Posts Tagged ‘virtual currency’

5 acquires Six

Friday, February 26th, 2010

After hi5 came close to calling it a day altogether, it seems as though they’re on one heckuva rebound, and obviously putting the social networking chips in the gaming basket was the right call. Announced on Wednesday, hi5 has acquired Austin, TX based social gaming company Big Six. Announced separately, Big Six’s founders Kevin Gliner, Monty Kerr, and Chad Hansing will now join hi5’s management team. These three will now also join one of hi5’s most recent acquisitions, Alex St. John.

hi5logoThe main draw for hi5 is/was Big Six’s proprietary commerce platform. This new acquisition will allow hi5 to expand their commerce in virtual goods and games sales. hi5 currently employs a commerce system that includes a universal virtual currency that can be spent in any of their titles. This acquisition brings new technology to hi5 in terms of payment processing, fraud detection and conversion optimization. As an added bonus to the deal, Big Six have also designed a social gaming platform that will now become part of the core hi5 site.

“The Big Six team and technology are a perfect complement to what we have already developed at hi5,” said Bill Gossman, CEO of hi5. “Over the last two years, we have made a substantial investment in building out the industry’s most robust commerce infrastructure for virtual goods and gaming and this acquisition will considerably augment both our commerce platform and domain expertise.”

“We are excited to be joining a company that shares our philosophy and vision for how social gaming will evolve,” said Kevin Gliner, co-founder and CEO, Big Six. “This deal is a perfect match because it enables us to accelerate our go-to-market plans by leveraging hi5′s huge global audience.”

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$23.74 million invested in virtual goods this week

Friday, January 22nd, 2010

Over the course of 2009 we saw the world on the verge of an economic collapse. While the current economic situation has hit some industries harder than others, and as we learned, even the video games industry isn’t recession proof. However, if venture capitalists remain bullish on virtual worlds and goods as they did this past week, 2010 could be a banner year for the industry as a whole. This past week alone, three individual companies saw injections of cash totaling $23.74 million. Let’s take a look at who got a part of the take this week.

Crowdflower

Crowdflower is an outsourced labor startup that rewards work with both real world money and/or virtual currency. Led by Trinity Ventures and Bessemer Venture Partners, Crowdflower also received funding from it’s original angel investors including the Founders Fund, Travis Kalanick, Marcus Ogawa, Manu Kumar, Gary Kremen, and Lorenzo Thione. This round of funding saw a healthy $5 million aid Crowdflower’s startup efforts.

The concept is simple enough: outsourcing mundane task that can’t be automated to a crowd sourced pool of workers that sign on to perform a small part of each task. For their efforts, workers man then choose between monetary or virtual currency payment. Currently partnered with Gambit, Crowdflower has completed over eight million tasks, grown revenue over 750 percent, and increased their labor output by 760 percent.

6 Waves

Hong Kong based 6 Waves made out with the bandits share of this week’s booty, garnering $17.5 million. Funding arrives from Insight Venture Partners. 6 Waves has filled various roles within the virtual worlds community, one of developer, and the other as publisher, specifically through promotion and monetization support for other social game developers.

“We started publishing for Chinese developers, but we have since diversified to work with developers from all over the world. “ comments co-founder Rex Ng. “To date, we have partnered with many developers from US, Canada, France, China, Hong Kong, and Singapore, with more in the pipeline. Since our audience spans across North America, Europe and Asia, 6 waves provide a one-stop shop for developers to reach a global audience.”

If you’ve never heard of 6 Waves, now would be the time to sit up and notice. Currently, they’re one of the largest developers on Facebook, operating 141 apps and serving approximately 44 million monthly users. To put their growth rate into perspective, only one year prior, 6 Waves was serving 22 million monthly users from a pool of around 60 apps. And now for the kicker – the 6 Waves team is made up of only 18 people, proving that lean-and-mean can get the job done.

Rixty

Rixty, a payment services provider recently announced a $1.24 million seed from Javelin Venture Partners, Accelerator Ventures, First Round Capital, Freestyle Capital, Nueva Ventures, and Soft Tech VC. Additionally, “several” undisclosed angel investors took part. As part of the deal, Javelin Venture Partners Managing Director Noah Doyle will not be sitting on Rixty’s board of directors, as will DIgg’s current VP of Product, Kevin Desai. Both men have experience in online payment platforms, Doyle formerly of MyPoints.com and Desai from Achex, which went on to be acquired by First Data.

