Posts Tagged ‘online games’

Tencent again on track to post record profits – attributes success to online gaming

Monday, August 17th, 2009

If you’ll remember, Chinese web portal, IM provider, and MMO operator Tencent made some pretty big waves last spring when the news broke that they’d surpassed the $1 billion mark in revenues. Well, if Tencent’s Q2 revenue numbers report is any indication of what’s to come, they are well on track for a repeat performance.

tencent-logoReporting RMB 2,878.4 or roughly $421.3 million in total revenues for Q2 2009, ending June 30th, Tencent saw a 14.9 percent increase over the previous quarter, and a sizable 79.9 percent increase in revenues year-over-year. This now brings the company’s first half of 2009 revenues to $787.9 million, a 77.5 percent increase over the first half of 2008.

Admittedly, the lions share of revenues are derived from the company’s IM services, but with virtual goods and currency sales a close second, Tencent is reporting a gross profit of $284.5 million. This number represents a 13.1 percent increase over Q1 2009, and a 69.5 percent increase y-o-y from 2008’s numbers.

Operating popular free-to-play MMO’s Dungeon Fighter and Cross Fire (both Nexon products), as well as gaming client QQ games has significantly helped lined the coffers at Tencent. The company saw a 17 percent increase over the previous quarter, and a significant, yet unnamed, year-over-year increase to $183 million.

Mr. Ma Huateng, Chairman and CEO of Tencent, said, “For the second quarter of 2009, we delivered solid growth in our operating and financial results as we strengthened our online platforms and increased monetization on our Internet value-added services, especially online games.”

However, while the Tencent camp has something to cheer about, things may not be quite as rosy as the surface view would indicate. Tencent representatives indicated that decreased revenues in “more mature MMO’s” including QQ Fantasy, QQ SanGuo, and QQ Huaxia must be considered in the overall revenue picture. To this end, Tencent has halted the launch date of two planned MMO’s. These titles were expected to hit the airwaves around the turn of the year. One prior to New Years, and the other was expected in early 2010.

To this end, Huateng comments, “For our online advertising business, the industry environment remained challenging although activities picked up modestly this quarter. We believe advertisers are still cautious on ad spend for 2009 until the global economy recovers in a more concrete and sustained manner.”

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Challenging economy not slowing growth of Microtransactions

Thursday, April 16th, 2009

While we all know that the ‘traditional’ advertising market has been taking a beating over the past few months, according to a recent Insidefacebook.com survey, social applications and games monetizing via direct or indirect payments has been less affected.  While a number of analyists offer up their opinions and site the entertainment industry’s traditionally strong performance during economic downturns (more free time and the increased desire for diversions) or the overall attractiveness of a low cost purchase (vs. buying that new car), Facebook applications developers have or have not (depending on how you look at it) been hit by the current economic state.

Facebook application payment providers in particular are reporting tremendous growth at a time when more and more businesses are looking at closing up shop.  Although no specific names or figures were named, Insidefacebook.com reports that overall, payment providers have seen on average a 35% growth in overall transaction and associated dollar volume rise over the Q1 2009, with some even reporting as high as 300%, due in part to new distribution partnerships.

And while a majority of these numbers are flowing from facebook, payment providers also reported that the demand for virtual currencies across other social networks (MySpace, hi5), mobile platforms (iPhone) and in online games in general have also spiked.  Consequently, developers large and small are reaping the benefits of this demand.  Zynga for example, one of the largest app providers on Facebook and MySpace is rumored to be pulling down quarterly revenues in the $10-$15 million range, while Playdom, the developers of MySpace’s #1 game is reporting similar numbers.  And obviously, for every major developer, there’s 10-15 smaller developers standing right behind it, working on their own unique application segment.  What does this all add up to?  Besides positive reinforcement in an area that’s been traditionally flogged as the black sheep, these types of numbers are making big waves in Silicon Valley, and VC’s that weren’t currently watching the space, sure are now.

But wait…isn’t facebook rolling out their own virtual currency?

In German, there’s a perfect word for this: Jaein, which is a combination of Ja, meaning yes, and nein, meaning no.  As we’ve previously reported, facebook has been flirting with the microtransaction/virtual currency tree for quite some time now, but have yet to make a full commitment to the project.  They have however taken great steps in the right direction, and perhaps even started introducing users to the concept (think Facebook Credits), the company still remains focused on growth over monetization.  Both devs and publishers of facebook applications would find a facebook currency advantageous, a number of them are also quick to point out that not even facebook themselves would be likely to deliver better services than a number of 3rd party payment providers.

