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REAL VALUE FROM VIRTUAL GOODS
Ravi MehtaVP, Publishing - Viximo
[email protected] - Emailwww.virtualgoodsinsider.com - Blog
Proprietary & Confidential
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WHAT IS A “VIRTUAL GOOD”?
Proprietary & Confidential
VIRTUAL GOODS INDUSTRY
As virtual goods evolve, they’ll grow to include all digital media including music and video
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VIRTUAL GOODS ARE GENERATING VERY REAL REVENUE FOR PIONEERING COMPANIES
Proprietary & Confidential
VIRTUAL GOODS INDUSTRY
China’s largest Internet portal generates 65% of its $500M revenue from virtual goods
Korea’s Facebook generates $160M revenue annually – entirely from virtual goods
Facebook’s Gifts service has generated $15M since February 2007
The youth oriented dating site generates 40% of its revenue ($6-7M) from sale of virtual flowers at up to $10 per flower
This virtual world with over 75 million users globally generates $60M annually from virtual goods
This niche social community for pet owners has had over 50 million giftings by its 500,000 users since its gifts program started 2 years ago
NORTH AMERICA EUROPE ASIA
In 2005, this Korean gaming giant report ed $230 million in revenue with 80% generated by in-game items
MindArk’s virtual world, Entropia Universe, holds the 2008 Guinness World Record for “Most Expensive Virtual Object”, a space resort that was sold for $100,000
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WHY DO PEOPLE SPEND REAL MONEY ON STUFF THAT ISN’T “REAL”?
Proprietary & Confidential
VIRTUAL GOODS INDUSTRY
1. A $100 bottle of Diaka Vodka which is colorless, flavorless, and made from $2 in grain
2. A $97,500 Piaget watch that contains a few ounces of precious metal and tells time (less accurately than your cell phone)
3. A $100,000 piece of “virtual” real estate that can be traded on a highly liquid market and generates a 20% annual return (2x most stocks)
POP REALITY QUIZ
POP REALITY QUIZ Which of the
following is most “real”?
A Stanford University research study has shown that people aren’t wired to distinguish between “real” world stimuli and digital stimuli:
Study participants showed the same tendency to smile back regardless of whether smiled at by a real person or a digital avatar.
Study participants felt the same feelings of elation when receiving a physical gift and when receiving a “virtual” gift.
Can’t relate? Put yourself in the shoes of someone who spends 20-50% of her waking hours immersed in an online community. How real and tangible would that community be to you?
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WHAT VALUE DO PEOPLE GET FROM VIRTUAL GOODS?
Proprietary & Confidential
VIRTUAL GOODS INDUSTRY
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VIRTUAL GIFTS PROJECT THEIR VALUE ONTO SOCIAL GESTURES AND ENRICH COMMUNITES
Proprietary & Confidential
VIRTUAL GOODS AND SOCIAL NETWORKING
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CASE STUDY: DOGSTER
Proprietary & Confidential
VIRTUAL GOODS AND SOCIAL NETWORKING
• Members spend between $0.25 and $4.00 to send virtual gifts• Dogster’s 500,000 mainstream members have sent over 50 million gifts
in the past two years• Gifts sent for friendship, support of sick/dying pet, acknowledgement of
community contribution, to reciprocate for gift given, “just because”