Posts Tagged ‘gdc austin’

$1 Billion of user-to-user transactions taking place in Second Life

Friday, September 25th, 2009

Building on their information released at last week’s GDC Austin, Linden Lab has recently revealed some truly staggering numbers with regards to their secondary market transactions platform. The company stated that Second Life residents have transacted the real world equivalency of over $1 billion in player-to-player transactions, while spending over 1 billion hours inhabiting the virtual space.

Second_Life_LogoAgain, adding to their statements at the GDC focused on retaining current users, the company revealed that Second Life’s economy has grown 94 percent year-over-year from Q2 2008 to Q2 2009. “Now at nearly USD50 million each month in user-to-user transactions, the Second Life economy is on an annual run rate of more than a half billion US dollars, making Second Life the largest virtual economy in the industry,” the company stated. With an economy like that, it’s no wonder Linden Labs is focusing on keeping current players happy, and staying right where they are. Perhaps a larger challenge than originally thought, as Linden Lab received an F from the better business bureau back in February of this year.

Linden Lab was also quick to point out that the total in-world hours, approximately 1 billion, has the real world equivalent of 115,000 years. But what exactly are these users doing? “Everything from meeting and socializing with friends; to attending live concerts; to creating, selling, and shopping for virtual goods; to learning a foreign language; to attending business meetings; and much more. User hours grew 33% year-over-year to an all-time high of 126 million in Q2 2009,” stated Linden representatives. On average, Second Life residents spend approximately 100 minutes in-world per visit, which the company is proud to point out is, “significantly greater than those seen with popular social networking Web sites and reveals the uniquely high level of engagement Residents have with Second Life.”

Specifically speaking to the in-world virtual items trading and sales, Linden Lab reports that residents are creating over a quarter of a million new good each day. These items may range from clothing to vehicles to buildings to automatic language translators, and just about everything else imaginable under the sun. At the time of the statement, Linden Lab reported that more than 270 terabytes of content is available within Second Life, with a growth rate of around 100 percent each and every year. Speaking from a primary marketplace point of view, since Linden Lab is the creator and vendor of virtual land, the company is not only the worlds largest platform for user-generated virtual goods, but also an industry leader in the sales of virtual goods. Perhaps the virtual world equivalent to Donald Trump?

Other statistics from Linden Lab include:

  • More than 18 billion minutes of voice chat have been used in Second Life since voice was introduced in 2007. Voice minutes grew 44% year-over-year from Q2 2008 to Q2 2009, and more than 6 billion minutes of voice have been delivered in 2009 alone, making Linden Lab a major VoIP provider.
  • Approximately 1,250 text-based messages are sent every second in Second Life, and more than 600 million words are typed on an average day. Roughly 60% of active Second Life Residents are based outside of the US, representing more than 200 countries, and the Second Life Viewer is available in 10 languages.
  • The total land area of Second Life is now equivalent to approximately 2 billion square meters — roughly the size of the state of Rhode Island. Land in Second Life has grown roughly 18% since Q1 2009 and approximately 75% since Q1 2008.

“These metrics give a sense of some key aspects of Second Life — the deeply engaging nature of the 3D world, the immense use of Second Life as a communications platform and the scale and strength of the economy based on the huge number of unique virtual goods users are creating,” commented Mark Kingdon, CEO, Linden Lab. “These numbers are a snapshot of the success of Second Life and its Residents today, and a validation of Linden Lab’s leadership in the virtual worlds space, but there’s much more to come. This is a year of renovation for Second Life, and we are well positioned for reinvigorating our growth in 2010 with a range of strategic initiatives that will enhance the experience for existing Residents and propel our expansion with new users.”

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Big Numbers from Big Players at Austin ‘09

Monday, September 21st, 2009

Last week’s GDC conference in Austin spilled out a ton of information not only about what’s up and coming in the gaming industry, but also the current state of affairs. One of the most interesting sessions saw EA, Turbine, K2, Linden Labs, and IMVU pony up and lay down some eye opening, if not eye popping, facts about their microtransaction and virtual goods monetization business models.

EA, perhaps the biggest and oldest games makers now involved in the freemium market reported that after initially only selling character customization options, sales were simply OK. Specifically speaking to Battlefield Heroes, once EA instituted Boost packs, these items/options quickly shot to the top of the list. Learning from this lesson, and perhaps overcoming the initial public balk, EA is now trending towards introducing these options into all of their freemium products. The focus here is on in-game advantages that drive higher conversion rates over that of purely cosmetic items. Using this formula, EA expects a 7-8 percent conversion rate in it’s freemium games, but realizes that rates may be driven down to the 5 percent range, do to the influx from social network traffic.

