Virtual Goods, the next big business model?

Thursday, 3:00pm - 4:00pm

Virtual Goods: The Next Big Business Model

Virtual goods and currencies have become the driving economic force for a number of virtual world companies. What does it takes to build a successful company with a strong virtual goods business? What types of items do consumer want to buy and in what context are they motivated to continually buy or upgrade their virtual items? How do you grow a virtual goods business and what are the pitfalls? In what cases does a virtual goods business model triumph over advertising or subscription models?-

Speakers:

• Craig Sherman, CEO, Gaia Online



• Timo Soininen, Chief Executive Officer, Sulake Corporation



• Erik Bethke, CEO, GoPets



• Kyra E. Reppen, Senior Vice President & General Manager, NeoPets



• Susan Wu, Partner, Charles River Ventures (moderator)

What kind of Virtual goods do we have out there? There's

• Decorative
  - stuff to decorate your home, dress up etc.
  - collectible and branded decorative virtual goods usually have high ASP (average sales prices)



• Functional
  - improved functionality like boosting your car
  - usually at a higher price than (non-collectible) decorative goods



• Behavioral
  - user interaction driven goods, like gifts, expressing opinion.
  - highest profit margins



• Branded

Here's some on the worlds represented in the panel:

GAIA- an online hangout for teens:

• 2.5 visitors who spend 1hr/day on average.



• 1 million forum posts per day



• $ 100 K sales per day.

As for branded content Gaia especially added cars to the platform for Toyota Scion. Then they created body shops to customize the cars, then created hang out places like car parks for teens to meet and hang out with their rides.

GOPETS

• Use pets as a catalyst for human social interaction, like when you walk the dog in RL you naturally start interacting with other dog-owners.



• Your pet lives on after you log off.



• These worlds are global, and especially for teens this can create problems when it comes to languages. GOPETS created Icu, an icon based language.



• People love to buy trees which produce fruit, then harvest the fruit, make pies and sell those for gold and spend the gold on games

SULAKE / HABBO HOTEL

• It's an easy to use Virtual World.



• You can make a living trading virtual goods



• core functionality is user generated content / rooms



• open ended play is vital to VW's



• Habbo Hotel supports about 170 different payment methods worldwide



• If translated to real world goods, the annual Habbo Hotel turnover would be $600 million.

NEOPETS

• Started out back in 1999, so a real ancient thing.



• Trading virtual goods only began this year



• now 750K in daily transactions



• Evolution of the game / world and innovation comes from listening to the community.



• Has a forum section on when it's the best time to ask your parents to pay for things.

The virtual worlds represented here get about 60 to 85% of their revenues from the sales of virtual goods.

Selling virtual goods and using it as a business model is pretty much about making purchases as easy as possible. Stimulate impuls buying without the hassle of having to get some money somewhere first.