Virtual Goods Summit coverage

Great coverage of the Virtual Goods Summit by 3pointD.

From 3pointD:

Virtual Goods and Entertainment

"Panelists:

Jim Greer of Kongregate
Erik Bethke of GoPets
Sean Ryan of Meez

Charles: What motivates people to stay engaged, and how do virtual goods play into that?

Ryan: For us it’s about self-expression. When our users spend 4-6 hours online, self-experssion as they show themselves in their IM, in their blogs, in the game, is incredbly impoertant to them. Our most loyal users are female. Unlike in Second Life, where they routinely blow up the American Apparel store, it has to be a conscious choice to engage with the brand. We find our users actually associate with brands. "

The Next Big Business Model

"Panelists:
Tim Stevens of Doppelganger
Kevin Effrusy, general partner with Accel Partners (investor in Facebook)
Dan Kelly, CEO of Sparter
Min Kim of Nexon

Susan: How do you guys estimate the size of the overall virtual goods market?

Dan: It’s easily a billion dollar [secondary] market. Consumers have told us these things have value, the industry now is trying to reconcile that with their business model.

Susan: These are big numbers. Why aren’t more content developers and producers looking at this as a viable business model?

Kevin: If I had a startup doing that kind of revenue on virtual goods, I’d be ecstatic. It’s incredibly high-margin, you have no cost of sales and no sales force associated with it."

Why Virtual Goods Matter

"Panelists:
Craig Sherman of Gaia Online
Daniel James of Three Rings
Amy Jo Kim of Shufflebrain
Byron Reeves of Stanford University and Seriosity

Reeves: The human brian is not specialized to differentiate between virtual and real. Same neurons fire when an avatar smiles at you as when a real person smiles at you. Seriosity is looking at what happens when you create an opportunity to do serious things with virtual currency attached, such as sending email messages with virtual currency attached. The result? You open the email faster when currency is attached. Virtual money changes real behavior."

KartRider

"Min Kim of Nexon gave a presentation at the Virtual Goods Summit and said the company would probably announce the release of its KartRider in the US soon, which has been in closed beta. Kim also said Maple Story has been “kicking ass” in the US, with 3.5 million registered users. The company is also introducing prepaid cards at Target that can be used to buy virtual items, which it expects will push up sales as well. It also just released Audition, which already has 100,000 registered users, more than half of them female."

NeoPets:

"Kyra Reppen of Neopets gave a presentation at the Virtual Goods Summit on MTV’s Neopets. Like other MTV presenters before her, she began her presentation with a video. Perhaps the most interesting part, though, was about the new NC Mall that Neopets will introduce in beta next week.

It’s about customizing and self-expression. It’s complementary to the Neopoints economy, no exchange between the two. Themed items around Neopian events. Launching with PayPal. Why do we think this is going to work? Digital is real life for this audience. Technology is invisible. Emotional connection makes the pixels go away and it’s about these experiences.

Virtual worlds and virtual economies are simply applications to achieve those four core goals: fun, self-expression, social needs, and control. Kids ages 6-14 have $60 billion in income."

Tencent

"David Wallerstein of Tencent began the Virtual Goods Success Stories panel at the Virtual Goods Summit with a presentation, mostly to demonstrate what Tencent is doing in China: Chinese Internet penetration is only 10.5 percent. Wireless is 35.2 percent. Roughly 40 percent of Internet usage in China takes place in Internet cafes. Tencent currently has more than 4,000 employees, with roughly 30 percent R&D staff. Tencent has five leading online platforms:

• QQ.com is the #1 portal in China
• QQ games portal is the #1 mini casual games portal in China
• QQ IM, #1 IM service provider in China
• They also have a leading wireless portal
• Qzone, the #1 blog site / MySpace in China"

Susan' Wu's Virtual Goods Summit

Virtual goods equal real profit.

From Susan's blog:

"Virtual goods and virtual currencies are growing beyond their traditional roots in online gaming and beginning to exert growing influence on the development of social networks, community sites, and casual games. This growing influence is due in large part to the fact that consumers have shown a willingness to embrace virtual goods as a way to express themselves online. From pets to coins to avatars, virtual goods are becoming a real opportunity for companies who are looking to build more engaging online experiences:

• Neopets users have created over 206 million virtual pets
• Tencent has over 250 million active users in China and generated $100+ million in Q1 2007, 65% of their revenue comes from virtual goods and services
• Nexon generated $230 million in 2005, 85% of which came from virtual item sales
• Habbo Hotel has over 75 million registered avatars in 29 countries, 90% of their $60 million+ yearly revenue comes from virtual goods
• Gaia Online does over 50,000 person to person auctions a day - making them the 3rd largest auction site on the Internet. Their average user consumes 1200 page views a month.

We encourage you to join us at this year’s event and participate in what promises to be an exciting and lively conversation around some of the key questions facing the virtual goods market today:

• How will virtual goods and virtual currencies impact social networking?
• Are virtual goods the next big business model?
• What does it take to successfully launch a virtual goods offering?
• Are virtual goods poised to go mainstream?
• What does it take to nurture and develop a successful virtual economy?
• Why are users embracing virtual goods?

Susan Wu's Web3D

Susan's all keyed up after SXSW and has another great post today. Its a "part one" post so jump on board and follow along!

From the post:

"Here’s how I see the evolutionary arc of the online user experience:

Web 1.0: Information Sharing
Web 2.0: Interaction
Web 3.0: Immersion

What are the implications? We are moving from web pages to web places."

The Importance of Avatars

Susan Wu was on a panel about Avatars at SXSW. She took good notes.

From the post:

"7. Why avatars are important:

There are going to be a bazillion virtual worlds coming online in the next several years. Every major media company is going to try to port all of their brands into some sort of virtual 3D environment.

These may be poorly designed, inferior products, but they are going to have the very real, very important impact of training the consumer to think about virtual worlds in a certain way. As product designers, we can help inform these big media brands who want to foray into virtual worlds."

Susan Wu on Second Life Open Source

Susan takes a long look at the recent open source announcement for Second Life.

Beneficial developments:

• "Reducing the engineering/QA costs at Linden Lab.
• Mashup style applications, like widgets for MySpace.
• Improved graphics.
• Better support for third-party building tools.
• Accessibility by new audiences.

Challenges:

• Revenge of CopyBot.
• Dying Netscape’s Noble Death?
• Building Babel?"