Rixty’s main tenant is facilitating virtual goods purchases for those that might not always have access to said content (read: no credit card). Working in cooperation with CoinStar, Rixty users are issued an exclusive PIN that they can enter into a CoinStar machine to receive their payout not in the form of cold, hard cash, but rather in virtual currency points. The currency points are then tabulated at Rixty, and through partnerships, gamers may then use this Rixty cash in their (hopefully partnered) game of choice. By keeping users’ virtual currencies in house, Rixty leverages this power and is certain to keep users coming back for more through various promotions, contests, and giveaways.

Again, $23.74 million in Venture Capital funding was announced just this week alone, and we’re only three weeks into a new year. Let’s hope that these funding sprees continue, and that 2010 will see a continued increase in not only the number of options available, but as the industry grows, so will the quality and innovation levels increase.

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New Study: Women competitive, social, brand engaged, loyal casual gamers

Wednesday, November 11th, 2009

There was a time when the term ‘gamer’ held a certain negative connotation to it. Past studies have shown that this once held preconception is vastly different today. With the advent and popularity surrounding casual gaming, the gaming landscape has changed dramatically. Just how dramatically? A new report released by Q Interactive and Social Media World Forum has found that female gamers are highly engaged with brands and virtual currency consumption.

QinteractiveWhile the sample size is still relatively small, approximately 2000, the results are enough to make any marketer or developer of casual games jump for joy. The study found that female gamers are passionate and competitive about Green Patches and Happy Aquariums, and often stock up on virtual currency. The study also found that women are highly engaged in branded virtual goods, and are much more likely to acquire virtual currencies through winning more, or accepting a branded offer, as opposed to paying for it with “real world” money.

“As brands seek relevant and natural ways to shake hands with women via social media, the gaming and application marketplace holds tremendous potential to integrate in a consumer-friendly, meaningful way,” said Matt Wise, President, Q Interactive. “Women seek a partner to support their entertainment, which is exceptionally important given their busy lives.”

A closer look at female gamers

  • 85 percent of those surveyed use five or less games and/or apps regularly, indicating an inclination to be loyal to a handful of favorites; approximately 15 percent regularly invest in six or more games/apps at a time
  • More than half (57 percent) are earning/spending virtual currency daily
  • Introduction to new games and apps rest heavily on word-of-mouth: Nearly three-quarters (74 percent) got involved in a game or app due to “a recommendation” by family or friend or because they “noticed a friend or family member’s score”
  • 95 percent utilize virtual currency primarily to “gift” and/or advance games
  • In interacting with games and apps, 57 percent feel virtual gifting – for example, giving a bag of virtual makeup from Sephora – is as meaningful as real life gifting

How Brands and female gamers interact

  • All but six percent (97 percent) of women prefer to earn virtual currency through either winning more or accepting a branded offer – versus paying for it with “real” money
  • While they game and app quite regularly, only one in ten women have actually used “real” money to purchase virtual currency; of that, 85 percent have spent under $100 in their gaming and aping activities – ever
  • Of women who have signed up for branded offers to get more virtual currency, 67 percent found the offer useful
  • 37 percent of those women chose the branded offers based on “content”; 17 percent went for offers with free products or services

“Applications and games are quickly becoming part of everyone’s daily lives,” said Ian Johnson, Director, Social Media World Forum. “This provides a terrific opportunity for brands to serve as a trusted, valued partner to them. By having a presence in the game and app space, brands get the benefit of reaching an influential consumer set. With the support of brands, advance in games and apps and we’re finding also get information from brands they value.”

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Meez coming to MySpace. Meh.

