Facebook shares new documentation for local currency pricing, sets migration for Q3

creditsFacebook today provided updates regarding its transition from Credits to local currency pricing. The company offered new documentation for game developers and announced that migration will occur in Q3 this year.

Facebook decided to phase out Credits in favor of a user’s local currency — dollars, pounds or yen, for example — in June 2012. This allows the social network simplify the purchase experience and give developers more flexibility. Developers will be able to set more granular and consistent prices for non-U.S. users and price the same item differently on a market-by-market basis, as opposed to pricing their virtual goods in $0.10 USD increments as was required when Credits became mandatory in July 2011. This also eliminates any confusion that resulted from users trying to think about conversion rates for dollars, Credits and in-game currency.
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27M users bought virtual goods using Facebook Payments in 2012; Zynga’s influence on revenue further diminishes

gamesApproximately 27 million users bought virtual goods using Facebook Payments in 2012, up from 15 million in 2011, according to a document the company filed with the Securities and Exchange Commission today.

Facebook generated $810 million in payments revenue in 2012. CFO David Ebersman said only $5 million of that came from sources outside of games, such as Gifts and user promoted posts. Overall, payments and other fees revenue in 2012 increased $253 million, or 45 percent, compared to 2011, despite close to doubling the number of users buying virtual goods.

That could be because of Facebook’s promotions to get more users spending money in games. Although the volume of paying users increased, it the amount new payers spend could be much less than other players. Another factor could be growth in international markets. Facebook says 51 percent of its revenue from marketers and developers based in the United States, compared to 56 percent in 2011. This figure includes advertising revenue as well, but international developers are increasingly finding success on the social network and the overall number of international users is growing much faster than in the U.S.
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Joy Ride to be First Freemium Game for Xbox Live

Joy Ride ScreenshotDuring the E3 conference this summer, we talked extensively about the increasingly social elements of Microsoft’s Xbox Live and its transformation into a budding social space reminiscent of a PC networks. Back then there was the mention of freemium games on Xbox Live with a game called Joy Ride. Well, it looks like things are becoming official for Joy Ride as Microsoft recently announced the coming launch of the freemium title, slated to appear during the 2009 holiday season.

In interviews with Gamasutra, Shane Kim, Microsoft’s Corporate VP of Strategy and Business Development talked about the possibility of PC-oriented companies developing a freemium market for Xbox Live. However, since the platform is not a completely open-system, like the PC, developers would have to determine if producing games for Live would be “worth the economic trade-off.” Joy Ride developer, Big Park, will be the first to try to test those waters.

Joy Ride Screenshot 2In a nutshell, Joy Ride is a fairly simple racing game where up to eight players will be able to participate in stunt races using their Xbox Live avatars as drivers. Also, since the game is classified as “freemium,” it is, of course, free to play, but will be monetized through the selling of virtual goods, such as cars, custom parts, avatar clothing, and more game content.

As far as social mechanics goes, Big Park has also said that the game will incorporate your standard leaderboard systems as well as the voice chat that Xbox Live utilizes for most of its existing games. Furthermore, they have stated that they will continue to add new content over time such as new game modes, new race tracks and something dubbed “huge community tasks.”

Though all of this is indeed interesting, the biggest point to take home is that this is a test for both Big Park and Microsoft. Of course, it isn’t the first “test” that we have seen involving the marriage of mainstream and social concepts. The most prominent one that comes to mind is The Sims 3 on iPhone. That, too, was considered a “test” by Electronic Arts, and was intended to see if highly polished iPhone games would be worthwhile. Also, let’s not forget other mainstream developers, such as Ubisoft, delving into similar spaces and the handful of others currently dabbling in virtual goods. Nevertheless, and unlike said examples, this “Joy Ride test” is the first one to apply to a traditional, home video game console — a type of platform that has almost always been mainstream and focused around hardcore gamers.

Digital Chocolate Creates New Virtual Goods Platform

logo_digitalChocolateBack in May, Trip Hawkins, founder of Digital Chocolate (not to mention Electronic Arts), made the comment that the way to monetize iPhone games was with virtual goods. Well, it looks like that statement has taken life, as the company has just announced the creation of a new virtual goods platform and game project, NanoStars.

What is most curious, however, is that NanoStars does not look to feature virtual goods in the traditional sense (weapons, furniture, clothing, etc.). The project is slated to revolve around 100 virtual characters that people can buy and use in a myriad of games titles, the first of which, NanoVerse Castles, is scheduled for release in Q4 of this year.