All in all, while virtual currency monetization is obviously something we’ve been working on for quite some time here at fatfoogoo,  a revolution definitely seems to be afoot and we’re quite happy to be able to answer that all important question, “Can you?”  our answer?  “Yes we can, how soon would you like to get going?”

Find out more about fatfoogoo’s social networking monetization packages by visiting our solutions page.

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Social gaming increases sales of virtual goods in social networks

Monday, March 30th, 2009

Putting some hard numbers behind what we’ve been thinking and believing for quite some time now, SnipClip trainee (read: intern) Matthias has poured over copious amounts of data over the past few months, and the results are in.  The survey was conducted over 15 various virtual worlds, social games and non-game social applications, and found significant differences in purchasing trends.  Most notably – sales of virtual goods in social gaming applications are ten times higher than those in non-gaming applications.

snipclip_logo_verticalAccording to the study, social games generate an average of $3.65 per monthly active user (MAU) per year.  Conversely, non-gaming applications have an MAU of only $0.37, with the highest average revenue being generated in virtual worlds, with an average of $8.04 per MAU per year.

Examining data strictly from social games and virtual worlds, the study found the average spend to be between $0.82 and $6.40, and $2.03 to $25.42, respectively.   This data supports SnipClip’s theory that virtual worlds and gaming applications are more engaging, therefore users are willing to spend more on virtual goods if they offer special functionality or higher social status.

Looking forward, SnipClip’s study projects potential virtual goods sales in social games at around $340 million per year.  Their non-gaming siblings should be looking at around $215 million.  Virtual Worlds arrive at the party, just slightly ahead of non-gaming social application with projected virtual goods revenues of approximately $244 million.  SnipClip does give a nod to the recent Tencent study, with their projections reaching into the billions mark, but does not include this data in their survey.  Reason being, that Tencent did not make a distinction in their survey between the virtual goods applications, i.e. classical online games, instant messaging, and social networks.

It’s no secret that social gaming is rapidly becoming a driving force on social networks, and obviously the providers are carefully watching revenue streams generated from virtual goods sales.  Facebook has been toying with microtransactions and a homogenized platform wide currency for years now. SnipClips’ survey points out that it’s more about the context in which virtual goods are sold and how this can clearly affect monetization rates.

Oliver Hanisch, heading the partnership and strategic alliance efforts at SnipClip recommends focusing on virtual goods applications that provide users with an engaging gaming experience and at the same time enable them to promote their social status within their community.

“Collecting branded virtual goods, as offered by SnipClip, provides both: a social gaming experience and a way for fans to express their passion for their favorite sports team, music group, or TV show. Therefore, we encourage community providers and content producers to consider the sales of virtual collectibles and provide our partners with an easy and ready to use solution.”

The SnipClip survey aggregated revenue and number of users data from 15 social games, social networks, and virtual worlds.  Average values were weighted by the number of users to provide a better-balanced picture.  Social games with 15.1 million or more active users and virtual worlds with 21.8 million or more active users were used.  Social networks, including facebook, social games such as Mob Wars, and virtual worlds such as Habbo Hotel are included in the study.

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Sci Fi partners with Acclaim Games and ZooKazoo

Thursday, March 19th, 2009

Launched in parallel with Sci Fi’s recent announcement of the formation of Sci Fi Ventures, a long-term growth project initiative to diversify Sci Fi’s portfolio of offerings to include media and non-media businesses into a global lifestyle brand, the company has announced their partnership with Acclaim Games.

syfyBoth free-to-play based Acclaim and ZooKazoo are slated to develop a new series of online games and entertainment destinations, further leveraging the love that Sci Fi fans have for one of the world’s most lucrative entertainment genres.  Acclaim will create an exclusive label for Sci Fi, and will jointly develop games, with the ultimate goal of spreading these titles out across various platforms, products, and other forms of media.  First out of the gate will be a new game currently titled ‘Tales of Magic’, and is expected to launch on scifi.com this spring.

ZooKazoo, a virtual world focused primarily on the 6-12 year old age group will create the ‘Sci-Fi Club’ that will reside inside ZooKazoo’s world.  Only one year old, ZooKazoo focuses on collaborative games and youth generated content and already has some impressive user statistics including average user sessions lasting over an hour per login.  Given that one of ZooKazoo’s tenets is to provide a safe environment for kids to develop and create their own ideas around imagination, the Sci Fi Club area of the world could very well be a massive hit with users, and naturally draw in an entire new segment of future rocket builders.

