Social Gold CEO, Vikas Gupta, spoke on a panel at the Flash Gaming Summit in San Francisco on Tuesday, March 9. The panel entitled, “Money in Flash: Next Gen Monetization of Flash Games,” was moderated by Atul Bagga of ThinkEquity and brought together monetization companies and publishers to examine and discuss the monetization of flash games. Chris Hughes of FlashGameLicense.com, Justin Wong of Mochi Media and Jim Greer of Kongregate were also on the panel.

The definition of a gamer is expanding to include a broader audience since the growing popularity of social and casual online games. Bagga opened the discussion by asserting that gamers are willing to spend money, but companies in the U.S. have not capitalized on monetizing these games as successfully as China, which experienced great revenue growth with the free-to-play model. There is great potential to increase revenue by providing social and casual games with a virtual economy platform.

While multiplayer online games have been monetized for a longer time, panelists asserted that monetizing single player games is somewhat new. Despite whether a game is a single player or multiplayer experience, though, providing an engaging experience is essential in achieving monetization. All panelists agreed that players will spend on virtual goods to enhance their game experience when they are immersed in gameplay. Furthermore, once users are engaged and make their first purchase, they tend to be spend again. Creating a quality game experience that hooks players in and inspires an initial transaction is essential when monetizing flash games.

We here at Social Gold provide a virtual goods platform for games and applications that allows for in-game payments. Users playing flash games can make payments and buy virtual goods without having to interrupt gameplay, which preserves the quality gaming experience for players, and this is essential for monetization. Preserving this experience through frictionless payments is our primary focus as we continue to innovate and build upon the online experience.

At the end of the panel, the panelists shared thoughts on future trends. It appears that casual, social and multiplayer games are converging and the popularity of social games is expanding rapidly. Since more users are willing to pay when engaged in these online games and virtual worlds, virtual goods will scale very well. There are great opportunities ahead for quality online and social games to be monetized when they offer users an engaging experience, and we’re looking forward to the future growth opportunities in this industry.

As always — sign up and get access to the Social Gold in-flash API at http://getsocialgold.com.

Here’s a quick intro to getting set up with payments within your flash games. Sign up and start making money today in your flash games!

Monetizing your international user base is not an easy task. Having a global user base inherently means that a very diverse user base is involved. When you game is playable on social networks that reach players in multiple countries around the world, you are dealing with hundreds of countries, even more languages, a wide variety of preferred payment methods and a large number of local currencies. Therefore, it is imperative that your payments solution is comprehensive to provide full coverage across international markets.

Money from around the world

http://www.flickr.com/photos/nicmcphee/ / CC BY-SA 2.0

The idea of successfully catering to local needs in a global market can be daunting. When monetizing an online game, there is the added complexity that users in different parts of the world prefer to pay with different means. Specifically, credit cards are popular in the U.S., but not as much in other parts of the world. In order to accommodate varying needs, you need to work with payment methods that are appropriate for each region or country. Furthermore, handling local currency is problematic because it requires operational complexity and exposes you to currency risk. In addition to these factors, you need to be aware of and work with local fees and regulations in each country.

Although international monetization is not intuitive and involves countless details, it is essential not to neglect such a valuable user base. On one hand, you want to enable users from anywhere in the world to be able to purchase virtual goods and make microtransactions, but the complexity in collecting money from them can be prohibitively high.

Today, no single company provides a seamless experience, easy integration and access to local audiences. Companies, who claim to, work with other intermediate aggregators to present payment options to users. Unfortunately, this is less than ideal for developers and leads to a poor end user experience, higher fees and eventually loss in revenue—the exact opposite goal of monetization. We see a great opportunity to improve international monetization and cater to a huge global market while providing a quicker, smoother and more tailored local user experience that international audiences deserve.

Please stay tuned for more exciting news at Social Gold that will tighten the gap between international payments and a frictionless end user experience!

At Social Gold we sit at the helm of the extremely fun space of virtual goods. It is a very new world, and publishers and platforms are all only beginning to see the revenue potential here.

Today we want to share some interesting statistics we have observed on virtual goods. Traditional wisdom would say that people spend very little amounts on virtual goods — but we’ve found that your engaged users can spend several thousand dollars through their lifetime use of the games.

We also find that of all the users who pay through Social Gold, 56% come back and make a repeat purchase. Part of the reason this number is high is that Social Gold enables a frictionless, single click in-app experience for repeat purchases. We’ve found such users to be more than twice as likely to make repeat purchases than other users.