Wednesday, October 21st, 2009

Popular social networking avatars developer Meez has recently announced that they’ve inked a deal with MySpace to provide it’s users with a virtual meeting point where they can play games and interact together in a virtual world inside the MySpace home. Running on Java, Meez Nation won’t require users to download any additional software. Likewise, a portion of Meez’s monetization, pre-roll and banner ads, integrates seamlessly with MySpace’s current platform.

generic_avatarMeez will naturally also be capitalizing on their other form of monetization: virtual goods sales. Using their proprietary form of virtual currency, “Coinz,” users can make RMT’s to fully customize their avatars. In addition to purchasing currency directly from Meez, users can also pick up pre-paid “Coinz” cards at major retailers such as Target and Best Buy. Users can also earn virtual currency by participating in ad supported games – a win/win for Meez. Meez CEO John Cahill stated that virtual goods sales constitute 30 percent of the company’s revenue, but also notes that Meez “hasn’t yet had the conversation” with MySpace execs to discuss a revenue sharing model based on ad generated revenues.

If we rewound to April of 2008, this deal might be a fantastic score for Meez, but in late 2009, this integration can only be described as: Meh. While social games developers reaping profits hand over fist on the ‘other’ social networking giant, why would Meez take the MySpace route over Facebook? CEO Cahill explains that a “significant” number of Meez’ 3 million monthly visitors actively spend time on MySpace as well. He also notes that MySpace’s target demo is more closely inline with Meez’, a predominantly female, teen group. Furthermore, Cahill comments that the way and manner of connections on MySpace is a better choice for Meez integration, “Many people use Facebook to stay in touch with real friends; MySpace is more about discovery—meeting new people that like the same music, movies or games that you do. Meez Nation creates a similar friend-discovery space.”

Cahill is also quick to point to a recent Nielsen study that place MySpace at the top of the social networking pile in terms of video streams. Since a portion of Meez’ revenue is derived from pre-roll advertising, he considers MySpace to be the right choice. He noted a Warner Brothers promotion that received 50,000+ views per day when run as part of a campaign in Meez Nation.

facebook_members_2But here’s the rub: The same Nielsen report provided a plethora of usage statistics that clearly indicate that Facebook is blowing MySpace out of the water, at least in terms of time spent on the site. Since April 2008, Facebook has seen a steady increase in activity, amounting to a 699 percent increase. While at the same time, MySpace saw a 31 percent drop in time spent on the site. So while Cahill can justify the Meez integration with MySpace as much as he wants, just by looking at the numbers, he’s chosen the wrong platform. The target audience may be more closely inline, but at the end of the day, isn’t product integration about expanding markets and thereby, posturing your product in the biggest marketplace? Even if video content consumption is higher on MySpace, is Meez now a video provider? Or virtual world builder? Or virtual goods vendor?

Or….as there’s no hint of exclusivity in this agreement (remember, the Rev Share conversation hasn’t even been put on the table yet), perhaps this just a stepping stone to get ready for ‘The Big One”?

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Under the radar Playdom now pulling down “Upwards of $50 million” per year

Tuesday, October 6th, 2009

As social and casual gaming continues it’s steady increase in usership, and associated revenues earned, a few names surface to the top as leaders in their field. Playfish and Zynga certainly come to mind, but there are a number of ‘others’ out there there are obviously finding success in what they’re doing. One such company, apparently flying relatively low on the radar, Playdom, is not only seeking additional funding, but turning a healthy $50 million in revenues per year.

playdomAccording to a post by insidesocialgames.com late last week, a reliable source within Playdom commented that the company’s “annual revenue is upwards of $50 million.” Not only is the company rolling in a positive cash flow, but they’re also raising a buzz amongst the VC crowd. According to Dean Takahashi, Playdom is raising a VC funding round in the double digit million, and seeking a valuation of somewhere between $100 and $200 million. According to one of Takahashi’s sources, “I think they’re going to be able to get that valuation.”

By no surprise, the social gaming company is monetizing via microtransaction sales of virtual goods, items such as weapons in it’s popular Mafia style game, and virtual clothing and customization options with it’s virtual world app Sorority Life. The company also rewards virtual currency to it’s users through participation in advertising offers, so a clear cut breakdown of revenues is unavailable at this point. Currently, the company has three of the top five social games on the MySpace charts, and has steadily been gaining traction on Zynga and Playfish’s turf on the Facebook games charts. Clearly indicating continued growth and expansion, Playdom has also recently launched it’s own Mafia game, Mobsters, for the iPhone.

