Ayar Market

below is a video talking with startup founders including the founders of LinkedIn and Jajah:

src: http://www.freetoplay.biz/2007/08/02/top-10-revenue-models-for-free-to-play-games/

The following 10 revenue models allow some or all of their associated game or virtual world to be played for free. The ordering is quite unscientific and I’m sure I’ve missed something obvious or messed up a detail. I leave it to the internet to correct me.

1. Virtual Item Sales
A well familiar revenue model first established in Korea and now the dominant model in Asia. Nexon - makers of KartRider, MapleStory, Audition and more - are widely seen as the leaders in this area, doing $230M of gross revenue in 2005 (the most recent year for which they’ve released figures), with 85% of that revenue coming from virtual item sales.

Virtual item sales is the practice of allowing users to purchase functional, decorative, or functional & decorative in-game items for use in and out of gameplay. A virtual item system usually uses two currencies - an attention currency (users earn virtual money via in-game activities) and a real money-based currency (users buy virtual money using real money). Typically, 5-15% of users opt for the latter currency and the influx of real world money is what provides the virtual item sales revenue stream.

What’s so compelling about virtual item sales is the unlimited ARPU (average revenue per user). According to Daniel James, CEO of Three Rings, some hardcore Puzzle Pirates users have poured more than $10,000 apiece into the game via virtual item purchases. To reach that contribution level via a World of Warcraft-style $15/month subscription would take a user 55 years.

While extremely shaky sources peg the overall size of the virtual item sales market at $1.5-2B this year, without an NPD-esque measurement organization there’s no way to verify that number.

2. Subscription Tiers
Runescape, the Java MMO from Jagex, is one of the leaders in the tiered subscription space. A tiered subscription model allows users to play the core game for free, but those that desire access to elite weapons or other game content, must pay a small ($5/month) subscription fee. Over 1 million of Runescape’s 6+ million users have opted into the tiered subscription program, grossing $60M annually for Jagex.

Dungeon Runners, an NCsoft free to play MMO, offers a similar $5/month subscription package that affords players access to the elite items, a bank and the ability to stack potions. It also gives subscribers server queue priority.

3. Advertising
Several different forms of game-related advertising revenue streams have popped up in recent years. Firms such as Massive, IGA and Double Fusion do big business in in-game advertising for clients such as EA, Activision, THQ and Microsoft. Game ad agencies typically serve up static ads (ads that ship with a product and never change) or dynamic (ads that are updated in real time via the net) within game products that are contextually appropriate for advertising (i.e. sports, racing, or contemporary shooters).

The size of this conventional in-game advertising market is currently pegged at $100-200M, according to well-placed industry sources. However, the number and quality of games with dynamic advertising enabled is escalating dramatically. So much so that Yankee Group predicts the in-game ad market will reach $732M by 2010.

But other, more emergent forms of in-game advertising have been at the forefront of enabling free to play. Examples include:

Google Adsense PPC ads (see recent post on Maid Marian, grossing $800K/year from Google Ads alone)
Sponsored item sales (Habbo Hotel)
In-game video ads (Real Networks)
4. Real Estate or “Land Use Fees”
Second Life is the biggest legitimate player utilizing this revenue model whereby virtual land is sold leased to individuals. Monthly lease fees range from $5 to $195, depending on the size of land in question. Users may also purchase their own island for a one time fee of $1,675 in addition to a monthly fee of $295.

Approximately 70% of Second Life’s revenue comes from land sales and maintenance fees. Of course the virtual land ownership revenue model doesn’t come without headache, as the Bragg vs Linden suit has proven.

Entropia Universe uses land auctions as a revenue stream, but a recent headline-making $100,000 land sale has been called into question as the successful bidder is an employee of Entropia’s developer, MindArk.

5. Merchandise
In what’s become a phenomenon of Furby proportions, Webkinz plush toys and their associated Webkinz World have taken the pre-teen set by storm. Users purchase a $15 Webkinz plush toy at retail and enter a secret code to activate the associated virtual character in Webkinz World. Beyond the retail plush toy purchase, there are no additional fees for playing in Webkinz World.

Two million Webkinz toys have been sold since April 2005, with more than 1 million of those users registering their pet online. That’s more than US$20M in retail sales in just 24 months. Products such as Bratz/Be-Bratz are quickly jumping on this bandwagon.