Even more interesting is the fact that 25% of paying users make more than two purchases. This is quite huge — and confirms the value users see in the purchases they make.

Social Gold: Users' Spending Behavior in Social Games

We’re excited to share with you that today we’ve launched a partnership with the leading online gaming website, Miniclip. This marks the beginning of Miniclip’s foray into virtual goods and microtransactions, powered by our roboust virtual economy platform. Miniclip currently hosts 550 online games in its catalog, reaching 57 million players, who will now be able to purchase virtual goods through a seamless payments experience. As Miniclip is the portal leader in providing Flash-based games, their platform is a perfect match for our in-Flash payments experience, which enables players to purchase currency and goods entirely within the game, resulting in increased conversion.

What is particularly significant about Miniclip’s launch of virtual economies is that it’s indicative of the confidence businesses have in the virtual goods market as a viable, sustainable business model. Social games, virtual worlds and free-to-play MMOs have been the early adopters of this model, while more traditional retail and advertising-supported game publishers have been evaluating the risks and rewards.

Often we’re asked about the question of cannibalization – will virtual goods sales cut into existing revenue streams? As we’ve seen from developers experimenting with different business models, such as iPhone developers, virtual goods and microtransactions have proven to be a source of supplemental revenue. Additionally, considering the continuing decline of retail sales as well as advertising spending, it’s likely we’ll see a rise in virtual goods sales supplementing these revenue streams over the next year, perhaps even replacing them at some point as the primary source of revenue for publishers.

We’re dedicated to helping foster the growth of the rapidly expanding virtual goods market through innovation in payments and user experience. Leading up to Miniclip’s virtual economies launch today, we’ve been working closely with their team to ensure the most seamless integration of Social Gold into their platform, and we look forward to hearing feedback from their community.

Unlike a physical store out in the real world that is positioned in a specific neighborhood or city, online applications are readily accessible to a global audience. Although an app may be targeted to a specific demographic with different expectations and needs, (i.e. tween girls, 18 to 35-year-old males, or working mothers) the great expanse of the Internet means that your reach is always global. It is essential that your company consider the currency and payment preferences and requirements of an audience that spans far and wide. Overlooking these aspects can be a missed opportunity to monetize willfully paying audiences.

It’s clear as online gaming has increased globally over the last several years that games are enjoyed universally among people everywhere who seek entertainment and engaging, interactive experiences. While cultural norms may differ from country to country, social experiences are part of daily human experience and are necessary for people to thrive. It’s not surprising that the relatively new genre of social gaming is rapidly expanding and attracting audiences everywhere. If you have an entertaining and engaging online game, it is very likely that users in more than one country are already playing it. If you are building apps on social networks, then there is no question: your user base is already global.

It is important to remember your international audience not only when it comes to language and content preferences, but also when it comes to currency and payment methods. Users are looking to purchase virtual goods with the payment method most comfortable and accessible for them – whether that is with a credit card, bank transfer, mobile phone or cash. Currency exchanges and regulations must also be taken into account when providing a fluid payments experience for the end user. We recommend looking for comprehensive payments solutions that provide full coverage across international markets without corrupting the user experience. We here at Social Gold focus on providing a comprehensive payments solution to ensure the most seamless payments experience for local and international users.

Additionally, just as games and social experiences are universal, so is the desire to have a frictionless payments experience. When playing a game online, users enjoy being engaged in gameplay—why disrupt this enjoyable experience? Remember, engagement is the key behind monetization. That’s why Social Gold offers seamless in-app and in-Flash payments. Players remain in the game while they complete their purchase, which results in greater retention and repeat purchases.

Remember your valuable international user base when it comes to payments and make sure they are provided the best possible payments experience no matter where they live.

Dave McClure had a great, fun post on his blog recently that talks about things we hold very dear to our heart.

Advertising has subsidized the user experience for a long time, and has kept things “free.” We believe that when you create a user experience that is truly compelling and differentiated, people will pay for it. We will see a larger shift from free to paid services online in the coming years.

One of the point Dave makes is the need to reduce friction in payments. Typically, users have to cross is the login process to most payment solutions. It is more important than you might think at first pass. Users either choose a difficult to remember password (as in infrequently used one) or use a password they use at other sites. When this password is used to unlock a payment instrument, both choices are bad.

At Social Gold, we always have focused on a frictionless experience for users, resulting in very high conversion and revenue lift for developers. At the same time, we spend a lot of time innovating behind the scenes on how to ensure the best security measures possible for our users and developers. Users who transact within an application — whether flash or html based — never have to login into a new Social Gold account. Their identity is carried in from their identity in the app. This makes for a seamless experience for users.