The string of hits continues for Playdom, as last week they announced a deal with pre-paid card provider InComm. These pre-paid cards are aimed squarely at the highly lucrative teens market, or in other words – those that have yet to acquire their own credit card or mobile phone account. This target market makes up one-quarter of all of Playdom’s users. Likewise, the Mountain View, California company has expanded from 60 to over 110 employees in the past few months, have opened an office in San Francisco’s SOMA district, a respectable address for any digital firm, AND in June, landed a number of gaming industry veterans, including former EA #2, COO John Pleasants, who’s now running Playdom.

While Playdom still trails what some would consider the industry leader, Zynga, with 28 million users vs. 129 million, it’s important to keep the timeline of Playdom in perspective. Still a relative newcomer to the market, it seems as though Playdom is starting to assemble the pieces to what could very well be a very powerful puzzle.

With that it mind, it’s also important to keep perspective on where Playdom is at the current moment. Playdom may be enjoying success right now, but let’s not forget that they’re currently involved in a copyright infringement suit with Zynga, and a number of Playdom’s successes have really been only reverse engineered versions of other popular social games. The true test of Playdom’s ability to truly stand on their own two feet will come when they produce an original work, and drive it to the top of the social gaming charts.

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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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Hi5 layoffs could have a silver lining

Wednesday, April 1st, 2009

Hi5, the world’s third largest social network hasn’t exactly had it easy this April Fools day.  Both VentureBeat and TechCrunch lit up the airwaves yesterday with reports of this, that and the other.  Let’s take a look at what happened, and what’s going to happen.

hi5logo_300dpi_3300x2550The social network news reports were abuzz yesterday afternoon when rumors were confirmed that hi5 had recently failed to secure another round of funding.  According to MG Siegler’s source, the deal was as good as done, just in need of a few signatures.  This wasn’t just pocket change, as the deal would have been somewhere in the $30 million range, effectively doubling it’s previously raised $35 million.

VentureBeat’s source admitted that hi5 was now down to one group  – the group focusing on entertainment, gaming and microtransactions.

Hold up.  Let me get this straight. The world’s third largest social network was passed over for additional funding, and are now down to the gaming/microtransaction group?  Seriously?  With 62 million monthly visitors, this could be downright huge.

Enter stage left – the silver lining

Ok remaining hi5 folks, take a second and give a deserved lick to those wounds.  Layoffs are never fun.  It’s comeback time.

And coming back they are.  Hi5 has just announced a partnership with games distributor and ad network Mochi Media.  Mochi will introduce 200 flash games initially, with plans for many more to come.  Games on hi5 is not new, as they introduced their virtual currency, Coins, in December of last year, and approximately 40 games back in February.  However, in the newly introduced Mochi Media games, hi5 coins will allow users to buy virtual items, download a select number of games, and access special, or additional features.  It might be fair to say that hi5 is arriving fashionably late to the party, as the site has on average 62 million users per month, but hasn’t really nailed down how to monetize these users.  Given Tencent’s conglomeration of an instant messaging client, social network and web portal recently reported over $1 billion in revenue from a variety of virtual goods, and Habbo recently announcing their $60 million in virtual goods sales (although I’ve also seen $70m and $74m – dang € to $ conversion), chances are hi5 is still very much in the running.  Earlier this month the company stated that they were aiming towards a $25 million take this year, with half of the revenues stemming from virtual goods, half from currently existing advertising.

Again, hi5 may have sustained a significant blow when additional funding fell through, but clearly they’ve already been working on monetization via microtransactions and virtual goods sales, so they’re already one step closer to a complete re-invention of themselves.  Will all of those 62 million users stick around?  That is yet to be seen.  My guess is that sure, some of them may go when they start to see dramatic changes to the site, but on the other side of the coin, by re-inventing themselves as a primary gaming destination, and combine both forms of revenue generation, we might very well see not only the return of hi5, but perhaps a hi10.

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Facebook still flirting with Microtransactions

Thursday, March 26th, 2009

In yet another ‘fanning the flames of desire’ move by facebook, the social networking’s “game guru” Gareth Davis confirmed that they are in fact “looking at” developing a true virtual currency system.  Davis specifically choose the phrase “looking at” to indicate that facebook may or may not be hard at work on this project at the moment, but also reserve the right to shelve the project if they see fit.

