Former Charles River Ventures VC and now CEO of ohai, Susan Wu, gave a great presentation at Le Web in Paris earlier today about the market for virtual goods.
She pointed out that 70% of Tencent’s annual revenue of $1bn comes from the sale of virtual goods. Faced with minimal opportunity to monetize via online advertising in China, the company chose a different path. Considering that advertising is on the wane at present, many companies would do well to follow Tencent’s lead.
You can watch Susan’s presentation below, and I encourage you to do so – for me these closing words from her are a great call to action:
If your users are interacting or building relationships, you can monetize via virtual goods.
Your community will participate, with or without you.
Find ways to capture the passion from ‘verbs’ – behaviors users are already participating in.
Eric Eldon at VentureBeat has a great piece on RockYou’s move into the Asia Pacific region courtesy of another round of funding from strategic investors in the region, namely Softbank and SK Telecom.
Why Asia Pac you might ask? The answer is – virtual goods.
Cracking the formula for monetizing social networks via virtual goods is the current holy grail. Where better than China to learn the ropes – bigger than web advertising, virtual goods are a $1.2bn business there already.
In addition, Softbank ploughed $400m into Xiaonei – a socnet similar to Facebook, but ahead of the curve: they recently introduced a virtual currency system. Teaming up with these players is a smart move.
UPDATE: Facebook has started to head down a similar track – they’ve moved to a micropayments system as of today.