According to Hawkins’ statements to ME, the project will be cross-platform (likely iPhone and Facebook) in order to encompass a greater breadth of users as well as increase the variations of purchasing methods (i.e. credit cards, the Apple App Store, carrier bills/subscriptions, and offer completion). However, what is most curious about the announcement is that the virtual goods are described as “living, breathing life forms.”

As was said, each good will be a character, but it is the objective of Digital Chocolate to have players form a sort of “relationship” and connection with the ones they buy. As such, the goods have been conceptualized as pop culture and historical references such as Octomom, “IDidNotInhale,” and Robin Hood. Furthermore, each character will encompass different benefits for each NanoStar game.

NanoVerse Castles makes for a good first example. For clarity’s sake, it is a card game, and based on the ME post, using a character — say, Robin Hood — in the game will allow a player to exchange a low card of their’s for a high card of the opponent. However, Robin might equate to something else in a different type of game, such as unlocking a better player in a sports game, or becoming a cool piece of furniture or weapon in another.

Currently, Digital Chocolate has not revealed any specifics beyond initial announcements, so it is unknown as to which platform NanoStars will first appear on. Nonetheless, Hawkins says that this idea has been a long time coming and is leveraged off of the publisher’s earlier games, DChoc Café and Party Island, so whichever platform it releases on, you can bet it’s going to be successful.

Mainstream Games Companies Buying More Virtual Goods

Digital_Goods_By_GenreFounder of both Electronic Arts and a relatively new mobile start up, Digital Chocolate, Trip Hawkins has said that the way to monetize iPhone games was with virtual goods. However, if recent data has taught us anything, growth isn’t just limited to the mobile space. On the contrary, free to play virtual goods revenue models are being seen more and more across the board; be it iPhone, PC, Xbox, mainstream, or casual. Of course, we have covered many of these before, but what we haven’t looked at closely is just how many mainstream developers are going this route.

Virtual goods in the US were worth roughly $265 million this year, according to Piper Jaffray (an estimate we think is very low) but around $5 billion in Asia, according to +8* | Plus Eight Star. So the concept is proven elsewhere and growing here.

Electronic Arts has been one of the most prominent behemoths to slowly lumber its way into the virtual goods realm.

iphone_sims3The EA Mobile release of the Sims 3 marked a small step into the social space for the company, but greater plans are still in store for the high quality iPhone title (which according to EA was classified as a mere “test” to see if high production value for a social iPhone game was worth it). Well, with over 1.4 million sales within one week, it is probably safe to assume the game did well, but shortly thereafter came virtual goods that were purchasable using a virtual currency called SimPoints. Supporting both PayPal and major credit cards, the virtual goods store for Sims 3 would mark one of the earlier renditions of mainstream virtual goods.

Another PC game from EA, the real-time strategy (RTS) and collectible card game (CCG) hybrid BattleForge was a project intended to test the waters of virtual goods in a full price game, forcing players to purchase virtual cards to further grow their fantasy-like armies. Initially, the game cost about $50, but even after a $20 price drop, the game still sold less than 100,000 copies. Developed by Phenomic, the RTS/CCG creation was bombing.

battleforgeBattleForge was not a sinking ship yet, though. To EA’s surprise, the virtual goods – card booster packs – were selling amongst users like wildfire. Noticing this, EA Games President Frank Gibeau made a curious call. BattleForge would go freemium, granting access to all of the game’s content, but offering fewer cards to start out with (originally, players began with 16). To Gibeau’s elation, the unorthodox move (from EA’s perspective) would lead to “record sales.” Unfortunately for us, Gibeau has not revealed average revenue per user (ARPU) metrics specifically, but he has stated that some freemium players were spending over $100 for virtual goods.

According to the LA Times, the freemium change may have single handedly saved Phenomic from a rather expensive failure. To that end, Gibeau also stated to the Times that EA did, indeed, have “four or five” new freemium projects in development. This was at the start of June.

battlefield heroesPerhaps one of the aforementioned projects was Battlefield Heroes, as about a month later it appeared on the scene. This online, freemium, and multiplayer shooter announced, shortly after release, that it had over 1 million registered players. With two forms of virtual currency to purchase items for a player’s avatar, Valor Points for playing and excelling, and purchased Battlefunds, the game offered two very viable options for advancement. But, with a matchmaking system that was designed around skill levels, EA kept players from advancing strictly because they had a lot of money to spend.