If you remember back to the beginning of the year, we reported on facebook’s previous flirtations with microtransactions, and how they’ve still yet to take the plunge and put something out there.  Likewise, a few months after the social network announced their developer platform in 2007, they hinted at microtransactions, and even made the high profile move of bringing Benjamin Ling on board.  Ling is credited as the lead Google engineer in getting the Google Checkout product up and running.  But, less than a year later, Ling packed up his office and headed back to Google (no hard feelings, eh?)

“Clearly, it’s something that is a large undertaking,” said Davis in an interview at the GamesBeat conference in San Francisco. “So it has to be done carefully.”

Maybe facebook is really working the ‘build ‘em up, and only make ‘em want more’ strategy, but they’re also riding quite close the ‘boy who cried wolf’ line as well.   Davis would not confirm any specifics on the platforms plans for virtual currency, but he did comment on the main benefit for consumers would be the removal of friction from virtual goods transactions (I can haz cupcake?) on both the central platform and independently developed client applications.  Specifically, Davis’ pros and cons:

The con: Virtual currencies are vulnerable to fraud. If Facebook sells currency, it would have to police transactions to prevent scams.
The pros:

  • A Facebook currency would let its 175 million active users buy virtual items and game features more easily. Right now, users need to fork over their credit card information every time they want to spend money with a different application developer.
  • Like iTunes, the currency program could turbocharge sales by allowing one-click purchasing, which would result in more money flowing to third-party developers. Facebook also could decide to take a cut of the sales.
  • A system of virtual currency could make sales of as little as 25 cents viable since the currency would be purchased in chunks of $10 or $20, then spent in smaller increments over time. Currently, a single credit card transaction for a few pennies would cost developers more money than they would make.

(Source: latimesblogs)

Note the number of pros vs. con?  Another note worthy tid bit to notice here is that late last year, facebook itself switched the terminology on their own in house offerings.  Instead of pricing virtual goods at price points in Dollars ($), they chose the name ‘credits’, thereby making it easier for the site to charge more or less than it’s long standing standard of $1 per virtual item.

So there you have it casual games/facebook fans.  Another ‘hey baby, come here often?’  or serious commitment from facebook?  In a $1.5 billion global industry, wouldn’t it make sense for facebook to jump in on a piece of the action, and the future of gaming?  If fraud is the only thing holding facebook back, why not simply outsource the financial mechanism to a microtransactions service provider and be off to the races with real world testing, 100% platform integration, and dramatically reduced time to market?

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Social Network hi5 introduces hi5 Games

Friday, February 6th, 2009

San Francisco based social network hi5 has recently announced the launch of hi5 Games, a vehicle for users to further interact with their social network contacts and meet new people.  With over 60 million unique visitors per month, hi5 is one of the world’s largest and fastest growing social networks.  hi5 Games will be presented in a fun and socially integrated gaming environment.

Setting itself apart from other social networks, hi5 focuses on deeply integrating social context within game content.  Their integrated messaging, challenge, and invite features also seek to make it a more compelling gaming experience with existing friends and easier to find new friends.

Staying true to their commitment of delivering fun and interactive ‘social entertainment’, hi5 Games represents a new and important monetization opportunity using hi5 coins.  hi5 Coins is the systems’ proprietary virtual currency, and will allow users to purchase premium content, advanced gaming features, and status upgrades via direct transactions.  In addition to these microtransactions, hi5 will also offer advertisers new and immersive options within hi5 Games, thereby allowing brands to better engage their ideal target audience.

“For our target audience of 15 to 24 year-olds, social gaming represents a major expenditure of time and money around the globe. hi5 Games is just one of a range of immersive features that will further engage our users, both keeping them on the site longer and driving them towards new forms of monetization for our business,” said Ramu Yalamanchi, founder and CEO of hi5.

hi5 Games kicks things off by offering players a variety of casual games in sports, arcade, strategy and card genres.  The site will be adding additional games on a monthly basis.  hi5 Games launch highlights include Disco Bowling, Pool, and Mahjong.

Any hi5 Games players out there?  We’d love to hear your feedback: Leave a comment below…

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