Hundreds of thousands of users across games on Facebook use Social Gold and pay with stored credit cards. Access to their saved cards is available for their identity on Facebook without having to ever log in again. As a result, we see users twice as likely to make a repeat purchase on Social Gold as opposed to anywhere else.

Thanks for the great post Dave — and we hope to continue innovating in this space.

VSVHBZBECTKZ

Well, it’s conference season again . . . Casual Connect, Engage! Expo, Flash Gaming Summit, GDC, etc. It’s a great time to reconnect with old friends, meet new friends and discuss industry trends. If you plan to be in Hamburg next week for Casual Connect, please swing by and say hello. Or, drop me an email at business@jambool.com, and we can coordinate a time to meet.

I’m also excited to announce that I will be speaking about monetization strategies at the Virtual Goods Conference, as part of the Engage! Expo. The Virtual Goods Conference provides attendees with insight into best practices in capitalizing on virtual goods, virtual currency and microtransactions.

In a session entitled “Getting Paid: Payment Systems That Power Virtual Goods,” I will join select panelists in a discussion about how to monetize your social game, casual game or virtual world effectively and how to choose the right payments platform for your virtual economy. If you’re interested in launching or optimizing a virtual economy, or in managing the associated payment challenges, I invite you to drop by this session.

This session will be held at the Javits Convention Center in New York City from 2:30pm – 3:30pm on Wednesday, February 17, 2010. I hope to see you there!

-Mike

Unbanked users are hard to convert into paying users. A large number of users who play games on the web or on devices do not have credit cards. This leads to a difficult problem for games — how do you get these users to pay in their games?

A common problem that people have approached this with is prepaid cards. Given the number of unbanked users playing games online, the market has seen a proliferation of such branded prepaid cards. Given the tiny shelf space they take and the potential for upside, these cards present a huge opportunity for retailers.

Prepaid Cards in Store

However, these cards bring with them several problems. First off, this is probably the least user friendly experience around. The time when the users are most likely to want points is when they are playing the game. The user has to then figure out which store they can get a card at that’s open at that hour, find the store and hope that the store carries it in stock.

Secondly, many games don’t carry their own branded cards. They rely on a third party to provide a game card or prepaid card. This third party is typically helped by a company that owns the distribution to several retail stores (e.g., Blackhawk or InComm). What the developer and the user get is an experience that involves layers of middlemen who all take a share from the transaction — not counting the desire to intercept the user experience to attempt to “own” the user.

Finally, the user typically has very limited choice in what they can buy. Most prepaid cards come in fixed denominations. This often leads to money being left over on cards that is never consumed.

The way most pre-paid cards work don’t help the developer or the end consumer — they involve too much friction, far too many layers, are too inflexible and aren’t consumer friendly.

Do you agree? Do you think there is a better alternative?

Recently, I had the opportunity to participate in the Virtual Goods Industry Forecast 2010. Encompassing discussion amongst industry executives, analysts, and other influential people within the space, the Virtual Goods Industry Forecast offered a chance to share the Social Gold perspective with many of my other contemporaries.

Much of this discussion runs rampant between one another as we see each other at industry events. Engage Digital Media took the lead in organizing our predictions, and we’re really looking forward to delving deeper into these thoughts and projections at the Virtual Goods Conference, part of the Engage Expo in New York City next month (of which, we’ll be attending and speaking.)

I highly suggest you take a look at the full report, as it is quite interesting to view the ideas and thoughts of many influential individuals impacting virtual goods. My prediction that the virtual goods sector will exceed more than $2 billion in revenue within the year is backed up with thoughtful input and analysis from other passionate leaders who also feel that 2010 will truly be a year where the virtual goods sector witnesses “explosive growth.”

As one will find when reading the report, 2010 will certainly be an exciting year for Social Gold and the industry on the whole. While the established companies will continue to expand, we expect some new leaders to come to the forefront. In order for such companies to establish themselves at the head of the pack, the top virtual good providers must be able to adapt with evolving consumer needs.

We feel that retaining a deep IP and differentiable brand are both key steps in doing so. To establish deeper brand experiences, we expect developers to go multi-platform with products offered, continuing to build a connection across multiple platforms, such as Facebook, the iPhone and Android.

Just as developers will continue to evolve, Social Gold will continually innovate our product to create the most frictionless virtual economy and payment service for users all around the world. We’re clearly not the only ones excited to see where 2010 will take the virtual goods industry, and you can read everyone’s expanded feelings in the report, which you can download here.