Digital Media PropertiesDigital Media PropertiesLessons from Social Games to Monetize their Fanbases

Nima PourshasbVP, Strategy & Corporate Developmentnpourshasb@livegamer.com December 1st, 2010

Live Gamer OverviewLive Gamer Overview

Micro‐transactions: Complete solution for virtual goods and digital content e‐commerce

Billing & payments, virtual currency & e‐wallet, storefront, merchandizing, analytics, player‐to‐player trading

Offices in NYC, Palo Alto and Seoul

90 publishers, 150 titles

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Focus on online games. Now moving to other digital entertainment

Digital Entertainment MT opportunity is still nascentnascent

US Digital Media & Entertainment gwill be $134BN by 2014 (PWC)

Music Sports TV/Cable PrintMusic, Sports, TV/Cable, Print

Any IP with fan base community

Now at inflection point with respect to microtransactions and virtual goodsvirtual goods

8 lessons digital media properties 

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have learned from observing social gaming

1. They like what they see…1. They like what they see…

Economics

‐ Revenue run rate

‐ COGS of virtual goods

f $‐ Upfront investment: $120K to develop Farmville

‐ Derisking a content business

Accretive revenue stream

Existing revenue streams are struggling

Source: Barclays Capital 2010

…and they know they need to move in that direction direction

Digital transition continuesg

2. Don’t need to make the “next Farmville”2. Don t need to make the next Farmville

Initial wave of M&A activity targeted at purchasing game developers

‐ Disney buys Playdom ($763MM)

‐ Warner Brother buys Turbine

‐ MTV buys Social Express

Light game mechanics and dynamics

“Gamify it and they will come…and they will stay…and life will be better”

Source: BunchBall

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better  

3. Their fan communities already display behaviors that drive virtual goods commerce behaviors that drive virtual goods commerce…

‐ Competition:  Who is the biggest fan?

‐ Gifting / enhanced communicationg /

‐ Self‐expression

‐ Insatiable demand for content

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… and the social gaming framework fits directly into the online fan community experienceinto the online fan community experience

EASY TO PAY COMMUNITY COMPETITION

CLEAR GOAL

INSTANTGRATIFICATION

S SSUPER USER

THE 1% THAT PAYS

SOCIALIZE SELF-EXPRESSION

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4. They already have the whales & the super usersusersAlready invested in: user acquisition, user retention, engagement, transition from passive to active to paying

Whale: Bonjovi VIP package: $1,750j p g $ ,

Conversion to paying users > 1‐5%

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5. They have high quality content

Archive libraries, cut scenes, behind‐the‐scenes, interviews

Content is dynamic: e.g. sports y g presults, tours, new albums, new editions, new season

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6. They get e-commerce

Merchandizing & sales optimization

Importance of payment methods

Familiar with reporting challenges (e.g. artist royalties)

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7. They really like earned virtual currencies

Strong incentive rewards for fans

Long list of desired behaviors

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8. They know that fans will follow them to the experienceexperienceMarketing channels: Email groups, fan websites, PR, events

Interaction with the IP is significant gpart of the experience

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New wave in MTX: Monetization of fanbases

Just starting

Opportunity for entire social gaming ecosystem: gamification, microtransactions, virtual goods, game design and development, , g , g g p ,advertising

Important implications on market size and definition of social gamingImportant implications on market size and definition of social gaming

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Thank you!

Nima PourshasbVP Strategy & Corporate Development

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VP, Strategy & Corporate Developmentnpourshasb@livegamer.com