As Virtual Goods News noted in July, “industry standards suggest that less than half of Battlefield Heroes’ 1 million registered players will be active and that fewer than 10% of the active players will ever purchase anything.” This is a common sort of revenue distribution in freemium games. EA is actually expecting around $80 million dollars in revenue, from digital sales (which includes virtual goods transactions) for 2009.

Electronic Arts isn’t the only developer looking into virtual goods. More recently, Atari made a similar movement with the closed-beta launch of its first-person shooter/RTS mix, Battleswarm (developed by Reality Gap) earlier this month. This system utilizes a virtual currency system called MetaTix, which according to Atari founder Nolan Bushnell, functions a bit like those found in arcades.

battleswarmThrough it, users can purchase virtual items that might allow them to gain an early advantage. Sounds useless for just Battleswarm, doesn’t it? Well, not to worry, because this currency will actually work across multiple games. The idea is that if a player has a number of MetaTix, they are more likely to try a game they know little about. Furthermore, with MetaTix costing about one penny and be attainable through in-game means (such as selling items), there is going to be quite a few in circulation and available for use.

As a matter of fact, the system is all ready live in the game Monato Espirit which is licensed from the Korean developer, Gamasoft. That in mind, Reality Gap Co-Founder J. Mark Hood told VentureBeat that seven developers have thus far agreed to participate in using the virtual currency system.

Even the largest game developer in the world, Activision-Blizzard, may be looking into virtual goods. The possibilities, at the moment, stem more from the Blizzard end of the table, but according to Battle.net Project Director, Greg Canessa, the company is not going to “rule anything out” in regards to a virtual goods platform addition to the Battle.net online gaming service. In essence, Blizzard commentary suggests that it would be remincient of Xbox Live’s current Avatar Marketplace, but the question lies in how such a new system would play out. Since its launch in 1997 with the role-playing game Diablo, everything from Battle.net has been free.

starcraft2“Blizzard’s reputation is about providing an amazing value — an amazing amount of stuff for free. And then enabling additional stuff, like value-add services, to maintain the free level,” said Canessa in comments to 1up.com. “Okay, you pay for StarCraft 2, and Battle.net is free. All the stuff we’re talking about: the Achievements, the profiles, the Avatars, the unlockables, the leagues; it’s all included for free. Then there’s value-added services — like for [World of Warcraft] where you have a paid subscription with tons of stuff, and we then added paid character transfer services on top of that later. So we may add some stuff to Marketplace, but it won’t interfere with the free tier.”

Certainly the road leading to these new virtual goods possibilities can be seen, and with the upcoming release of the StarCraft 2 RTS, a relaunch of Battle.net will include a new store, the Map Marketplace, where players can purchase new game maps (something that was free in the original StarCraft). As it stands, the fees are likely to be very small,. Of course, the availability of anything beyond the StarCraft 2 maps is mere speculation, but the probability seems high.

In the end it doesn’t matter who you are. Virtual goods are not something to be taken lightly. These minuscule pieces of digital art, animations, and sound have been adopted by the public. As a billion dollar industry world wide, some of the largest players are stepping forward to take a crack: Electronic Arts used virtual goods to boost the sales of the Sims 3 for the iPhone, mend a wounded BattleForge, and attempt to repeat the success with Battlefield Heroes. One of the oldest developers, Atari, even stepped in with both virtual goods and its MetaTix virtual currency to promote new, and unfamiliar games. And even the best of the best, Blizzard Entertainment looks to be considering a virtual goods bonus for its players for its new releases. Suffice to say, virtual goods have proven to be one of the fastest evolving and most successful new additions to come to not just social games, but the gaming world as a whole.

Korean Game Company Nexon Grows in Europe

Nexon EuropeOf all the virtual goods based games in the world, one of the most successful has been those developed by Nexon. In the past, we have seen the Korean company excel with both Asian and North American audiences, but just how well are they doing in the world’s other major market: Europe? Though the privately held casual gaming site is not required to release numbers, it released some to show how well it’s doing.

There are two Nexon games in question when referring to the Nexon Europe game portal: MapleStory and Combat Arms. While the company was founded back in 2005, Nexon’s European branch has actually only been around since 2007. As of May and June of this year, it has saw a 168% increase in year-on-year revenue for Europe alone. In comparison with other released numbers, overall revenue for Nexon was up 35% year-on-year.

