[Excerpt From Think Equity Report]
Think Entertainment: Gaming
Virtual Goods: An Interview With The Founder And
CEO Of Live Gamer
We had a chance to speak with Mitch Davis, the founder and CEO of Live
Gamer, one of the leading payment and ecommerce solution companies for
virtual economies serving more than 85 million users. The company sees
payment solutions as a commodity business and ecommerce suite (analytics,
merchandising, item management, and marketing) as much more valuable,
given its ability to drive up conversion rates and ARPPU for publishers. The
company is seeing a strong interest in the micro-transaction model from
traditional media companies (newspaper, TV, and films) to monetize their
content, which could significantly expand the market opportunity, which at
present seems to be largely focused on online gaming.
Live Gamer is one of the leading payment and ecommerce solution
companies for the virtual economies, akin to an SAP for real goods business,
according to Davis, powering 85 virtual economies and serving over 85
• The company is focused on online gaming but is seeing strong interest from
traditional media companies like newspaper, magazine, television, and film
studios in adopting a micro-transaction model to monetize their existing
• According to Davis, the size of the online gaming market could be about $15
billion, and assuming a 7% take-rate, the market for ecommerce and
payment solutions could be about $1 billion currently and could grow to about
$2 billion in the next three to five years. Including the emerging opportunity
from the traditional media space, the addressable opportunity could grow to
about $3 billion over the next three to five years, according to the company.
Download the full report
Virtual Goods News recently caught up with Live Gamer’s president, Andrew Schneider to talk about likely trends of 2010 in microtransactions and virtual goods.
Here’s what he had to say…
To read the entire visit, Virtual Goods News
Virtual Goods News: What do you see happening with free-to-play business models in the immediate future?
Andrew Schneider: Free-to-play models will become king online and on mobile, with revenue coming from microtransactions. We’ll also start hearing hype around the first free-to-play console title.
VirtualGoodsNews: What company do you think will have the most impact on virtual goods in 2010?
Andrew Schneider: Apple will open the door for virtual currencies and virtual goods sales on the iPhone and iPod Touch via the App Store. Over $100 million in virtual goods will be sold within the App Store economy in 2010 alone, with overall virtual goods sales rivaling overall iPhone app sales.
VGN: What impact do you see microtransactions having on total mobile revenues?
AS: Mobile microtransactions will reach 20% of mobile revenues. The introduction of microtransactions through the iPhone App store will be a major influencer here.
VGN: Do you see any innovations coming in the ways publishers use virtual goods?
AS: Multi-purpose, cross platform item use will become commonplace. For example,
single items may have functional use in games or virtual worlds, but then also be used outside of that context — in user profiles or other social display outlets on multiple platforms.
VGN: Where do you see brands fitting in to 2010′s virtual goods picture?
AS: Brand licensing will increase, both for free-to-play games and for virtual goods inside games, social networks, and virtual worlds.
VGN: Do you see publishers trying to monetize virtual goods differently in 2010?
AS: Publishers will focus on an integrated approach to revenue that expands beyond monetization of the “super-user,” with a targeted combination of virtual goods, virtual currency and advertising.
VGN: Do you see traditional media companies adopting a microtransaction-oriented business model?
AS: Traditional media companies will increasingly mirror the virtual goods market in social gaming for monetization. The first major move to this will occur when Google starts charging for content.
Originally Published By Industry Gamers. Article by Nima Pourshasb and Laura Brown
The micro-transaction model is a proven and reliable business model for online gaming, virtual worlds, social networks and other virtual environments. Stemming from Asia, the use of micro-transactions is beginning to flourish in Western markets; over half of all MMOGs launched in Western markets use a micro-transaction model and these revenues are increasing at a faster rate than subscriptions, according to Nick Gibson at casualgaming.biz.
Shanda is a virtual environment provider who switched from a pay-for-time model in 2006 to free-to-play supported by micro-transactions. At the India Gaming Summit 2007, Desmond Lu from Shanda said that the change in business model had escalated the traction to the site several times over.
The following are a list of some of the success stories that are testament to the strength of the micro-transaction model.
View Data and Insight From
Habbo, Weeworld, Clun Penguin, Zygna, Playdom, Gaia, Whyville, TenCent, Kart Rider, SGN, and Maplestory