During the past months, our trainee Matthias analyzed the virtual goods market, especially in the area of social gaming, social networks and virtual worlds. Today, SnipClip announced at the GamesBeat conference, where Oliver will pitch for SnipClip at the Who’s Got Game competition, that it will publish the results. The press release highlights some interesting insights:
On my search for revenue numbers from virtual good sales I stumbled many times across the figures of Tencent. Yesterday for example, I watched the presentation of Susan Wu on the Le Web conference. She mentioned that Tencent has revenues of $1billion and 70% come from sales of virtual goods. I doubt that this figure is true.
Let´s have a closer look.
I think the number is derived from the press releases of Tencent. In 2007, Tencent published that they generated $344.1M revenues from their Internet value added services (that is 65% of their $523.1M total revenues). In the three of four quarter results of 2008 (1st, 2nd and 3rd) Tencent announced that they generated $644.1M revenues from their Internet value added services (68% of their $943.1M total revenues)
The question is: what are these Internet value added services? Tencent aggregates QZone, QQMembership, QQShow, QQMusic and QQLive in their Internet value added services. I doubt that all of these services have revenues from virtual goods. I am also confused that Tencent´s instant messaging services are not included in the Internet value added services. According to Susan Wu the most virtual goods revenues of Tencent come from the instant messaging services.
In my opinion it is unclear how much of Tencent´s revenues are generated from virtual goods. What do you think? Am I missed something here?
On my search for more figures from virtual items sales in social networks or virtual worlds I got in contact with Vili Lehdonvirta from virtual-economy.org. I am so happy, that he and his colleague Juho Hamari started an own forum-thread on virtual-economy.org, where everybody can share revenue data and other metrics of virtual asset sales market.
This is a really good start and I hope, this can be a central point of metrics of the virtual asset sales market.
We already blogged about the size of the virtual goods market. There are no real numbers, but different estimations. Here’s another one from a scientific institute:
Many people of a certain age may consider such gifts a waste of their hard-earned and very real money. But not so a growing number of tweens and teens as well as 20- and even some 30-somethings, who spent around $2.1 billion in 2006 on virtual goods and services, according to researchers at Finland’s Helsinki Institute for Information Technology (HIIT).
On Netzwertig I found a survey about the future trends on the Internet. 51 media experts were interviewed, in which direction the Internet is developing during the next few years. The market research instituts AGOF, IVW and INFOnline presented the results of the survey on the OMD – a fair for digital marketing.
One trend on the Internet is paid content. Here are some selected facts:
1. Social networks have problems with the montetization
2. Paid content as a future trend
3. Paid content as one of the three future business models
Probably everyone in the web industry knows this book: The Long Tail by Chris Anderson (a.k.a. the founder and editor in chief of Wired a.k.a. the magazine of the new economy). I don’t like to summarize the content here – Wikipedia has a fine summary. And there is also a website, i.e. a blog. In short terms, the long tail are the niche markets that are growing thanks to the Internet. If you didn’t read the book yet, read it!
Michael Arrington from TechCrunch asks: “Is there a future for local startups?”. His answer: “No.”. His advices (I marked those statements bold which were most enlightening to us):
Think global as you create the business
Move to Silicon Valley
Create an original product: new and different
Do not create a copycat, unless your goal is only to get acquired
Try to raise funds from world-class VCs
Hire people from all nationalities as much as possible
Register your domain names in the key countries you are interested in (and the large ones you are not interested in)
Protect your brand Worldwide
Make a site that is language ready day one, even if you launch in English
gather an international community since day 1
Talk to the most active members of the community to help you understand their market and become evangelists there
Create an application that lets your community translate the site by themselves
Languages are not the same in all the countries they are spoken
Do not think that Europe is the U.K.
Manage costs properly
Never do a 50/50 deal with anyone
Do key partnerships with large local players
Never trust that if the partner is large your service will be a success