Turbine is looking good with what at the time raised a few eyebrows when they announced that their long time subscription title Dungeons and Dragons switched to the free-to-play model. Turning more than a few heads, Turbine execs announced that the free switch has significantly increased subscription rates, as well as concurrency rates. To be fair, Turbine is offering a subscription/freemium hybrid model, which the company believes to be the optimal solution, capturing both hard core, play all the time fans, while also hooking the players that only want to pay for what they want, and not for what they don’t. Subscription players are given a dedicated monthly allowance of virtual currency, and free players are given the option to purchase virtual currency with RMTs. Both allow players to unlock a variety of in game content.

K2, publishers of Knight Online, Red Stone, War Rock, Global MU Online, and Sword of the New World, report that every single cent of their revenues are derived from in-game item sales. Citing their key focus on community management, K2 claims an extremely high ARPU. “ARPU is high, relationships is long and persistence is everything.” Given that their revenues are items sales driven, K2 is aggressively pushing for expansion in Turkey, Brazil, and Eastern Bloc countries, areas were the freemium model has thus far been tremendously successful.

Linden Lab, publishers of perhaps one of the most well-know Virtual Worlds, Second Life stated that their annual revenue was over $80 million, and that they’re closing in on the $100 million mark. The company monetizes in one of three ways: Currency sales, premium subscriptions, and a hosting package that allows users’ 3D items to persist throughout the games. Given Second Life’s rocky, sometimes controversy filled, track record, the folks at Linden are now focusing on plugging the holes, and retaining active users as opposed to seeking out new Second Life residents. Linden Lab execs say that the largest stumbling block they’ve encountered is in-game fraud. Remember, Second Life allows users to create their own items for sale within the game, sometimes leading to a removal of currency from the virtual economy. The company considers this fraud/loss risk a basic price of doing business.

Rounding out the top 5 on parade at the GDC Virtual Worlds Monetization talk was IMVU. The firm says that 80 percent of their revenues come from sales of virtual items, and 20 percent from advertising. While 20 percent is a sizeable contribution, IMVU says that this revenue is only possible due to it’s expansive virtual world. They stressed importance on non-paying users, as they add to a large community, and encourage others to be drawn in. Comparing themselves to eBay, IMVU execs cited it’s catalogue of over 2.5 million virtual items made by 20,000 users. The top designers of virtual items within IMVU properties annually earn over $100,000 annually, however, the IMVU market functions on the long tail model, whereby the top 10 catalogue items only account for .2 percent of all sales.

Thanks to Ada Chen for outstanding notetaking.

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SOE Prez John Smedley to deliver keynote at GDC Austin

Friday, August 7th, 2009

If you were in search of this years “The One” gaming convention, look no further. It seems like the gathering in the Lone Star State is shaping up to be a veritable industry ‘who’s who’. Yesterday, GDC Austin officials announced the SOE President John Smedley will deliver a keynote speech detailing the success and lessons learned regarding the recently launched runaway tween success, Free Realms.

john-smedleyHis address, “From Dragons and Daggers to Kart Racing, Cooking and Concerts … It’s a Whole New MMO World,” will detail how Free Realms has worked well for SOE, expanding the title’s base of players and how they engage with each other in online worlds. Smedley is also expected to “inform attendees about the challenges and lessons learned when creating a full-blown MMO for younger audiences,” and complete with research and insights. Ooo…pie charts?

This keynote is a so-to-speak homecoming for Free Realms, as the title was first officially announced at the GDC Austin in 2007. Fast forward to an April 2009 launch, and SOE has seen over 1 million registered users pass through their doors in only 10 days. According to a recent Comic-Con panel, Sony has recently past the 5 million user mark, with no signs of slowing anytime soon in sight.

If a keynote by the man behind EverQuest I and II and Free Realms wasn’t enough to get your feet moving in the right direction, remember, GDC Austin has also confirmed Blizzard co-founder Frank Pearce and World of Warcraft production director J. Allen Brack to discuss the operating challenges and lessons in the talk “The Universe of World of Warcraft.” An naturally, one of our personal favorites, Rebel Monkey CTO Jeffery Kesselman will be on hand and discussing how CampFu “combined open source technologies to build an industrial strength platform for unified multi-player casual game-play and social web experiences” in his talk, “The Monkey Wrench: Design and Architecture of an Online Environment.”

The GDC Austin event takes place at the Austin Convention Center in Austin, Texas September 15-18. This conference is the major focus of a larger gathering also featuring four two-day summits including the Game Writers, Game Audio, iPhone Games and Independent Games Summits. To find out more, visit the official GDC Austin website.

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