Panel on Virtual Goods and Entertainment

Google’s Charles Hudson, a host of the Virtual Goods Summit, moderated the last panel of the day, on virtual goods and entertaiment.

Panelists:
Jim Greer of Kongregate
Erik Bethke of GoPets
Sean Ryan of Meez

Charles: What motivates people to stay engaged, and how do virtual goods play into that?

Ryan: For us it’s about self-expression. When our users spend 4-6 hours online, self-experssion as they show themselves in their IM, in their blogs, in the game, is incredbly impoertant to them. Our most loyal users are female. Unlike in Second Life, where they routinely blow up the American Apparel store, it has to be a conscious choice to engage with the brand. We find our users actually associate with brands. It comes down to, I’m online and I want to express something about my identity to everyone else.

Bethke: Self-expression is obviously addictive and it’s huge. Poeple want to express themselves, but I think it’s alot bigger than just self-expression. I want to ask you guys a favor. If you hav a party, get 4-5 different colored marbles, put them in bowls with one bowl mixed up and several bowls organized. See how long it takes for them to become totally oprganized. I think people can’t help but organize things. There’s really no distinction between play and work. Self-expression is one element of fun play or fun work, but people are oging to want to do a lot of other things, make money, be powerful, kill things, be romantic. What’s cool about virtual worlds is taht for the first time in history, we’re not stuck with the asshole who lives next to us. But we’re still unfortuantely randomly born innto this plane of existence. But now with virtual worlds, Habbo, WoW, massive eBay trading, MySpace, Facebook, people are living very signifcant parts of their lives in these worlds.

Greer: I come from purely a game industry background. When you play a game you’re motivated by rewards every two seconds in WoW, every 20 seconds you klil an emey, every 15 minutes you get to see a new area, every so many hours you level up. Evnetually you acquire all the rare armor you want. What our site is about is, Flash games are great because they provide instant rewards. They reward you at 15-minute intervals. Our site is about engaging in longer time-scales. When I achieve something I can show it to my friends. Pride in accomplishment, power those give you; as you level up you gain abilities. We don’t sell any virtaul items directly, we let people earn them.

Charles: In casual games, is there as meaningful a distinction between rewards earned and those purchased?

Bethke: You need to have different things you can do for differnet people, and different forms of achievment, some with moenty, some with time. It can’t be one solution for all people.

Greer: As a gaming community, we’re more about skill in achievment or grinding. We were doign enoguh new things with this company that we’ve chosen not to create a trading market. For an audience of gamers, they take pride in what they’ve done more than what they’ve bought.

Ryan: About 25 percent of our licensed items are paid for, but it’s a small portion of our revenue, and the majority of the people who use our currency earn it. I don’t believe for a moment that it’s going to be solely about virtual goods here. Advertising, subscriptions will continue to be a part of the landscape.

Greer: The reason we think people will accept advertising is becasue it’s rewarding behavior they’re doing in the first place.

Bethke: In virtual worlds, you have to have two different currencies at the least. You need to have one that’s purchased, and one that’s bought with time. You can’t balance a single currency.

Charles: Do you guys worry as much in casual games about fraud and bad actors?

Ryan: In our community systems, we just got assaulted over the weekend by the Patriotic Nigras, which takes glee in destroying communities. In a teen and 20-something site, you need to give a little more liberty in the behavior that goes on. You try and figure out that line, I’m not sure it’s a perfect line. We let some behavior go that wouldn’t be appropriate on Club Penguin, but you do have to figure that out.

Greer: People do invest in their reputation on our site. We do have problems where we’ll get a rush of trolls. We basically empower users we trust to deal with them.

Bethke: For our community managers, we do tons of the same kind of sourcing, but it’s extremely complex. I liken us to one of the big trading coampnies from a couple of centuries back. We’re private companies trying to make money, but these people live in our world and they think they have rights.

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