Generating Real Revenue from Virtual Goods

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.

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