How open is too open

February 28, 2008

Rueben Steiger, CEO of Virtual world ad agency specialist Millions of Us, gave a talk during GDC and Gamasutra had a recap. He says the reason that virtual worlds have had initial success is due to the lack of rules and openness, the user defines the fun, not a game designer. However, hybrids with more traditional game mechanics are “probably a lot more mass market friendly.”

I think he’s right, casual users will appreciate the openess that a virtual world can offer, but they want to be told what to do. They want goals and missions. They don’t want to always have to make their own fun. Second Life is a good example of being too open and not offering enough goal oriented content. SL has yet to reach mass market adoption and have even seen their growth plateau recently.


I want

February 28, 2008

Written correspondence is extremely rare these days, what with the “Internets” and “Electronic mail”, but there is still something special about receiving a hand written letter, now more than ever. While I tend to stay away from snail mail, I just don’t have the patience, I have a feeling that if I had my own personalized stationary, I would do alot more correspondence with people. The stationary I want is Symthson’s, which has a proud heritage of making stationary since 1887, and would surely impress anyone receiving it.

Not only do I want this stationary, I’d also like a personal assistant to handle the mailing and address. I figure once I’m able afford dropping this much on stationary, a personal assistant would make sense.

On rotation

February 27, 2008
  1. Ride A White Swan by T. Rex – My knowledge of T. Rex’s music was limited to ‘Bang a gong’ and ’20th Century boy’ but since hearing this song I have a whole new appreciation.
  2. You make my dreams come true by Hall & Oates – Just saw this on a trailer for a Will Farrel movie. For my money Oates has one of the best mustaches ever.

Virtual goods market size

February 18, 2008

I thought I’d take another stab at estimating the market size for virtual goods. The size of the market can be determined using the following formula:

Virtual goods market = Potential users x Yearly user spend x Penetration

Below I’ve gone through each variable and made estimates for 2006, 2007 and 2012.

Potential users
The easiest figure to use for this would be the total number social network users, as Bear Sterns released a research report (in 08/07) that had projected and historical figures. Generally social networks and virtual worlds will be where users buy  virtual goods and most likely if you’re a virtual world user, you’re also a social networking user, so there is no need to double count. There could be other sites that will offer virtual goods, but they’ll most likely be “social media” related, and it’s not clear exactly what BS has defined as “social networks”, so its best to make it simplified and just use their numbers.

Potential users:
2006 = 382m
2007 = 573m
2012 = 914m

Andrew Chen has a good post on his blog recapping the Virtual Goods Summit during June of 2007. One of his take aways was that only 5-15% of users will ever buy virtual goods (Darren Herman commented that he thinks this % will  actually increase over time). Unlike potential users, there isn’t a source for penetration figures. In 2006, we know that the market was roughly $1.5bn (this has been often quoted but I’m not sure of the original source, I assume its from the Virtual goods summit), if we assume penetration of 7%, it results in yearly user spend of $54, which might make sense. I’ve assumed an increase on 1% a year as virtual commerce gains acceptance.

2006 = 7%
2007 = 8%
2012 = 13%

Yearly user spend
As mentioned in Penetration, in 2006 we’re assuming the average yearly user spend was $54 or $4.5/month. This is lower than the big virtual worlds (Maple Story: $7, Habbo Hotel: $15-20) but considering Facebook charges only $1 for virtual items than $4.5 might be right. Also, Club Penguin charges users $6/month which validates that some users are willing to spend that amount every month. I’ve assumed small yearly increases.

Yearly user spend:
2006 = $4.5 x 12 = 54
2007 = $5 x 12 = $60
2012 = $7.3 x 12 = $87

Virtual goods market estimates
Using the variables above, the market estimates are:

2006 = $1.5bn
2007 = $2.7bn (90% growth
2012 = $10.3bn (07-12 CAGR: 30%)

Also posted at


February 12, 2008

Fox Searchlight has some videos of Michael Cera and Jason Bateman chatting about random stuff and promoting their movie Juno. This one is my favorite:

Business, casual gaming

February 12, 2008

What you need to know about casual gaming:

  1. Fast growing market – Casual gaming is worth $2.2bn, and growing fast – growth rate estimated at 20%
  2. Investors are getting in – Rebel Monkey ($1m), Alamofire ($2m), Zynga ($10m), C3L3B ($3m), PlayFirst ($26.5m), Doof ($??), Outspark ($11m) to name just a few
  3. Social gaming – Currently this means casual games that integrate with social networks, but virtual worlds are also starting to integrate with casual games (ie. Flowplay and something is looking at). Inside Facebook has a good rundownof the top Facebook game developers. One interesting take away is that the daily active user ratios for these gaming apps are much higher compared to other apps, 10-20% vs. 4-5%.
  4. Widening demographics – The San Jose Mercury News reported that women in their 30s and 40s are behind the casual gaming boom – apparently women account for 74% of paying customers. The NY Times just ran an article on how the “growth in the now $18 billion gaming market is in simple, user-friendly experiences that families and friends can enjoy together.”
  5. Big game publishers are taking notice – EA has started a division called EA Blueprint. The group will be led by former EA Los Angeles general manager Neil Young and artist and creative director Alan Yu. Products will include brand extensions of existing EA games in addition to original IP. The EA Blueprint games will reportedly focus on social networking platforms, such as Facebook. Apparently CAA is involved somehow.
  6. Monetisation – Current focus is on in-game advertising. CPMs are difficult to judge, Jeremy Liew posted awhile back that Wild Tangent was getting an eCPM of $150, but this was a mix of revenue from both premium and advertising driven games. Venturebeat interviewed Zynga and they were talking about CPMs of $0.10. Awhile back Google bought an in-game ad network so apparently they are getting into this space.
  7. Guys who know what they are talking about – Jeremy Liew, of Lightspeed Partners and Andew Chen

Also posted at’s blog.

VC 101

February 11, 2008

There are some great sites out there that help you understand how to work with VCs, the top 3 in my book are the following:

  1. The Funded– Great resource when researching VCs. You can search based on funding level, geography, how quickly they fund and also on how they are rated by entrepreneurs. Reading the comments left by other entrepreneurs is fascinating and full of tips, they’ll tell you which partners to approach and who to avoid. 
  2. Venture Hacks – From getting an introduction and making your first pitch, to term sheet negotiations, this site gives you step-by-step instructions.
  3. Get Venture – Another great guide to raising venture capital written by Mark Peter Davis, an intern at DFJ Gotham Ventures. Just found this one and have been reading it non stop, basically everything thing you need to know about VCs