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The Future of EntertainmentThe Future of Entertainment

Group B-9Fang-Chi Chang, Manuel Pineros, Christina Radcliffe, Dov Rivkin, Itaru Shiraishi.

Marvel Entertainment Inc.Marvel Entertainment Inc.

http://www.marvel.com/

http://www.marvel.com/universe/Image:Marvel-character-composit.jpg


1.1. Background and current modelBackground and current model

2.2. Lines of Business Lines of Business

3.3. Sustainability of current model and life cycleSustainability of current model and life cycle

4.4. Management challengesManagement challenges

5.5. Marvel’s brand equityMarvel’s brand equity

6.6. Hasbro and Marvel Studios dealsHasbro and Marvel Studios deals

7.7. Free Cash Flows and options for growthFree Cash Flows and options for growth

8.8. International expansionInternational expansion

9.9. Online communityOnline community

10.10.ImplicationsImplications

11.11.Q&AQ&A

AgendaAgenda


What is at the core of Marvel?What is at the core of Marvel?

Intellectual Property

LicensingLow Capital Expenditure

=

1939 2006

High Margins

&

Low Risk


http://en.wikipedia.org/wiki/Image:Spider-Man50.jpg

http://en.wikipedia.org/wiki/Image:Timelysm.jpeg

http://en.wikipedia.org/wiki/Image:Atlaslog.jpeg

http://en.wikipedia.org/wiki/Image:Marvel_logo.jpg



2.2. Lines of BusinessLines of Business









11.11.Q&AQ&A


Performance Evaluation - LicensingPerformance Evaluation - Licensing

Advantages Disadvantages Challenges

•Low risk•Robust business model•High margins•Focus on the core business

•Short-term deals•Final prices are set by distributors•Legal issues between Marvel and partners•Limited by the “mindshare” it is able to develop in the consumers•Limited by the creativity of licensees

•New technology•Better royalty schemes (from flat to Equity Participation)

63.1%

15.9%

10.7% 10.3%

43.0%

15.5%

31.4%

10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

DomesticConsumerProducts

InternationalConsumerProducts

Spider-Man LLP Studios

2005

2004

Size Largest and fastest growing division (from 19.3% of total sales in 2003 to 59% in 2005)

Margins 62%

Competitors Time Warner (DC Comics), Walt Disney, NBC Universal

Market share

~9%

Strategy Best-in-class sole-partners



•Customer loyalty•Rich characters•Multiple versions

•Narrow demographic•Few “stars”

•Channel management•Readership expansion•Internet exploitation•Creating new “stars”•Sustaining “stars”

Market ShareMarket Share

40%

33%

27%

MarvelDC ComicsOthers

Performance Evaluation - PublishingPerformance Evaluation - Publishing

Source: DC Comics Website, Marvel Annual Report 2005

Size Second largest in terms of revenue

Customers - Male well educated teens 13-23- Collectors

Competitors DC Comics

Key Success Factors

- Quality content- Relationship with retailers

Industry - Low barrier to entry- High power of retailers- High substitution- High switching costs


Performance Evaluation - ToysPerformance Evaluation - Toys


•Appeal to younger segment•Raise new generation of fans

•Licensee risk•Concentrated retailers•Influenced by movies

•Decrease volatility•Licensee management

9.8%64.7%

25.5%TraditionalGames softwareGames consoles

Global Toys & Games Global Toys & Games MMararkkeett SegmentationSegmentation

Source: Datamonitor, Marvel Annual Report 2005

Size Smallest in terms of revenue

Customers - Children 4-12- Collectors

Competitors - Mattel- Jakks Pacific

Key Success Factors

- Quality design- Successful movies

Industry -Intense rivalry-Short lifecycles













11.11.Q&AQ&A


Can the current model continue to deliver? Can the current model continue to deliver?

2006 is expected to be a rough year, but the current pipeline is promising

After the turnaround, Marvel is financially healthy

Analysts perceive that the current business model has potential Analysts perceive that the current business model has potential and can continue to deliver, we agreeand can continue to deliver, we agree


Where do Marvel’s businesses stand?Where do Marvel’s businesses stand?