Another successful merchandise-based revenue model is collectible card games, or CCGs. Neopets launched a CCG in 2003 and just this week MapleStory became the latest free to play game to go this route, announcing a partnership with Wizards of the Coast. Consumers purchase real-world MapleStory collectible cards that come with codes redeemable for exclusive in-game content in the MapleStory MMORPG.

6. Auctions & Player Trades
In June 2005, Sony set up Station Exchange on select Everquest II servers. Station Exchange facilitates player to player trade of in-game items - including the provision of an escrow service - in return for a 10% closing fee as well as listing fees ranging from $1 (items and coins) to $10 (characters).

While Station Exchange recorded only $274K in net revenue in its first year of limited release, it was enough for Sony Online President John Smedley to declare it the future of RMT. Read the SOE Station Exchange whitepaper for more.

Entropia Universe - a world in which virtual items actually decay with use and require real money to repair or replace - utilizes first party auctions as their primary revenue stream. This means that instead of merely facilitating player to player auctions and taking a cut (a la Station Exchange’s eBay model), Entropia auctions items directly to their players.

Entropia items sell for ludicrous sums, with rare weapons auctions closing at $26,000, land auctions for (allegedly) $100,000. The May 2007 auction of five in-game banking licenses brought in $404,000, total. Ironically, Entropia takes no fees for player-to-player auctions.

In the wake of this success, watch for third party virtual item auction houses such as Dan Kelly’s Sparter.com to offer developers and publishers a cut to ensure the (exclusive?) cooperation of their products.

7. Expansion Packs
The best known example of expansion packs as a primary revenue model is the Arenanet product, Guild Wars. Likened by Richard Garriott to a series of fantasy novels, Guild Wars relies not on monthly subscription fees for its revenue, but on the sale of successive expansion packs for $29.99.

The game’s creators argue that the thin-pipe origins of their technology allow their game to be run far more economically than competing titles, enabling this no-subscription free model.

Over 3 million people have purchased the previous three Guild Wars products (Guild Wars, Guild Wars: Factions and Guild Wars: Nightfall) with those numbers set to surge again with the release of Guild Wars: Eye of the North on August 31, 2007.

8. Event or Tournament Fees
Netamin’s free to play, ad-supported Ulimate Baseball Online uses event fees as an additional revenue stream. UBO’s Pay to Play tournaments cost $5 per player to enter and offer cash prizes up to $4,500.

Shot Online, a free to play/virtual item sales golf MMO, also charges users to enter tournaments.

Third parties such as Valve’s Tournament.com and Groove Game’s Skillground.com are getting into the pay to play tournament scene as well. These sites charge charging entry fees for game tournaments for games such as Half-Life 2 and Counter-Strike.

9. TrialPay
At the recent Virtual Goods Summit and again at the Seattle Casual Games Conference, I bumped into representatives from TrialPay. TrialPay is a third party facility that allows customers to pay for products (i.e. games) by trying or buying from advertisers.

What this means is that when you go to pay for a casual game or purchase virtual currency, you can instead select from a demographically targeted list of special offers. Trying or buying one of these offers - from merchants such as Avis, Geico, Vonage, etc - allows you to get your game purchase for free, as the offer merchant has paid the game provider for acquiring a new customer on their behalf.

TrialPay claims that this allows game developers to earn more per user, as some offers pay game developers upwards of $50 per user (as opposed to the $20 a casual game might normally charge).

Someone from TrialPay can jump in and give me a more relevant example of their system’s use in the game space, but all I could find was a casual games company called Dreamquest Games.

10. Donations
Clocking in at last on the list is of alternate revenue streams is player donations. Raph Koster recently blogged about meeting up with the Kingdom of Loathing guys at ComicCon in San Diego. Raph reported that while KoL’s revenue is “definitely indie,” their primary revenue stream of player donations is a sustainable one.

According to Wired, the donation revenue has allowed creator Zack Johnson to quit his day job and hire six employees to help improve and maintain the product.

That’s what Maid Marian founder Gene Endrody would call a “lifestyle business,” but I suspect most of us wouldn’t scoff at it or any of the above revenue models.

src: http://www.internetlifestyle.com/blog/?p=235

#1: Atlas Shrugged by Ayn Rand

Not really a business book but probably one of the biggest influences for top CEOs and entrepreneurs who have cited this numerous times. I’ve read this several times and even threw out calling our daughter Dagny – but Missy didn’t go for that. I loved Atlas Shrugged for instilling the philosophy that productive value should be compensated and revered instead of these individuals being coerced into self-sacrifice because of their talent and other’s “needs”. It really cemented the argument in my mind that the more laissez-faire approach to governing is ultimately best for a free marketplace and productive society. Yes, this is a thick read but well worth it.

