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Digital Media PropertiesDigital Media Properties Lessons from Social Games to Monetize their Fanbases Nima PourshasbVP, Strategy & Corporate Development [email protected]
December 1st, 2010
Live Gamer OverviewLive Gamer Overview
Micro‐transactions: Complete solution for virtual goods and digital content e‐
commerce Billing & payments, virtual currency & e‐wallet, storefront, merchandizing, analytics, player‐to‐player trading Offices in NYC, Palo Alto and Seoul 90 publishers, 150 titles l 2 Focus on online games. Now moving to other digital entertainment
Digital Entertainment MT opportunity is still nascentnascent
US Digital Media & Entertainment g will be $134BNby 2014 (PWC) Music Sports TV/CablePrintMusic, Sports, TV/Cable, Print Any IP with fan base community Now at inflection point with respect to microtransactionsand virtualgoodsvirtual goods 8 lessons digital media properties 3 have learned from observing social gaming
1. They like what they see...1. They like what they see...
Economics
‐ Revenue run rate
‐ COGS of virtual goods f $‐ Upfront investment: $120K to develop Farmville
‐ Deriskinga content business Accretive revenue stream Existing revenue streams are struggling Source: Barclays Capital 2010
...and they know they need to move in that direction direction Digital transition continuesg
2. Don’t need to make the “next Farmville”2. Dont need to make the next Farmville
Initial wave of M&A activity targeted at purchasing game developers
‐ Disney buys Playdom ($763MM)
‐ Warner Brother buys Turbine
‐ MTV buys Social Express Light game mechanics and dynamics “Gamify it and they will come...and they will stay...and life will be better” Source: BunchBall
6 better
3. Their fan communities already display behaviors that drive virtual goods commerce behaviors that drive virtual goods commerce... ‐ Competition: Who is the biggest fan?
‐ Gifting / enhanced communicationg/
‐ Self‐expression
‐ Insatiable demand for content 7... and the social gaming framework fits directly into the online fan community experienceinto the online fan community experience EASY TO PAY COMMUNITY COMPETITION CLEAR GOALINSTANTGRATIFICATION S SSUPER USER THE 1% THAT PAYS SOCIALIZE SELF-EXPRESSION 8
4. They already have the whales & the super usersusers
Already invested in: user acquisition, user retention, engagement, transition from passive to active to paying Whale: Bonjovi VIP package: $1,750j p g $ , Conversion to paying users > 1‐5% 9
5. They have high quality content
Archive libraries, cut scenes, behind‐the‐scenes, interviews Content is dynamic: e.g. sports y g p results, tours, new albums, new editions, new season
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6. They get e-commerce
Merchandizing & sales optimization Importance of payment methods Familiar with reporting challenges (e.g. artist royalties) 11
7. They really like earned virtual currencies Strong incentive rewards for fans Long list of desired behaviors 12
8. They know that fans will follow them to the experienceexperience
Marketing channels: Email groups, fan websites, PR, events Interaction with the IP is significant g part of the experience
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New wave in MTX: Monetization of fanbases Just starting Opportunity for entire social gaming ecosystem: gamification, microtransactions, virtual goods, game design and development, , g ,g g p , advertising Importantimplicationsonmarketsizeanddefinitionofsocial gamingImportant implications on market size and definition of social gaming 14
Thank you! Nima PourshasbVP Strategy & Corporate Development 15
VP, Strategy & Corporate [email protected]
