Posts Tagged ‘justin smith’

New Report: US Virtual Goods market to reach $1 billion by years end

Monday, October 19th, 2009

InsideFacebook.com editor Justin Smith and industry expert Charles Hudson of Serious Business have recently released a report for purchase that estimates the total US virtual goods market value will reach $1 billion by years end. This estimation effectively doubles the market value of the previous year, and puts a $1.6 billion dollar amount to 2010’s sales.

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While the free-to-play traditional PC gaming platform certainly contributes to this overall figure, Hudson and Smith squarely point to the rapid expansion of casual gaming, firmly finding it’s roots in social networking. “One of the major forces that has led to growth in virtual goods this year is the explosion and seeming ubiquity of social networking in the U.S.,” said Smith in an interview.

This newest estimation is not new to the virtual goods market, as we’ve heard various valuations for quite some time, with no one definitively being able to put a finger on just how much virtual goods are actually worth. Early this year, research firm Plus Eight Star valued the Asian market value at over $5 billion, which, if seen in the light of Hudson and Smith’s newest findings clearly falls short, as the US market alone is expected reach $1 billion this year. Conversely, Brian Balfour of Viximo argued that the US market should be valued in the neighborhood of $400 to $600 million. So who’s, quite literally, on the money here? While valuations and projections are always a sticky science, it’s arguable that no one up to this point has done as much extensive research as Smith and Hudson. Again, the report should not be taken as gospel, but it is perhaps the most researched in detail.

The report, available for purchase from insidevirtualgoods.com focuses on four main areas, thoroughly investigated by Smith and Hudson:

  1. Social Networks, Applications, and Games - The explosion of the virtual goods market on social networks is in our view one of the biggest stories of 2009. We delve deeply into the trends, stats, key players, opportunities, and challenges facing the space this year and next.
  2. Casual MMOs and Virtual Worlds - Virtual worlds and casual MMOs continue to grow as a meaningful share of the virtual goods opportunity in the United States. Our study breaks down the key drivers for success in this segment, trends in monetization and engagement, and the prospects for the future.
  3. Hardcore MMOs and Free-to-Play Online Games – Developers in the MMO / MMORPG space have been among the earliest adopters of the free-to-play model. We explore why free-to-play MMOs are succeeding, revenue and user trends, and the key issues facing this space as we head into 2010.
  4. Emerging Areas: Consoles, iPhone, and Subscription MMOs- As the virtual goods business model becomes more well understood, it is beginning to show up in new and interesting areas of the games and entertainment landscape. We highlight a few of the more promising areas where virtual goods are emerging as a promising opportunity.

“I don’t know anyone who expected it to grow this fast. The Facebook platform went from zero to hundreds of millions of dollars in two and a half years. It reflects a broader shift in society where people are spending more time on casual games,” says Smith.

An of course, fatfoogoo, as an industry leading provider of microtransaction and virtual goods payment systems is profiled in the report.  We’d like to send out a big thanks to Charles and Justin for this outstanding industry report.

 

fatfoogoo getting serious about social

Tuesday, September 22nd, 2009

Throughout our lifespan, fatfoogoo has created a number of monetization and payment platforms and options for a wide range of gaming companies. In 2006, when Martin Herdina and Daniel Petri set out to make a virtual marketplace for the trading and purchasing of virtual goods and services, the initial idea was to provide a marketplace for consumers to meet and trade/sell in-game virtual items and services. While this platform proved to be successful with gamers, game operators made it clear that they would rather keep a tighter hold on what was and what was not being traded within their titles. Et Viola, the modern version of today’s fatfoogoo was born with a white label services and technology model. And while there are a number of ‘traditional’ games and titles that we provide our services to, the undeniable growth and popularity of social games, as well as a number of other browser based games, has been certainly something we’ve been looking at for quite a while now.

ff_logo_whiteSpeaking to Justin Smith of insidesocialgames.com last week, Martin states, “We’ve been working with social app and game developers since the end of 2008, as the requirements are very similar to classical online game business models. The first social networking project we did was to provide store, white-label payments and virtual currencies for the avatar engine mEgo, now we are just working with Gogogic on powering Vikings of Thule – and some really exciting social apps/games projects are currently under the hood.”