Publishing & Traditional Toys

Licensing













11.11.Q&AQ&A


Management ChallengesManagement Challenges

• New market opportunities • International presence• IP protection and management• Cultural traditions of comics• Acquisition opportunities• New technologies

• Identify vision clearly• Build brand equity• Strengthen and balance character portfolio• Mine character library• International expansion• No new characters

• Dependence on superheroes• Few “cash cows”• Appeal to new markets• Segmentation

Ch

alle

ng

es f

or

Gro

wth

Ch

alle

ng

es f

or

Gro

wth

Globalization

Product Portfolio

Growth and Strategic Alignment













11.11.Q&AQ&A


A company must have a clear vision to position and brand itself for successA company must have a clear vision to position and brand itself for success

Marvel’s Brand EquityMarvel’s Brand Equity

Company VisionCompany Vision

Intellectual Property Company Entertainment Company

• Focus on character branding

• Concentrate on developing characters

• Low involvement in non-core value chain

• Limited use of technology

• Focus on corporate branding

• Concentrate on developing brand

• High involvement/extension of value chain

• Heavy use of technology


Building Brand EquityBuilding Brand Equity

Salience

Performance

ImageryJudgments

Feelings

Resonance

Make Marvel a household name

Building Brand Equity Allows to Capitalize on IP for Future RevenuesBuilding Brand Equity Allows to Capitalize on IP for Future Revenues

• Brand Dilution• IP Management• Competition

• Focus on developing creativity• Differentiate image• Develop associations with the

brand• Build a global brand

Growing brand equity

Challenges

MARVEL

CHARACTER

CHARACTER

MARVEL













11.11.Q&AQ&A


Is Hasbro deal beneficial for Marvel? Is Hasbro deal beneficial for Marvel?

Revenues coming from $205 million in royalty and service fee payments($70 million, Spider-Man 3; $35 million, Spider-Man 4)

Hasbro is a strong partner•Second largest toy maker in U.S.•U.S. is the largest toy market

•Benefit from Hasbro’s knowledge about the U.S. market•Focus on Marvel’s creativity and advisory skills

The deal is financially sound and allows to focus on core businessThe deal is financially sound and allows to focus on core business

• Focus on technologically advanced products• Develop toys & games with cross cultural appeal

•Could become just “one more” in Hasbro’s portfolio•Efforts may be limited to theatrical releases


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

ROE ROA ROE ROA ROE ROA ROE ROA

Marvel Pixar Pixar CashAdjusted

Disney

%

2004

2005

Note: ROE and ROA for Marvel and Disney are not adjusted with their cash positions

What potential does Marvel Studios have? What potential does Marvel Studios have?

In-house production can be profitable by building awareness of lesser-In-house production can be profitable by building awareness of lesser-known charactersknown characters

Film Facility allows to minimizes risk while venturing into a potentially profitable area

•Lesser known superheroes•Characters limited to superheroes•Alienating core followers

•Script writing know-how•Develop in-house film expertise•Marvel movies historically profitable

Marvel Facility Backed Films (2008) 10 Titles (Captain America)

Company Market Cap PERMarvel 1,720.00 20.74Pixar 7,462.00 48.8Pixar (Adj) 6,422.00 41.99Disney 52,036.00 21.44


Marvel’s Spiderman potentialMarvel’s Spiderman potential

Superman Superman II Superman III Superman 4 Superman Returns Superman Returns Sequel

Batman Batman Returns Batman Forever Batman & Robin Batman Begins Batman Begins Sequel

Spider-Man Spider-Man 2 Spider-Man 3

Men in Black Men in Black 2

X-Men X2 X-Men 3: The Last Stand

Fantastic Four Fantastic Four 2

Worldwide Gross Budget Worldwide Gross Budget Total $2,845,830,804 $1,249,000,000 $4,618,248,551 $1,820,500,000

Average $177,864,425 $89,214,286 $307,883,237 $101,138,889

(1978-2006) (1986-2006)

• Gross returns from movies for Marvel average over 60%Gross returns from movies for Marvel average over 60%

• Spiderman can continue to deliver revenuesSpiderman can continue to deliver revenues


http://en.wikipedia.org/wiki/Image:Dc2005.JPG

http://en.wikipedia.org/wiki/Image:Marvel_logo.jpg












11.11.Q&AQ&A


Options for growthOptions for growth

•Expanding the Marvel Universe

•Acquiring other Comics (Entertainment) Company

•Expanding into new lines of business (online community)

•Expanding to other markets (e.g. Japan)

•Further share buybacks or paying dividends

•Divested non-core businesses

•Improved and expanded licensing agreements

•Strong characters continue to generate cashflows

•Focusing on a model that requires low capital investment

Estimated free cash flows of ~$300 Million in 2006-2007Estimated free cash flows of ~$300 Million in 2006-2007

Marvel’s performance over the past 5 yearsMarvel’s performance over the past 5 years

How can Marvel use these cash flows to increase shareholder value?How can Marvel use these cash flows to increase shareholder value?


