1. Digital Media Properties
Lessons from Social Games to Monetize
their Fanbases
Nima Pourshasb
VP, Strategy & Corporate Development
December 1st, 2010
npourshasb@livegamer.com
2. Live 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
Focus on online games. Now moving to
l
other digital entertainment
2
3. Digital Entertainment MT opportunity is still
nascent
US Digital Media & Entertainment
g
will be $134BN by 2014 (PWC)
Music, Sports, TV/Cable, Print
Music Sports TV/Cable Print
Any IP with fan base community
Now at inflection point with
respect to microtransactions and
virtual goods
virtual goods
8 lessons digital media properties
have learned from observing social
gaming
3
4. 1. They like what they see…
Economics
‐ Revenue run rate
‐ COGS of virtual goods
‐ Upfront investment: $120K
f $
to develop Farmville
‐ Derisking a content business
Accretive revenue stream
Existing revenue streams are
struggling
Source: Barclays Capital 2010
5. …and they know they need to move in that
direction
Digital transition continues
g
6. 2. Don’t need to make the “next Farmville”
Don t 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 Source: BunchBall
they will stay…and life will be
better
better”
6
7. 3. Their fan communities already display
behaviors that drive virtual goods commerce
commerce…
‐ Competition: Who is the biggest
fan?
‐ g/
Gifting / enhanced communication
‐ Self‐expression
‐ Insatiable demand for content
7
8. … and the social gaming framework fits directly
into the online fan community experience
EASY TO PAY COMMUNITY COMPETITION
INSTANT CLEAR
GRATIFICATION GOAL
SUPER USER
S S
THE 1% THAT PAYS
SOCIALIZE SELF-EXPRESSION
8
9. 4. They already have the whales & the super
users
Already invested in: user acquisition, user retention,
engagement, transition from passive to active to paying
j p g $ ,
Whale: Bonjovi VIP package: $1,750
Conversion to paying users > 1‐5%
9
10. 5. They have high quality content
Archive libraries, cut scenes,
behind‐the‐scenes, interviews
y g p
Content is dynamic: e.g. sports
results, tours, new albums, new
editions, new season
10
11. 6. They get e-commerce
Merchandizing & sales optimization
Importance of payment methods
Familiar with reporting challenges
(e.g. artist royalties)
11
12. 7. They really like earned virtual currencies
Strong incentive rewards for fans
Long list of desired behaviors
12
13. 8. They know that fans will follow them to the
experience
Marketing channels: Email groups,
fan websites, PR, events
g
Interaction with the IP is significant
part of the experience
13
14. 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
Important implications on market size and definition of social gaming
Important implications on market size and definition of social gaming
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