Virtual Worlds Go Mainstream For Businesses

By Ron Callari

Viximo, a 2-year-old start-up company, is fast becoming a leader in the burgeoning virtual goods industry. For those who are new to this commercial space, virtual goods are digital products that are gifted, bartered or paid-for items online or via mobile phones. Videos, icons, e-cards, personalized avatars - items that allow people to better express themselves, add gravitas to their online persona, or increase their enjoyment of a game - make up the products that are now known as virtual goods.

Considered an unlimited opportunity for thousands of Web publishers, Viximo distinguishes itself from its competition in how it addresses the market. It claims it is the first and currently the only virtual goods provider that brings together everything a publisher needs for virtual goods in one complete, easy to implement, customizable solution.

Viximo is one of the only companies that offers both a system for selling virtual goods and the goods themselves. This then permits clients to either upload directly into their own virtual gift stores or customize at will.

In addition to partners such as Fotolog and Zorpia, Viximo just added BlackPlanet.com, SmartDate.com and FanIQ.com into its virtual goods platform. These deals extend Viximo’s reach to 60 million users, a new milestone for the company.

The increased interest in virtual goods is apparent by how quickly it has scaled. U.S. consumers spent $1 billion on such items in 2009, according to Inside Network, a market research company focused on Facebook and social gaming sites. Daniel Strang, the newly appointed CEO of Viximo, says he “sees these types of purchases as a potential substitute for dying revenue streams (such as subscriptions) in the publishing world.”

Brian Balfour, founder and vice president of product marketing for Viximo, speaks with DMB about how companies can capitalize on the virtual goods market.

What is the current status and future of the virtual goods market and how does it break down percentages between social networking, online gaming and online dating sites?
The current size of the virtual goods market in 2009 was about $1 billion in North America, and about $7 billion world wide. While North America still represents only one-seventh of the global market, it is the fastest growing - quadrupled in 2009 - and the youngest. There is still a lot of room to grow in North America and we expect it to double in 2010. I am unsure of exact percentages, but the majority of virtual goods purchases are taking place on social networks, which includes social gaming - probably around 50 percent. The next biggest area is more traditional gaming and virtual worlds, with online dating being the smallest piece at the moment.

What do traditional brands use virtual goods for? (e.g.  Kohl’s, American Apparel, Sears, K-Swiss, Eberjey)
There are a couple opportunities for brands to get involved in virtual goods.

The first way is a sponsorship model. Users are highly engaged with virtual goods and spread them virally to their friends, so it’s a great place for brands to embed themselves. Brands can pay to have branded virtual goods offered to the users in various social networks and games. It basically acts as a very engaging form of promotion that performs much better then banner advertising does on social communities.

The second way is a licensed model. Certain brands that have a luxury appeal to them have an opportunity to sell virtual goods around their brand to users for actual money.

Does Viximo supply Second Life with virtual goods? According to the blogosphere that site has lost popularity over the years? Why?
Viximo does not supply virtual goods to Second Life. We primarily work with social networks, online dating and casual gaming sites. These areas are where most of the growth happened in 2009 and will continue to happen in 2010. I think the fact that the public has lost interest in Second Life is a good thing for the virtual goods industry. Typically people originally associated virtual goods with something very geeky and non mainstream like Second Life or other 3D worlds. The fact is that they represent a smaller portion than other areas like Social Networking. Virtual goods is a mainstream thing and as users become exposed to it more often, it will become more socially acceptable and we will continue to see the industry as a whole grow.

What types of sites are “hot” right now? And why?
The three verticals [that we] mentioned are where we will see most of the growth in 2010. There are still thousands of these sites worldwide that have yet to institute virtual goods. But looking forward beyond 2010 there is a question of how virtual goods will expand into the broader social Web and content arena. It will happen, but just how we don’t know yet. Other areas of potential opportunity in North America would be consoles (xBox, Wii, etc).

Ron Callari is a freelance journalist and editorial cartoonist whose work has been published on AlterNet, CounterPunch and the Sacramento News & Review. He is currently a social media blogger for InventorSpot.com and the author of two graphic novels.

For Mobile Gaming’s Success, ‘Constraint is the Mother of Innovation’

By Alan Smodic

When the Facebook platform went live in May 2007, Zynga’s Bing Gordon says it changed everything about the social gaming industry.

“Its developer APIs were as solid as any video game console development tools, and it achieved mass market penetration much more quickly (Facebook apps are estimated to have reached 40 million users in just 12 months),” he wrote.

Social games, like Zynga’s Farmville and Mafia Wars, burst onto the scene and never looked back in the last two years, which led to the rapid growth of the industry. Zynga alone sees about 230 million monthly active users on Facebook.

But as the realms of social media move away from the computer and onto mobile platforms, more specifically to those of the iPhone, Android and BlackBerry devices, the young industry must adapt with it.

On the developer’s end, that hasn’t been too much of a problem, especially in terms of Apple’s iPhone. “The iPhone apps development environment has also proven to be enormously productive,” Gordon says, “and the iTunes Apps store is clearly a new ‘killer app’ for mobile computing.”

However, things begin to get a little trickier when other platforms come into the mix. Translating game play from the Web to fit onto numerous devices running either Android, BlackBerry, iPhone or even Windows Mobile takes time. And money.

Foursquare, which recently launched a beta of its BlackBerry app to about 5,000 testers, stated before that it ramped up its BlackBerry development only after it secured more funding. Gowalla, Foursquare’s biggest competitor, has yet to implement BlackBerry or Android native clients.

“As soon as we felt good about the financing going through, we hired our friend Pete to start working on it,” the company says in a press release.

Even then, it took another four months before the beta released. Meanwhile, iPhone and Android users were already growing well accustomed to their apps thanks to what many developers consider a better programming experience.

What has slowed down the applications more, though, (other than the opinionated arguments behind the SDK, API and IDEs) is the lack of ability to transition all profitable elements of the gameplay from the Web.

Each major social gaming company has admitted that they are tinkering with the elements that make them profitable. But most have found success through virtual currency, which hasn’t fully optimized yet on the mobile platforms.

For instance, Zynga reports that purchases of virtual currency account for most of its more than $100 million in revenue in 2009. That says a lot for its necessity to be included in all versions of its games to be successful.

It’s these limitations, or others that may surface as the industry continues to grow, which will only help it flourish, according to Scott Jon Siegel, a former iPhone lead designer for Zynga who now works for Playdom.

Playdom boasts more than 20 million monthly active users and possesses the no. 1 game on MySpace, Mobsters, which recently launched on the iPhone.

Siegel likes to work with a personal slogan: “Constraint is the mother of innovation.” ”As a game designer, I refer to this principle on a daily basis,” he writes. “Whether working on a brand new title, or making improvements to an existing one, the best ideas are born out of limitations - boundaries which designers must work around to achieve their goals.

“Easy problems are simply those with too many solutions. It’s when our options are severely limited that we begin to look in new and exciting directions.”

Playdom’s CEO and co-founder, Dan Yue, takes it one step further, stating that sticking to his company’s values of relying on user feedback and metrics to understand exactly what players want and expect will make social games successful on any platform.

“As long as we continue to respond to our players, we’re confident our games will be successful on new platforms and as player expectations evolve,” he says.

Web games to rule by 2013

By: casualgaming.biz

The rise of the web-based casual (and sometime not so casual) game has certainly been a quick one, but one of the sector’s leading execs believes bigger things lay ahead – indeed, he thinks global dominance is just around the corner.

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