Moving towards introductory stageMoving towards introductory stage

Online communities

Movies

International Expansion StrategyInternational Expansion Strategy

Licensing

Consoles & Online

Games













11.11.Q&AQ&A


International Expansion StrategiesInternational Expansion Strategies

Possible Targets (market capitalization):Sanrio ($1,348MM)Takara-Tomy ($687MM)Bandai-Namco ($3,650MM)

Financing option: Treasury stock

Hello Kitty, Cinnamoroll

3/2006 PER (estimate): 30.81

Operational Income Breakdown (3/2007 estimate)

Access and Gain following:• Character library• New demographic segments• Client relationship• Anime management know-how• Market knowledge

Japanese Japanese MarketMarket

Key Reasons:•Major footprint in the region•Relative low piracy level•High technology penetration: a test market for the US and Europe

Key Facts(1): US$17 billion manga, anime and related video

games US$14 billion character merchandise sales 75 anime broadcast/ week (2001) 748 million comic books printed (2002) 3.2 billion comic magazine print (2002)

Note: (1) JAPA http://www.ppp.am/ppp_shiryou_data.html


Successful superheroes across regions?Successful superheroes across regions?

USA China

IndiaEurope

Adaptation is necessary to transfer popular culture figures such as comicsAdaptation is necessary to transfer popular culture figures such as comics

Inframan

http://www.internationalhero.co.uk/nonus.htm

Agent 327













11.11.Q&AQ&A


How technology is changing entertainment?How technology is changing entertainment?

“57% of American teenagers create contents on the Internet(1)”

Capitalizing on Online Talents

Marvel Online Platform(easy to use, create and socialize)

Participants create

characters and stories

Select those

with high access rates, hits and traffic

Evaluate the quality

of characters and stories

Contact candidates

for possible contracts

Provide platform for participants

to create characters, stories and

socialize

Note: (1) “Pew Internet and American Life project”, http://www.pewinternet.org/pdfs/PIP_Teens_Content_Creation.pdf

TM


Capitalizing on technological changesCapitalizing on technological changes

Note: (1) “Pew Internet and American Life project”, http://www.pewinternet.org/pdfs/PIP_Teens_Content_Creation.pdf

Marvel Online Platform (easy to use, create and socialize)

•Bring in those creative minds and talents into Marvel Bring in those creative minds and talents into Marvel •Provide professional assistance to develop themProvide professional assistance to develop them

PublicationsPublications FilmsFilms Video gamesVideo games

Fee RevenuesFee Revenues

NPV of first five years NPV of first five years $1,324,688 $1,324,688

TM

Increased shareholder valueIncreased shareholder value

Marvel Entertainment

Marvel Studios

Partners: e.g. Microsoft













11.11.Q&AQ&A


ImplicationsImplications

Implications Risks Risk Mitigation Strategy

Marvel Studios Potentially large revenues and profits

•Unpredictable outcome of films•Venturing into inexperienced field

•Recruiting creative talents•Building awareness for lesser-known characters

Toy Business with Hasbro

•Eliminate risk •Maximize profit through Hasbro's wider retail network

•Dependence on Hasbro distribution•Brand mismanagement

•Monitor and advise on character management


ImplicationsImplications

Implications Risks Risk Mitigation Strategy

Acquisition ・ International expansion・ New segments ・ New markets・ Client relationships・ Know-how

•Cultural fit•Large financial commitment•Integration

・ Respect the cultural differences

Online Community

・ Tap into unlimited talents・ Additional revenue・ Raising Marvel profile

・ Technological changes・ Financial commitment・ Intellectual property rights

・ Joint venture with a strong technology partner・ Retain content property with disclaimer


Q&AQ&A

The Avengers


Appendix


Financial projection and Free Cash flowsIncome Statement 2003A 2004A 2005A 2006E 2007E