#2: Influence: The psychology of persuasion by Robert Cialdini, PhD

I’ve read it at least 9 times and it will truly help you understand the psychological triggers to a sale. Very powerful stuff. Written by a self-proclaimed “sucker” and professor of psychology to help consumers avoid being taken “in” by marketers – this instantly became a classic for us marketers to apply each of the psychological tactics to success. This truly is a power that should only be harnessed for good. If I was to start at zero again and if you stripped away all the knowledge from every book I’ve read  – I would start by reading this one and get it all back!

#3: How to Make Millions with Your Ideas: An Entrepreneur’s Guide by Dan Kennedy

Yes, even though this was published in 1996 and some of the new-fangled technology sections like broadcast fax are out-of-date – this is a top ten for sure! I’ve spent probably $150k or more with Dan and every product or resource I buy from him gives me back at least a 10-to-1 return. This is one of my favorite Dan books (along with #7 on the list) but you really can’t go wrong buying any of his books. When I first stumbled onto Dan I was so excited because he finally provided more of the true ‘nuts & bolts’ I was looking for. Sure, he’s grumpy and not the most sociable guy – but his information is priceless no matter what type of business you are in.

Side note: I also strongly recommend getting Dan’s newsletter. You can get a free 3-month trial here. (Fair disclosure – I do write a damn good column for it on Internet marketing each month)

#4: “Tested Advertising Methods” by John Caples

Absolute classic for any direct marketer or anyone that doesn’t want to waste a dime on untrackable ads. Devour this one and also look for Caples’ other books that are out of print. A true professional who generously published his directly-traceable results for everybody to benefit from. Many people might think there’s nothing to be gained from a book written decades ago – WRONG! Everything Caples reveals applies online in spades.

#5: Scientific Advertising by Claude Hopkins

Yes another “old time” marketing book but the gems in here are absolutely brilliant if applied today. Remember, human nature does not change – just the ways to activate our buying does. This is a short read and available online for free in many places since it’s in the public domain. Hopkins was one of the true advertising pioneers and this little guide really distills the essence of why you cannot use conjecture or opinion but actual tested, scientific methods to discover what your customers/prospects want.

#6: 4-Hour Workweek by Tim Ferriss

I have to admit it, I love Tim’s book because this is the book I wish I wrote. Tim’s a friend of mine and we met over our love of marketing, living life to the fullest and extreme adventures. There’s a reason this book has literally taken on a life of it’s own and achieved best-seller status so quickly. To me, it’s because the concepts in here are so compelling.

I’ve given away a ton of copies of this book and a lot of people have actually gotten pissed at me for giving to them. One of my hockey teammates said that to me again a few nights ago. He’s gets really mad when he looks at it on the nightstand because he’s not living his life the way it could be using the ideas in this book.

This book is designed to get you to stop and think if you are really putting the right things in the right priority. Tim has a concept of the “New Rich” and that’s people who have time to do the things they want & they’re passionate on. There’s some exciting concepts about life design, dumping the email habit, outsourcing and creating online “muses” that pay for it all.

#7: Rich Dad’s Cashflow Quadrant by Robert Kiyosaki

A lot of people might say “Rich Dad/Poor Dad” is more influential but I would argue this second book in the series really hits the concepts explained there harder. If you’re looking for a book to shake you or someone who needs it out of the typical 9-to-5 mindset – this will do it. The Cashflow Quadrant is all about creating enough passive income to pay for your needs and truly creating financial independence. It’s a simple concept explained by Kiyosaki’s drawing depicted on the cover.

On the left-hand side are the people who trade time for money. That’s the “E” or employee quadrant and the “S” or Small business quadrant. Then on the right-hand side are the people creating passive wealth by being “I” – Investors or “B” Business owners (who work on in their business not in it). While Kiyosaki’s books are pretty short on specific details – I think the philosophy and mindset is way more powerful and important.

