1. Creating value out of virtual goods
Simon Guild
Chairman, Bigpoint

2. Introduction - Bigpoint
The Company The Figures
Founded 2002
Number of Employees 550+
Concept
Free-to-Play (F2P) browser
Optional premium services on demand
Locations
Hamburg, Germany
Berlin, Germany
San Francisco, USA
São Paulo, Brazil
Malta
60 active games, 30 languages
More than 150 million users
250,000 registrations per day
Awards Winner
Best Gaming Portal 2010
Best Browser Game 2010
International Business Award 2010
Deloitte Rising Stars 2009
European Business Award 2009
Best Gaming Website USA 2009
MTV Games Award 2009

3. What is a virtual good?
Virtual goods are non-physical objects
that are purchased for use in online
communities or online games.
They have no intrinsic value and, by
definition, are intangible.
[thanks to wikipedia]

4. On the 14th of December 2009 the
Crystal Palace Space Station was listed
on public auction and in later that month it
sold for 3,300,000 PED which is equivalent
to $330,000 USD. The winning bidder
was Erik Novak aka 'Buzz Erik
Lightyear' from Canada. Buzz is already
well established in Entropia as one of the
most skilled crafters. He owns and supplies
a chain of department stores across Planet
Calypso. Owning the Space Station means
he will now earn tax when players mine and
hunt in the station.

5. Source: comScore
Why focus on games?

7. Subscription vs. Micro-Transaction
Caps total revenue by
a)excluding those unwilling to
commit to recurring revenue
b)Limiting those willing to pay
more.
Subscription
Price
Quantity
Demand
Maximize revenue by
perfectly aligning demand
with consumers marginal
willingness to pay
Price
Quantity
Demand

8. The 10% Rule
USERS REVENUE
10% of users Generate
80% of revenue
15% of users
Generate
15% of revenue
75% of users
Generate
5% of revenue

9. The 10% Rule: Transaction ROI
$2 Item $5 Item $10 Item $20 Item $50 Item $75 Item $100 Item
Revenue
TransactionVolume

10. The 10% Rule: The Standard Model
Total Views Registrations Active Pay Heavy Pay
10 % 10 % 10 % 10 %

11. Description User $
Revenue $100,000
Customer lifetime must be > 9 months!
The 10% Rule: Example
ARPPU $10
Paying User 10,000
Active User 100,000
Registration 1,000,000
Visitors 10,000,000
CPC $0.10
Cost per Lead $1
Cost per Paying User $100
Profit ??? -$900,000
Total Costs $1,000,000

12. So how does this
actually work
(traditionally)?

13. 1. Importance
2. Impatience

14. Importance: I want better kit

15. Impatience: get me to level 8 now!

16. So how does this
actually work (in
a social world)?

17. 1. Vanity
2. Self-Expression
3. Gifting
4. Socializing
… because Social Context provides meaning and emotion

18. Vanity …

19. Self-Expression …

20. Gifting …

21. Socialising …

22. • Virtual Goods evoke real emotions…
… in a well-understood social context
• Virtual Goods enable self-expression…
… and enhance social activities
• Virtual Economies drive ongoing use…
… and turn a game or website into a service

23. So let’s go back
to the real
world

24. Product
Price
Promotion
Place
The traditional marketing mix

25. Product, Price …

26. Promotion …

27. Distribution …

28. Distribution …

29. Distribution …

30. So how do we
create value?

31. Game
Mechanics
Social
Context
Marketing
Mix
Value

32. For additional information contact us!
BIGPOINT GmbH
Christoph-Probst-Weg 3
20251 Hamburg
Germany
Tel +49 40.88 14 13- 0
Fax +49 40.88 14 13- 11
BIGPOINT Inc.
2 Bryant Street
Suite 220
San Francisco, CA 94105
USA
Tel +1 646.350 0860
Fax +1 646.350 0863
info@bigpoint.net
www.bigpoint.net