjust up.
AS: Watch for inflation - do they have enough to spend it on? do they value it enough?
MM: Try auctions and let your users decide.
Panel 3 of the day (Virtual Goods Summit 2008) has the following:
* John Hwang, RockYou
* David King, Lil Green Patch
* Shervin Pishevar, SGN
* Andrew Trader, Zynga
* Moderator: Mark Wallace, Wello Horld
Q: What are the advantages/disadvantages of doing virtual goods in a social network setting?
john hwang - updates are important; refresh content to keep users engaged; userbases on social networks is growing which directly correlates to your own userbase growth.
andrew trader - you do not control the users, the social networks do. that makes fraud and cheating a bigger problem. harder to build fraud and and cheating prevention systems. wants facebook to offer a payment processing system.
shervin of sgn - recommends you build a standalone service to go with your FB or Myspace app.
Q: what % of users on social networks purchase virtual goods? average revenue per user (arpu)?
AT - depends. estimates of 3-8% all seem high. economies are complex and you have to figure out how to manage the economy. (note from earlier in panel, AT mentioned $4K-$5K daily revenue on yoville)
JH - 3-5% is possible, but we see abt 10% of users try to pay for currency into the game. of the 10%, only 10% actually complete the transaction. also recommends a limit on able to level up via currency because it creates inflation of points and ruins the experience. sees $20-30 revenue per thousand active daily users on speed racer.
DK- very limited percentage of users want to pay, so it avgs out to less than penny per user.
SP - its healthy but we will not disclose. (lol)
everyone seems to want FB to develop a payment system. this would 1) help with getting users over the account registration hump, 2) make it easier to manage fraud, 3) see #1:) but after seeing the fiasco of beacon, do we really want FB to have our financial information as well?!?!
Q: barriers for entry?
JH - apps in social networks have more virality because people want to show off their personalized creations. they buy, mod, customize and then show all their friends. therefore, there is room for innovation and success by individual developers.
AT - the entry costs for developers in the social network business is going up. games are becoming better quality and more rich in experience, so it now takes more to build and launch. (JH - jokes that AT just wants individual developers to go work for zynga instead)
Audience question: what is the ratio of active users to registered users and what are your retention rates?
DK - says those numbers dont matter so much because there are so many other factors at play - size of audience, activity of active users, etc.
no one else wanted to answer the question.
audience question: Pros & cons of using real dollars versus points or other forms of virtual currency?
JH - think back to when you were a kid in an arcade. after you changed you money into arcade coins, you didnt know what you were spending. it encourages people to spend more.