#8: “Magic Words that Bring You Riches” by Ted Nicholas

There are 3 main people I’d give credit for opening my eyes to the enormous power of direct response marketing and helping me achieve financial independence before I was 31. And one of those is definitely Ted Nicholas. I cannot begin to tell you how many dozens of times I listened and read Ted’s material over and over again. He’s one of my all-time marketing heroes. Ted took the guts of his $197/year newsletter on direct marketing and distilled it into this single book. When I checked this morning there were a few used copies available on Amazon but you can now find it as an ebook or real book on Ted’s site.

#9: No B.S. Time Management for Entrepreneurs by Dan Kennedy

Yes, Kennedy makes the list twice. Let’s face it, for entrepreneurs we’ve got no greater asset than our time. And even if you’ve read a 100 other time management books I guarantee you’ll get something out of this one. Here’s Dan’s unique & ruthless approach to time management that might give some people pause. I don’t follow all of Dan’s advice here because I’m a little too nice at times but reading this book will really let you understand that you create the rules at all time. You decide how you want customers to work with you, people to contact you, etc. Fact is, if you don’t set the rules – then someone else will for you by default.

Another Dan Side Note: Dan and his top students probably get more accomplished than most anyone else. You might want to check out Dan’s upcoming release – “The Phenomenon” which details how to get more done in 12 months than you have in the last 12 years. Truly showing you how to take the speedy elevator of success instead of plowing up the stairs.

#10: “Winning Through Intimidation” by Robert Ringer

I know the title of this book is a bit off putting and that’s probably why Robert renamed the latest edition. I love the way Ringer objectively looks at other people’s success advice in here. For instance, the advice of “work hard and you’ll succeed”. He asked himself what “working hard” really means since one person’s definition of working hard is a 18-hour shift while someone else might have a totally different notion. Ringer threw out typical advice like this to work on his own theories for figuring out success.

Plus, there is one chapter in here “the Leapfrog theory” that is essential reading. It explodes the myth of “working your way to the top”. Basically this is a waste of time to keep the status quo. You can leapfrog over any competitors by proclaiming yourself at their same level – but you’ve got to be able to back it up with the goods. For some reason people are always waiting to be anointed the “expert” – it doesn’t happen. And Ringer’s book is packed with even more hard-hitting realities for street smart entrepreneurs.

Like I said it’s super tough to pick just 10 so here’s a bonus selection. I kinda cheated since this isn’t a book but an audio program.

Bonus #11: The Strangest Secret & Lead the Field by Earl Nightingale. I can’t even begin to count the times I’ve listened to these programs. Earl was really the first person who game me ‘permission’ to think and behave differently. He talks about how the top 5% of achievers don’t do the things ordinary people do and that’s why they are extraordinary. Or they are willing to do the things the other 95% aren’t willing to do (like read/listen for hours per day honing my expertise).

http://blairwarren.com/osp.pdf

sentence:

People will do anything for those who encourage their dreams, justify their failures,
allay their fears, confirm their suspicions and help them throw rocks at their enemies.

< Previous Strategy

In your previous Success Marketing Strategy I started talking about how Bill Glazer’s retail business has continued to thrive because of how he competes with the BIG retail chains through marketing. I would like to share with you one of the examples of the smart things he does with marketing … in fact, it’s my favorite.

He very diligently makes certain that every customer that walks into one of his stores never leaves withOUT his sales associates asking them for their complete contact information (name, address, phone, email, etc.)

Now, depending on their spending, he communicates with them often. In fact, certain customers will receive from his store yearly:

18 mailings
4 personal calls from their sales associate
4 Voice Broadcasts
52 weekly emails

Now in marketing, this is what we call ‘marketplace dominance.’ It doesn’t matter how many expensive TV spots the big box retailers buy, they canNOT compete or make the impression that Bill’s store makes with his customers.

As most of you know, now Bill teaches his marketing savvy to thousands of retailers worldwide. What separated him from all others? It’s because he understands the overall importance of marketing.

You maybe asking yourself how can we apply a marketing idea that works in his retail business that has never been used in my business, how can we do those kind of things?

We find that that’s what successful people are doing today. They are out there looking for and implementing great new marketing ideas.

In your next Success Marketing Strategy that will be arriving to you in just a couple of days, I will be sharing with you what else very successful people are doing. You are not going to want to miss this!!

src: http://www.dankennedy.com/index.php?option=com_content&task=view&id=387&Itemid=196