Nexon also reported that its European rendition of MapleStory comes to around 1.2 million active users. Its other title, Combat Arms, which launched in Europe in February, falls short of this total with 800,000 registered users and a concurrent user count of 12,000. To add some perspective to these numbers, in the United States, Combat Arms was reported, back in February, to have had a total of 2 million users, according to Virtual Goods News, with its launch having been in October of 2008. Granted, the Amercian version has been around longer, but it still had around a million users in its first month; so relatively speaking, the European release is growing significantly slower.

Despite the slower start for Combat Arms, the European market has still been effective for Nexon. In general, the average monthly revenue growth, year-on-year ,for the first six months of 2009 has been 105%. Curiously enough, Q1 only had a 63% growth in revenue while Q2 was reported to have an impressive 146% increase. Moreover, Nexon has stated that Q1 and Q2 alone have exceeded the total revenue for all of 2008.

[via GameIndustry.biz]

USA Network Continues Social Gaming Expansion with New Deals

character arcadeMedia from all walks of life appear to be expanding further into social spaces, and television is no exception. Latest example: The popular USA Network, a division of NBC Universal, has announced partnerships with several game startups in order to boost the social capabilities of its online games portal, Character Arcade. Partnerships include NeoEdge Networks, Bigpoint, and Bunchball.

Each strategic partnership is intended to bring something new to the table for the 36 year old network. Having all ready developed casual games for Apple’s iPhone, this marks the second major move towards a social evolution. In fact, USA is looking to double its games roster by the end of 2009, but more than that, will begin connecting to major social sites such as Facebook and Twitter, as well as offer virtual goods.

As part of the deals announced today, USA will gain access to NeoEdge’s collection of casual games. They’ll be downloadable for the PC as well as be playable through the USA Character Arcade, and in turn, USA games will see distribution through all of NeoEdge’s distribution channels. Furthemore, NeoEdge games will come complete with built in, dynamically targeted advertisements.

Bigpoint will similarly add games to the repertoire of titles available on Character Arcade by providing massively multiplayer online games. These games from the German company will be free-to-play and monetized through virtual goods transactions, complimenting the NeoEdge addition and further adding greater breadth to the USA games collective.

twitterLastly, there is Bunchball. Unlike the other two partners, however, this pair up isn’t intended to add more games, but rather, enrich USA space by turning Character Arcade into a “real social media environment.” This technology company will be helping further drive user engagement using its SocialLink technology in tandem with Facebook Connect. Through the combination of these two elements, players will be able to challenge one another, view leaderboards, chat, and access rewards and virtual goods, from a new Bunchball rewards and points platform, regardless of where they are playing USA games. However, the social integration is not only for Facebook, but is available for Twitter and other social media sites as well.

“The intersection of social media and games is the hottest part of the industry now,” says Jesse Redniss, Vice President of Digital at USA Network in an interview with VentureBeat. “The projection is that casual games will be a $10 billion to $11 billion business by 2011 and that is something we want to be a part of.”

This marks yet another big name on the list of major media developers to turn their online portals social. However, while we have seen casual portals such as Candystand.com and mainstream developers such as Konami go this route, the social integration for USA marks one of the first major non-game media providers to really catch ISG’s attention.

PlaySpan Survey Shows Some Interesting Virtual Goods Stats

Sating the curiosity of developers, the market research firm tailored specifically to video games, VGMarket, and online monetization company PlaySpan conducted a survey to garner a better estimation on just how many players are spending real money on virtual goods. Conducted between July 15th and 31st of this year, the survey of 2,425 pulled from a variety of customers ranging from those that made online purchases through the PlaySpan Marketplace, made use of the retail-based Ultimate Game Card, or utilized the more recent virtual currencies acquisition, Spare Change.

Digital_Goods_By_GenreCovering this wide expanse of purchasing options, the PlaySpan/VGMarket survey discovered that 58% of surveyed gamers bought virtual goods with one of the aforementioned methods, in the last year, for a free-to-play game. Coming in second, over the same course of time, was massively multiplayer online games at 34%, followed by a mere (by comparison) 23% were social network games.

In addition to having the highest number of purchasers, free-to-play games also saw the highest expenditure. The median average spent among users was approximately $75 with MMOs and social network games coming in at around $60 and $50 respectively. Of those reported, 80% of those surveyed admitted to buying virtual goods for themselves with the remaining 20% buying them for others as gifts. On average, they also proclaimed that they were currently playing three online games.

