Great Facebook application review

November 21, 2008

The great blog Inside Social Games has put up a glowing review of Citypixel Spaces – our brand new Facebook application. Here are a few great lines from it…

“Citypixel – 8 Bits of Awesomeness”

“Part The Sims, part Lego, pure awesomeness”

Read the whole review here. Also, be sure to Digg the article here.


Citypixel.com launches Facebook app

November 13, 2008

After a long period in development, the virtual world citypixel.com has launched its Facebook application. Check it out here.

The Facebook application allows users to…
– Show off their virtual spaces to all of their Facebook friends
– Invite their Facebook friends to become citypixel.com users
– Interact with their friend’s apartments by rating them and visiting with their avatar
– Buy and send virtual gifts to their friends
– Through paypal, buy extra ‘pixels’ (virtual currency)

Citypixel.com has 30k users and the FBA already has 400 users, so we’ll see what happens.


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

Penetration
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.

Penetration:
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 citypixel.com


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 citypixel.com 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 citypixel.com’s blog.


Virtual world biz model – Virtual commerce

February 5, 2008

While social networks are focusing their business models on advertising, virtual commerce are driving the business models of virtual worlds, ex. Habbo Hotel (90% of revenue), Tencent (65%), Cyworld (43.5%) and Nexon (85%). Statistics on the current market size of virtual goods are hard to come by, but one stat puts the amount that people spend on virtual items at over $1.5bn/year.

Use cases
Jeremy Liew has a great post on the use cases for digital goods; (i) increased functionality (ii) self expression and (iii) communication. The virtual goods in citypixel.com are mostly about self expression, allowing users to personalize their apartments and other spaces.

Citypixel items

The ability to buy a car with virtual currency has introduced virtual goods that increase functionality into the world.

Citypixel car

Ultimately, to maximise the monetisation potential of the virtual world and to provide users with the greatest number of options, all 3 use cases should be provided.

Current adoption rates
Finding statistics on the current level of user adoption of virtual commerce is very difficult. Social networks and virtual worlds are using private companies and don’t have to release these figures. To get a sense of what the average number of transactions per user might be for social networks and virtual worlds, you have to really scrounge the Internet looking for numbers.

The most readily available statistic for these sites is registered users, “active users” or “unique users a month” would have been preferred but there are varying definitions and not always released. I then tried to find how many virtual transactions each social network or virtual world has a month – this was quite difficult and I was only able to find numbers for a few, and they are a bit sketchy. See the table below for my findings:

Virtual items stats

The market for virtual commerce is at its infancy so these low numbers aren’t very surprising. What is surprising is how successful Neopets has been in this area – apparently they have consistently ranked as one of the Internet’s stickiest sites, which would explain alot.

Transaction size
I tried to find the average dollar amount of a typical virtual transactions, but this was even more difficult. The average transaction size on Xbox Live is $2.78, with users spending on average $1.46/month. Maple Story transactions are on average $2.67 with users spending $0.02/month. Facebook charges $1 for each virtual gift. According to Wikipedia, Habbo hotel users who participate in virtual commerce spend $15-20 a month, no idea what average user amounts are though. I’d be interested if anyone has anymore info on how much users are spending on virtual goods