What's next for virtual goods?

Nowadays,virtual goods market is very hot! Experts predict the sales total will be 2.5 billion by 2013.

And there are tons of information out there about virtual goods itself, and what the days will look at going forward. Particularly, I found the post by Maria Korolov , a few posts by Avril Korman and the "inside virtual goods" report by Justin Smith from Inside Network helped me to better understand the market mechanism and the its future.

I also studied IMVU, which is a site that allow you register an account and start to socialize with others in 3D in just a minute. I found their (or in general this type of company's) business model is very self-sufficient. Users generate content (virtual goods), sell the contents to other users, and they collect the money. Then their job would be to reach to more users, retain existing users and reach to even more users. And that's not easy job!

Based on the limited information and experience I have so far. In the next few years, what I like to see more are (1) creating new ways to partner with real life brand owners (what I mean here are retails, manufacturing companies)(2) grab the non-English speaking market (3) have something to offer for users with different taste and expectation.

Can brand name company produced some kind of virtual goods that are both suitable for selling on the sites and related to the products they sell in real life, and sell it at cheaper price than user created goods? So that they could use social sites as a lab to do product development and nurture their potential customers at the same time. Users probably feel more comfortable with brand names in virtual world just as they do in everyday life.

I found Avril's post on fashion very interesting. Then could company start to being more aggressive in this direction, meaning create more products to just improve user experience in certain categories? Now IMVU have a daily outfit contest, can we have a fashion show, and let user decide what they want to see? And can we work with some young designers as partners to see if we can make their label more aware and more sale. We do revenue share with them. By marketing deeper in certain categories, users will get more involved and addictive. It's a win-win for both sides.

How can anybody forget the other side of the world, the more populated continent and more conservative group of people? Conservative here only means their culture kind of educate them to value group more than themselves. These type of people must have stronger wish to express themselves. And virtual world seems to be an ideal choice for them - people don't know who you are and you can whatever you want without worrying the consequences. So I like to see companies like IMVU grabbing international users as fast as they can. It's going to be an asset with unpredictable value.

Lastly, say I have a user, who has no interest in outfits or the digital sex. But that user really want to climb to a cliff and jump down. It does not mean that user want to kill himself. It simply means he want to have other type experience. Will that type of user find something they want in virtual world too?

Visual That

Yesterday I opened my business week magazine and saw this picture in an article talking about CES in Las Vegas this year. The picture compares the size and weight of Panasonic new garage-size 3D TV to something people are very familiar with, like Koby Brant's height, length of mini cooper, weight of a cow. So that users reading this article have rough idea how big the TV is.


Precision of measurements is not very important in this case, the familiarity and approximation of measurements are the key. And this is an idea that have sat in my mind for a month now. How desperately I want to realize that idea by building my own website! I actually already have a name for the website. It's called "visualthat.com", isn't it a cool name? Maybe at this moment I don't have the ability to do that now. At the very minimal, I can tape my thoughts here. :)

What I have been thinking is a website that allows users to input the metric they are interested in (for example, height, weight, volume, currency etc) and the amount of the metric in numbers. And the website spits out a visualization of the metric comparing against something average people are familiar with. For example, I am interested in 1 yard. The website spits out a picture of a height of SUV, and visualize how much a yard is comparing to that height. This visualization could be chop some part of the SUV (suppose SUV is taller than 1 yard), or a ruler next to the picture indicating the approximate position of 1 yard. Another example, I am interested in how much 1 dollar is worth in Chinese currency. Well, I input 1 dollar, it shows me a mac burg from McDonald’s dollar menu, and probably 3/4 of the same thing over a map of China or 2 apples. To make it more fun, users are allowed to choose baseline they’d like to compare to. And an app for mobile devices can be created too.

The closest thing I can find on the internet is Wolfram Alpha . However, I don’t quite like (1) no pictures, (2) too many query results crowded in one page. This Scale of Universe from Primax Studio is also cool, but it does not (1) allow user input (2) choose baseline.

Anyway, this is going to be a very fun project, making measurement conversion allowing user input query and visualizing query result. And it’s going to be a challenging one! Hmmm, maybe I should start learning some html and JavaScript.

online vs cross-media marketing

The conversation between me and the interviewer (right, I am looking for another opportunity) yesterday made me think a lot about how advertisers look at which media and how much to invest, and how the marketing as a whole still needs a lot of improvement in terms of efficiency.

Like on the online advertising side, you have google, yahoo and microsoft which make up the head of the long tail curve. They utilized their resources (machines, technology, people) just to figure out what the user is really interested, what he is going to click next and also of course to grab as much market share as possible in the online world. Machine learning, collaborative filter, etc, etc wowed a lot of us. The competition is so intense that you almost feel unable to breathe for even a second!

On the other side, when advertisers look at the budgets in their pocket, internet is just one channel for them to broadcast their products, their brand. They probably rely on the analysis done by firms that do marketing mix analysis. Those people seem to come from complete different background with those in the online world. They often have training in economics and marketing. The model they use to analyze lift from different media and recommend mix, is more or less in the same level of linear regression.

So think about this, it is those "simple" models that recommend how much money actually going into this industry. It may not be very efficient as a very important starting point. And the internet firms use all the "fancy" stuff to make sure those money got spend efficiently. How ironic this is! Of course, there is nothing wrong using simple models. What shocked me is really the contrast!