Sales 348 513 391 341 460 Licensing 189 215 230 - -

Publishing 73 86 92 - -Toys 85 213 68 - -

Cost of Goods Sold 79 160 51 79 107Depreciation, Depletion & Amortization 4 4 5 5 5Selling, General & Admin Expenses 109 143 166 166 166Total Operating Expenses 193 306 222 250 278

Other Income/Expense - Net 1 9 2 4 5Equity in net income of joint venture 11 8 0 0 0Operating Income 167 224 171 95 187

Interest income 2 3 4 3 3Interest expense 19 20 4 16 16Income before income tax and minority interest 150 207 171 82 175

Income tax (expense) benefit 1 (65) (63) (30) (64)Tax rate 31.24% 36.73% 36.73% 36.73%

Minority interest in consolidated joint venture 0 (17) (5) (8) (10)Net income 152 125 103 44 100

Less: prefered stock dividends 1 0 0 0 0Net income attributable to common stock 150 125 103 44 100

Free cash flowEBIT 171 95 187

Depreciation 5 5 5Changes in Working capital 10 4 (9)

Free cashflow 185 104 183

Source: Annual Report, CNNmoney.com, Yahoo Finance* COGS is calculated from the from the average sales ratio of previous three years**Depreciation, SGA, Other income, interest income and tax rate are kept at the same level from 2005*** Interest income, Other income,


Online platform – estimated cash flow

• Should be launched in the US home market• Revenue model – monthly subscription• Additional motives to subscribe: opportunity to interact with Marvel

designers, potential to sell their characters to Marvel or even sign a contract• Possibility to raise price in the future (audience is not price sensitive)

year 1 year 2 year 3 year 4 year 5Annual growth rate 50%subscribers 15,000 22,500 33,750 50,625 75,938fee/month $14.95 $14.95 $17.95 $17.95 $17.95annual revenues $2,691,000 $4,036,500 $7,269,750 $10,904,625 $16,356,938annual costs $500,000 $500,000 $500,000 $500,000 $500,000annual cash flow ($18,000,000) $2,191,000 $3,536,500 $6,769,750 $10,404,625 $15,856,938Break EvenDiscount rate 20%NPV $1,324,688

Intangible benefits:• Increased brand awareness• Potential for new talents• Access to new segment of customers• Potential revenue source from online advertisement• Learn consumer preferences


Sales Revenue

USA

(dollars in millions) 2003 2004 2005

Percentage

2003 2004 2005

Licensing 106.3 173.8 182 37% 45% 59%

Publishing 61.3 72.8 77.3 21% 19% 25%

Toys 118.7 140.1 47.7 41% 36% 16%

Total 286.3 386.7 307 100% 100% 100%

Foreign

Licensing 18.2 40.9 48.1

Percentage

30% 32% 58%

Publishing 11.9 13.2 15.1 19% 10% 18%

Toys 31.2 72.7 20.3 51% 57% 24%

Total 61.3 126.8 83.5 100% 100% 100%

Total

Licensing 124.5 214.7 230.1

Percentage

36% 42% 59%

Publishing 73.2 86 92.4 21% 17% 24%

Toys 149.9 212.8 68 43% 41% 17%

Total 347.6 513.5 390.5 100% 100% 100%


Percentage of sales revenue from USA

Licensing 　　 2003 2004 2005

USA 85% 81% 79%

Foreign 15% 19% 21%

Publishing 　　 2003 2004 2005

USA 84% 85% 84%

Foreign 16% 15% 16%

Toy 　　 2003 2004 2005

USA 79% 66% 70%

Foreign 21% 34% 30%


Operating Income Margins

Licensing (dollars in millions) 2003 2004 2005

Net Sales 124.4 214.7 230.1

Operating Income 83.2 152.7 143.4

Operating Income Margins 67% 71% 62%

Publishing (dollars in millions) 2003 2004 2005

Net Sales 73.3 86.0 92.4



Toy (dollars in millions) 2003 2004 2005

Net Sales 149.9 212.8 68.0




Marvel’s Movies and TV Pipeline

Feature Films (2006) 3 Titles (X-Men 3,Ghost Rider, The Punisher 2)

Films in Development (2007) 10 (Spider Man 3, Fantastic Four 2)