What form of virtual goods is being purchased most. Well, according to the survey, in-game currency is on top with 71% of players having purchased it in some form or another. Seeing as how virtual currency can be used to make purchases across multiple games on a network, it seems logical that it would be first. However, the difference between #1 and #2 is staggering.

Virtual_Goods_BuyersAccording to the report, weapons were the second most purchased item at 37%, followed by subscription codes at 30%, wearable items at 26%, power-ups at 25%, virtual gifts at 19%, and maps and levels at a scant 16%. In fact, not only did a higher percentage of users buy virtual currency, but the median number of transactions for them were higher as well (7) when compared to all other types of virtual goods (5).

Currently, this is all the information that has been released from PlaySpan and VGMarket, but according to what they have told ISG, additional components of the study that include individual virtual goods seller data may be released in the future.

Tapjoy Releases Free Version of its Ad Optimization Platform

Tapjoy SDKTapjoy has introduced a new version of its free advertising optimization platform, tailored specifically for the highly saturated iPhone.

Having been around for a while now, Tapjoy’s past versions have made use of seven different ad networks, to provide revenue options. However, this newest version of platform is what peaked our interest as it now comes with a full set of app analytical tools, from Pinch Media, all in one simple dashboard. Granted, many developers may have an analytics system they currently use, but Tapjoy provides a viable alternative for an ever growing mobile field.

As it stands, the additional analytics tracks a number of the most important pieces of user information including feature usage, demographic reporting, and advertising performance. Furthermore, The Tapjoy SDK also allows for greater revenue potential through ad optimization, virtual goods monetization (through Offerpal), rewarded installs, customizable gaming features, and even wagered tournaments (something that we have seen only twice before with PayoutHub and more recently Come2Play) and user challenges.

As a game developer themselves, Tapjoy does have an understanding of the needs of the game creator. With popular iPhone games such as TapDefense, TapSudoku, and TapWord backing their name, the mobile developer has indeed learned a lot from creating these top apps, and states that they have done their best to include all those key lessons into the features of its latest SDK.

Certainly Tapjoy SDK offers a great option for optimizing any iPhone game, and really does provide a means to move more resources to the creation of a great title rather than worry too much about monetizing it. Interested parties can check out more at Tapjoy.com.

Come2Play Adds Virtual Currency Monetization Platform

come2playIt was over a year ago that we first looked at the white label social gaming platform, Come2Play. Since then, he company has been pretty quiet. Nonetheless, it looks like they are busy again with their latest, and quite significant, addition to the platform: Virtual currency monetization.

For those unfamiliar with Come2Play, it first launched with a service that lets web site owners easily integrate a customizable social gaming channel into web pages. Each channel contains game galleries composed of titles submitted to the Come2Play network, and include multiple play rooms, chat, and virtual goods rewards. Last October, multiplayer API was added, and while, at the time, it only was capable of supporting two-player games, when combined with the existing virtual goods, it paved the way to this latest release.

All of Come2Play’s supported games allow for players to challenge one another, according to the company. Now, the concept of challenges, in and of themselves, is not terribly out of the ordinary. They have been a standard social element in the space for a long time now. However, these Come2Play challenges add a little something to this traditional feature.This is something we have only recently seen with the company PayoutHub, which allows monetization through competitive tournaments.

Here’s how Come2Play’s challenges work: In any challenge, players are able to wager X amount of virtual tokens. The winner of that challenge then takes the total amount of the challenged tokens, which can then be used to make virtual goods purchases. Tokens are also attainable via purchase through the “Token Store” as well as through the completion of advertisement offers.

come2play_developer screenRight away, one can begin to see the revenue potential from this latest addition. Already, profits for in-network banner advertising revenues – now carried over into these new virtual currency purchases as well – are split, with all publishers receiving 40% of all proceeds. The remainder is then divided evenly between Come2Play and the developer, but with the growth of virtual goods and currencies in the United States, 30% is hardly something to scoff at. In fact, overall growth was worth around $265 million last year, and is projected, according to Piper Jaffray, to reach over $600 million by the end of 2009. We think that number may be a bit low.

Come2Play certainly looks to be a viable opportunity for both developers and publishers alike. With multiple monetization opportunities through the platform it makes for a very safe looking endeavor for any of the stated parties, and covers most, if not all, the bases for earning potential.

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