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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?
Good bye and stay tuned.
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In the last week a lot of stuff was written about the Facebook gifts. First Lightspeed Venture Partners published a home made analysis, where Jeremy Liew showed, that the sales figures of the Facebook gifts are growing. Mashable!, Venture Beat and Virtual Goods Insider picked up the same topic afterwards and released own articles in their blogs.
A really good article came from Nick O´Neill in All Facebook – the unofficial Facebook blog. He pointed out, that the reason for the growing sales figures of Facebook gifts is the growth of the user base of Facebook.
“So what’s the prime reason for gift growth on Facebook? The company’s rapid growth in their user base. The company has more than doubled since Jeremy Liew published the company’s findings back in January. This means that the rate of gifting appears to be staying pretty consistent.”
Another really good article in that context came from Vili Lehdonvirta on Virtual-enconomy.org. He reported, that the biggest daily in Finland had a full page devoted to virtual consumption. He attached a snippet of one of his papers, where he points out a very interesting aspect of consumption in general.
“One strategy is to note that everywhere in our economy, goods have a social life beyond their physical qualities.”
This applies also to the Facebook gifts. It is not about paying 1 $ for this little pictures, it is about showing your friend how much he/she is worth for you.
All this makes me believe, that virtual goods in social networks can be really successful. The future will show, how much the users are willing to pay for virtual goods.
Good bye and stay tuned.
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Sean Ryan from Meez gives a convincing answer why virtual goods and social networks are a good combination:
The best reason for them to pay is that in an SNS, which is really about people interacting with each other, the #1 goal is STATUS – how can I be different, better, have more authority, etc, and most importantly, how can I impress those around me with that status? It’s so basic, and is sometimes overlooked. It’s not about getting loyal users to pay for premium services like Music since those are generally solitary services which don’t take advantage of a social network filled with people checking each other out. It can be as basic as a virtual gifting system, and as sophisticated as a fully built-out virtual item marketplace. The “online bar” FUBAR is probably the most developed in the US, with a relentless focus on getting users to pay to impress members of the opposite gender, or to somehow benefit the group through happy hour sponsorship, but there are numerous other examples emerging.
Read the full article: SharkJumping: The Social Network Service Quest for Premium Revenue = Virtual Items
Thanks to a posting from Bret I discovered the following article:
In April, Viacom’s Paramount Digital Entertainment signed a partnership agreement with Makena Technologies, making thousands of movie clips from the Paramount movie library available on There.com, an online virtual world. Visitors who purchase the clips can use them to communicate with others by having their avatar “speak” lines from movies while the actual clip plays in a small window. Links allow users to purchase DVDs of the featured movies.
Read the full article: Movie Studios Expand Into Virtual Web Worlds
Selling virtual goods within a virtual economy isn’t a trivial accounting task – that’s why we seek for a snart CFO. This blog posting explains the problems with accounting virtual goods:
Last week’s Game Developer’s Conference put the limelight on the rapidly growing game industry, but it also highlighted a significant pain point – virtual good sales create very real accounting issues for successful virtual worlds and MMORPGs.
Read on: Virtual Goods = Real Accounting Issues « Virtual Goods Insider