Marvel Facility Backed Films (2008) 10 Titles (Captain America)

Direct-to-Video 4 releases starting in 2006 (Ultimate Avengers)Animated TV 1 release (Fantastic Four)Live Action TV 3 releases (Alter Ego, Blade)

+

+

+

Video Games 8 releases over 2005-06 (Activision deal through 2017)

+


Financials - ROA & ROIC


Comics, Graphic Novel, & Magazine Publisher

Marvel Comics, 39.56%

DC Comics, 32.67%

Dark Horse Comics, 4.61%

Image Comics, 3.36%

Tokyopop, 2.86%

IDW Publishing, 2.02%

Small Size (2% to .24%), 10.11%

Other Non-top 20 , 4.81%

Source: http://www.diamondcomics.com/market_share.html

Financials - ROA & ROIC


Source: Thomson

MARVEL - ROA (1996 - 2005)

-40

-20

0

20

40

60

Return On Assets 11.01 -16.86 -17.54 -1.84 -10.51 4.42 9.72 31.69 18.27 15.46

Operating Profit Margin 12.28 -32.68 -1.12 0.08 -15.49 0.63 21.86 44.57 41.14 46.48

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Financials - ROA & Operating Margins


Operating Income per Business Units

-40%

-20%

0%

20%

40%

60%

80%

100%

Licensing 5,200 69,400 139,400 152,700 143,400

Toys -5,800 8,900 77,905 58,100 15,500

Publishing 14,500 19,600 25,400 37,300 36,300

2001 2002 2003 2004 2005

Financials - Operating Income per LOB


Revenues by Geographic Region

020406080

100120140160180200

US Foreign US Foreign US Foreign

2003 2004 2005

MIllions

Licensing

Publishing

Toys

Financials - Revenues by Region


92.4145.3

33.3 36.5

67.5

24.7 21.523.6

214.7230.1

0

50

100

150

200

250

DomesticConsumerProducts

InternationalConsumerProducts

Spider ManL.P.

Studios Total

Licensing Sales by Division

2004

2005

Financials - Licensing Sales


0

10

20

30

40

50

60

70

Apparel andAccessories

Entertainment Toy Royalties Other (Domestics,food and other)

Licensing Sales by Category

2004

2005

Financials - Licensing by Category


Source: http://www.diamondcomics.com/market_share.html

Released Movie Name 1st

Weekend US Gross Worldwide

Gross Budget 5/3/2002 Spider-Man $114,844,116 $403,706,375 $821,700,000 $139,000,000

6/30/2004 Spider-Man 2 $88,156,227 $373,524,485 $783,924,485 $200,000,000 5/4/2007 Spider-Man 3 - - - $250,000,000

$777,230,860 $1,605,624,485 $589,000,000 $388,615,430 $802,812,243 $196,333,333

Released Movie Name 1st

Weekend US Gross

Worldwide Gross

Budget

6/23/1989 Batman $40,505,884 $251,188,924 $413,200,000 $35,000,000 6/19/1992 Batman Returns $45,687,710 $162,833,635 $282,801,937 $80,000,000

12/25/1993 Batman: Mask of the Phantasm

$1,406,291 $5,617,391 - -

6/16/1995 Batman Forever $52,784,433 $184,031,112 $335,000,000 $100,000,000 6/20/1997 Batman & Robin $42,872,605 $107,325,195 $237,300,000 $125,000,000 6/15/2005 Batman Begins $48,745,440 $205,343,774 $371,824,647 $150,000,000

12/31/2008 Batman Begins Sequel

- - - -

$916,340,031 $1,645,743,975 $490,000,000 $152,723,339 $274,290,663 $98,000,000

TotalsAverages

TotalsAverages

Movies: Spider-man vs. Batman


Management of Intangible Assets“Creativity”

Cross-Culture &

Cross-Boundary Market Research

• Freelancer• Designer• Drawer• Talent Storyteller

Product Segment+

Customer Segment

Pool of Talents

Database of

Story Resources

Network of

Talents

Matching Talents & StoryCreative StoryAdjustment


Sanrio (TSE: 8136)

Other Possible Targets (market capitalization):Takara-Tomy ($687MM)Bandai-Namco ($3,650MM)