This move into the gaming space also heralds the beginning of a strategic move by Sci Fi, or should I say SyFy, as the company will soon be known as, to bring the genre to the masses.  Sparked on by an entire new generation of Science Fiction fans (I’m looking at you Battlestar Galactica), SyFy’s opening of the Sci Fi Club in ZooKazoo is the network’s first strategic move into a youth market.  And as the old saying goes, “There’s proof in the pudding”, Sci Fi has recently acquired big gun Alan Seiffert to fill the role of Senior Vice President at Sci Fi Ventures.  Seiffert is currently in the role of SVP of business development and partnerships for CNBC Asia Pacific in Singapore, and will assume his new position beginning in May with Sci Fi Ventures.

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fatfoogoo at the Games Convention and Developers Conference

Monday, August 18th, 2008

The Games Convention which kicks off in Leipzig, Germany this Wednesday and continues through Sunday in will see two equal sides of fatfoogoo. CEO Martin Herdina will be speaking at the GCDC (Games Convention Developers Conference) about in-game economies and item trading, while Loki and DT will be scouting the floor, reporting on and talking to gamers about the newest trends in various multiplayer games.

Many publishers have expressed interest in or are currently in search of additional revenue streams for their virtual worlds. Discounting the ‘traditional’ subscription fee, thousands of developers are either already in the game or standing at the starting line with free to play titles springing up almost everyday. The problem? How do we monetize it and recoup some of (read: ideally all of) the development costs? If the already established gold and item trading system (aka Blizzard) wasn’t already the Goliath these David’s are staring down, more and more suppliers are shying away from ‘Secondary Market’ third party suppliers. fatfoogoo has comprehensive experience with developing, managing, and providing ‘ready to go’ in game ecosystems, which makes it the ideal partner for a number of these publishers. fatfoogoo can function either as the Primary Trading platform or an Add-on marketplace. Combine this functionality with Comscore’s data: 32% of all Internet users play online games – and they’re prepared to spend money on it, along with the NPD Group’s recent study stating “…more than half of the Extreme Gamers and just over a third of Avid PC Gamers said that they would definitely download a feature to enhance a specific game that they own.”

Another interesting topic being covered in at the GC is the future of specialty trading. Not exactly new, but the genre is…eSports. Could we be seeing microtransactions being applied to “coach’s hours” whereby players receive special tips and tricks on how to command in-game mastery? Stay tuned as developments continue….

Martin Herdina is scheduled to speak on Wednesday morning, delivering his talk: A New Revenue Stream – Legitimizing the Trading within a Virtual Market. fatfoogoo is in good company, as Acclaim co-founder David Perry will deliver the Keynote speech with 125 other speakers and approximately 1000 industry participants discussing the future of the gaming industry.

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fatfoogoo goes to Hollywood

Thursday, June 26th, 2008

fatfoogoo is an official sponsor of the Virtual Worlds Expo taking place September 3-4, 2008 at the Los Angeles Convention Center.  Virtual Worlds management is the trade media company with a focus on online play, games and virtual worlds.

The Virtual Worlds Hollywood event is THE premier event for entertainment industry professionals seeking to understand and view the opportunities available via virtual worlds.

During the conference top industry professionals will talk about a wide range of topics including:

  • Virtual Worlds Primer for Entertainment Industry
  • Virtual Worlds by the Numbers: A Look at the Market Research
  • Bringing Celebrity Brands to Virtual Worlds
  • Virtual Worlds and Hollywood Agencies
  • Virtual Worlds: What Producers Need to Know
  • Using Virtual Worlds to Enhance, Streamline and Augment the Film-Making Process

“Virtual Worlds have the ability to bring creators together with passionate fans in an environment that supports rich storytelling and engagement on a level impossible with other media,” said Christopher Sherman, Executive Director of Virtual Worlds Expo. “The market for virtual worlds user services is expected to climb from $310 million today to $8 billion in 2017, according to market researcher Strategy Analytics. These numbers do not include the online games subscription market which separately is already generating $1 billion in annual sales, according to the NPD Group.”

The industry currently has over 100 virtual worlds operating in or directly focused on the 18 and under youth market.  Venture capital and media firms have invested more that $184M in 23 virtual world related companies in the first quarter of 2008 alone.

Online registration for the Virtual Worlds Expo is open at www.VirtualWorldsExpo.com. Attendees can save $400 by taking advantage of the early-bird registration – only $595 – until July 25, 2008. After that time online registration is $795. Onsite registration at the event is $995. Expo hall-only passes are available for $195.

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