Money for Nothing:User-Generated Virtual

Goods

Cary Rosenzweig, CEO, IMVU Inc.May 5, 2010

Web 2.0 Conference

An online community where members use3D avatars to meet new people,

chat, create and have fun with friends

Agenda

• IMVU

• Virtual Goods

• Key Learning

Company Overview

• Founded in 2004

• Based in Palo Alto, CA

• 90 employees

• 3 institutional rounds

• $30M raised

Snapshot

• 3D avatars

• 50M+ registered users

• 10M+ uniques/month*

• User Generated Content

• 4 Million Items in Catalog

*Source: Quantcast, global

Cumulative Registrations

Millions

April ‘10Jan ‘06

2009 Results

2009•Raised $10 million in January, led by Best

Buy Capital

•Doubled revenue to $22 million in calendar 2009

•Became profitable and cash flow positive

Attractive Demographics

70% Female

60% 18+ years old

60% USA

User Generated Content

4 Million Virtual Items

April 2004

April 2010

2010 Outlook

2010•Double revenue again to $44 million

•End year at $60 million annualized revenue run rate

• Invest profits into hiring… from 60 to 120 employees

•Extend reach beyond English- and PC-only

•Begin pivot… Virtual World to Social Entertainment

•“From Dress Up to Level Up”

•Game Mechanics

•2D and 3D Games

Virtual Goods

13

Thanks to PlaySpan & VGMarket Survey (n=2,425; 7/09)

http://corp.playspan.com/pressroom.html

“Free to Play” Leads the Way - %

14

Thanks to PlaySpan & VGMarket Survey (n=1,736; 7/09)

http://corp.playspan.com/pressroom.html

“Free to Play” Leads the Way - $

What are Virtual Goods?

Digital Items with Contextual Meaning

(A) Functional Virtual Goods

(B) Decorative Virtual Goods

Why Virtual Goods?

1. Enhance Game Play (kill more, run faster)

2. Express Your Identity (dress up, decorate)

3. Build Relationships (gifts)

4. Shop (browse & buy)

SOCIAL CONTEXT Provides Meaning & Emotion

Key Learning

It’s all about community

Key Learning

Virtual goods are consumer products Payment options must be flexible UGC is hard

Patience is a virtue

Q & A