Financing option: Treasury stockLBO

Sanrio Co. (TSE:8136)Library includes: Hello Kitty, Cinnamoroll Main lines of business: Strength: Licensing, Overseas Weakness: theme parks, toy merchandising

Note: (1) JAPA http://www.ppp.am/ppp_shiryou_data.html

Sanrio Financial Data(115 yen/$) MM Yen MM $USShare Price (4/25/2006) 1,785 15.52Market Capitalization(4/25/2005) 154,965 1,348Total Debt (12/2005) 39,983 348Revenue 102,400 890Operating Profit (2005E) 9,200 80Licensing Profit (2005E) 8,700 76Net Income (2005E) 4,700 41Estimated 2006 EPS 56.7 0.49Estimated 2007 EPS 51.1 0.44

RatiosD/E Ratio 1.28Estimated 2006 PER 31.48Estimated 2007 PER 34.93* Note: 2005E is fiscal year ending March 2006

Divisional Income statementOverseas sales# of characters


Marvel & Licensing industry

2005 2004 2003Net Sales 230.1 214.7 124.4Cost of sales 0 0 0SG&A 87.1 70 52.5Operating Income 143 152.7 83.2Margins 62% 71% 67%

59.0%

41.8%35.8%

19.3%

2005 2004 2003 2002

Estimated Revenues of Entertainment/Character Properties by Product Category (2004)

24%

14% 10.5%6.5%

Estimated Licensing Revenues by Property Type (2004) in $million (source: LIMA)


Major US Titles

Source: http://www.igda.org/online/IGDA_PSW_Whitepaper_2004.pdf


Source: http://www.dfcint.com/game_article/june03article.html

•By 2008 we forecast the usage of online games will be 35 billion hours a year

•PC pay revenue is the biggest revenue stream

•Pay revenue is money paid by consumers for subscriptions etc; ad revenue is money from advertising, sponsorships, e-commerce royalties etc

•even as usage and revenues from online games soars, profits are likely to be elusive. In fact, most companies in the online game market are likely to lose money over the next five year


Economics of Online games

There has been little or no correlation between the level of success and the size of the investment

Subscription revenues make for an attractive business case and are necessary to provide a return on the high costs of development and ongoing operations

if a game has over 100,000 subscribers it is not hard to realize 25+% net profit on subscriptions and if it is over 200k, 40% is possible. Conversely, a game of 50,000 subscribers may only have a 10% net profit.

Scale is clearly a significant issue in profitability, mainly because of the massive fixed expenses required to build, launch and run this kind of business

Budgets for online games range from $2MM up to $30MM and higherBy far the most common method for funding OL games is through publisher funding.

Indeed, most MMORPGs have been not only funded by publishers but also developed by their in-house studios

A small number of titles have been developed externally with Publisher funding, notably City of Heroes, developed by Cryptic Studios and published by NCsoft, and the Asheron’s Call games developed by Turbine and published by Microsoft.

A few developers have had success in raising substantial venture capital investments, notably: Linden Labs ($8MM Oct 2004), Turbine ($18MM Dec 2003, at least $10MM in earlier rounds), Mythic ($32MM 2003, at least $3MM in earlier rounds), There.com (over $30MM in various rounds) and Artifact Entertainment (at least $10MM in various rounds, including $5MM from NCsoft). Raising VC is extremely difficult, and most of the above developers had established their skills and credibility by working with publishers before raising capital


Revenue models

At present, and for the foreseeable future, the primary revenue source for persistent online games, at least in the U.S., is the monthly subscriptionSubscription pricing has increased steadily from the early days of the web.

Simutronics' play.net site was one of the early subscription-based models, charging $9.95/month in 1997. Ultima Online, launched in 1998, followed suit, also charging $9.95. Today, prices tend to range between $10 & $15 per month, with $14.95 seeming to be the most popular price point

Gaming audience, once they are already signed up to a game, does not appear to be particularly price sensitive. Indeed, it has proven possible to raise prices on customers without suffering substantial attrition; in 2001, Funcom and Mythic launched their titles at $12.95 per month, and in 2002, Sony Online Entertainment raised the monthly price of EverQuest from $9.89 to $12.95, with virtually no increase in customer churn as a result. Ultima Online and Funcom’s Anarchy Online raised rates as well.

Additional options:Revenue Generation from ServicesVirtual Goods Sales article in Economist


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