games 2.0 web 2.0 expo april 25, 2008
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Games 2.0Web 2.0 ExpoApril 25, 2008
Jeremy LiewMD, Lightspeed Venture Partnerswww.lightspeedvp.comlsvp.wordpress.comjeremy@lightspeedvp.com
Lightspeed Confidential - Not to be copied, distributed or referred to without the prior written consent of Lightspeed Venture Partners
2
Birth of Web 2.0 has been driven by making costs variable
Web 1.0 Web 2.0Development Build everything from
scratchOpen SourceOutsourcing
Marketing Superbowl ads CPC and CPA
Distribution Multi year, multi million dollar portal deals
Social network platformsViral growth
Content Teams of writers and editors
User Generated Content
Monetization Internal sales teams Ad networks
Lightspeed Confidential - Not to be copied, distributed or referred to without the prior written consent of Lightspeed Venture Partners
3
The games industry is starting to feel the same dynamics
Games “1.0” Games “2.0”Development Massive development
projectionsFat clients
In browser gamingFlash and other rich media improving
Marketing Offline advertising driving players to retail
CPC and CPA online advertising driving online play
Distribution Controlled by retail and big game portals
Social network platformsViral growth
Content Teams of level designers
Multi player is user generated content for games
Monetization Selling games in jewel cases
Digital downloadFree to play supported by subscription and digital goodsAdvertising
Lightspeed Confidential - Not to be copied, distributed or referred to without the prior written consent of Lightspeed Venture Partners
4
Development: “Low fi” games gathering more users
30
<1
<1
<1
<8
Sources: Lazard Capital Markets, Adonomics, Press Releases, LSVP Estimates
3
7
8
1
10Halo 3
Power Challenge
Zynga’s Texas Hold’em
Friends for Sale
SGN’s Jetman
Development Costs ($M) Players (M)
Lightspeed Confidential - Not to be copied, distributed or referred to without the prior written consent of Lightspeed Venture Partners
5
Marketing: Online distribution allows CPC and CPA advertising
$30M in marketing - Primarily offline10M copies sold - 90+% through retail
Lightspeed Confidential - Not to be copied, distributed or referred to without the prior written consent of Lightspeed Venture Partners
6
Distribution: Viral growth and social networks allow games to grow virally
* Not to scale
TYPICAL AAA GAME
New user growth (illustrative)
Marketing campaign supports big launch, with sales declining thereafter
SOCIAL GAMES
Friend invitations drive increasing growth curve as user base grows
Lightspeed Confidential - Not to be copied, distributed or referred to without the prior written consent of Lightspeed Venture Partners
7
Content: Multiplayer is user gen content for games
Source: Ian Bogost, Lightspeed analysis
Single-player games-Need new levels to keep player interest-AI for NPCs to maintain challenge
-vs.
Multiplayer Games-Each game is different, keeping player interest-Other players have real intelligence, not AI
Asynchronous Play- Large pool of other players- Easier to play against friends- Players playing in sequence, not in tandem.- Requires persistent state which all players affect, and which in turn affects all players.- Breaks between players are the organizing principle
Lightspeed Confidential - Not to be copied, distributed or referred to without the prior written consent of Lightspeed Venture Partners
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Monetization: Online games market growing as revenue sources become more variable
Sale of downloads Advertising Digital goods
Self expression In-game power Extra levels/content Attention Convenience
$3.8B$5.2B
$6.9B
$8.8B
$10.6B$11.7B
2006 2007 2008 2009 2010 2011
ONLINE GAME REVENUES
Lightspeed Confidential - Not to be copied, distributed or referred to without the prior written consent of Lightspeed Venture Partners
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If Web 2.0 is the social web, then Games 2.0 is social gaming
Jeremy Liew: MD,
Lightspeed Venture Partners
Mark Pincus:CEO, Zynga Game
Network
Shervin Pishevar:CEO, Social
Games Network
Johan Christenson:CEO, Power Challenge
Siqi Chen:CEO, Serious
Business (Friends for Sale)
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PANELISTS
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