As Smith states, we are based in Vienna, Austria, miles away from some of traditional games development hotbeds, we’ve also established offices in the UK and the US, with our very own Stevie Case running point on working closely with North American operators/developers.

“Our technology is purely international, so it’s capable of supporting multi-languages, multi currencies, multi-byte character-sets and different VAT-rates,” Herdina says. “However, in terms of business development we are mostly focusing on talking to potential partners in North America and Europe.”

Realizing that while social gaming might share a number of traditional facets, it also takes on it’s own brand of monetization. Specifically, in-game advertising can often be relied on as a primary means of revenues. To this end, we’ve partnered with a number of managed offer platforms in order to facilitate this monetization mechanism. “We treat offers as an alternative payment option, and therefore work with quite a few offer providers in different regions to ensure ideal coverage, like PayBuyPartner, AdParlor, GratisPay, and SponsorPay,” Herdina says.

With this particular attention turned out social games, naturally, facilitating the ease, and variety of payment options is key. We’ve partnered with a number of payment providers specifically focused on social games in order to ensure the highest levels of both client and customer satisfaction. Payment options include credit cards, direct debits, mobile payments, and prepaid cards, to name a few.

“We are expecting our ongoing and future projects in the social app/game space to contribute a significant part to our success in 2010,” Herdina says.

If you’re headed to the Browser Games Forum in Frankfurt this November, Martin will be speaking and available for questions both days.  To have a better look into who we are and what we offer, please visit our solutions section.

 

Facebook shelves in-house microtransactions system

Saturday, January 3rd, 2009

Have a mental look through your microtransaction news archives, and you’ll probably remember Facebook’s J Morgenstern’s call to developers that were interested in working on an in-platform microtransactions/payments solution.  Got that ‘oh yeah’ memory on hand?  Good, because as it stands right now, a memory is all it is and will be.

Morgenstern’s initial offer required developers to sign a tight lipped NDA (non-disclosure agreement), possibly resulting in less than spectacular interest, and coverage/development news around the internet and amounted to nothing more than a mere ripple.  Surprising, as we know more about Zuckerberg’s choice in footwear than what could have been (and still could very well be for the right development team) the biggest news of the year.  At the time of the initial offer, PayPal co-founder Peter Thiel didn’t hesitate and quickly became a primary source of funding, along with pulling up a chair at the Facebook board members table via his Founders Fund.

A highlight of the initial developer call reads:

Transaction-based applications that use virtual currencies or kick users out to PayPal could soon start accepting payments from users directly in their applications.

A Platform payment system could also be a significant revenue generator for Facebook. While Facebook is not making money directly from application use (developers keep 100% of ad sales), developers would be happy to pay a commission for the service.

Sounds reasonable, if not downright right on the money.  Fast forward one year, and it looks like the facebook in-house transaction system might be moving slightly faster that molasses.  Justin Smith of Inside Facebook ran a post on the 29th of December stating:

…one year later, Facebook has not developed the system, and some signs from the company point to the project being on hold altogether while it focuses on other priorities.

Facebook has apparently decided not to get in the middle of third party transactions, leaving merchant solutions to other payment processors. Developers can continue to choose between established providers like Paypal and new entrants like Spare Change and Zong.

When asked directly about the future of a Facebook Platform payments system this afternoon, a Facebook spokesperson said, “We’ve been excited by advertising and payments solutions provided by the market, and we currently do not have anything to share around a Facebook Payments system at this time.”

The very next day, Smith ran in article analyzing why Facebook have deprioritized an in-platform payment solution.  While the article itself is insightful, a read of readers comments (both negative and positive) should be required reading for anyone involved in the microtransaction field.

While this might be a bit of a setback for Facebook itself, I DO know a certain facilitator of microtransactions, particularly in the way of social commerce monetization that already has a tool ready to roll: fatfoogoo.

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