SAN JOSE, CA — Venture capitalist Jeremy Liew of Lightspeed Venture Partners kicked off this year's Engage! Expo with a keynote talk that held at least one zinger for big game publishers like Activision Blizzard, publishers of the dominant MMO, World of Warcraft.
Liew identified "non-hardcore gamers" as a sizable untapped market for the types of games that can best leverage virtual goods. "This kind of consumer is coming into the market right now at unprecedented rates," he said. "These aren't people who want to spend time grinding out levels. These are people who want to maximize their time having fun, rather than just maximize their time.
Additionally, Liew saw huge potential in the virtual goods sector, based in part on the way gamers of various stripes perceive themselves. He was careful to draw a distinction between people who think of themselves as "gamers," and the rest of the online public. "In the United States, gamers still see virtual goods as cheating," he said. "That's not the general public's attitude." Tapping into consumers who may not identify as gamers holds potentially significant upside for the virtual goods sector, he said.
However, "The big game publishers are not standing still.”
While markets like the iPhone and XBox Live Arcade were intially dominated by independent developers, those markets are now being taken over by big publishing companies like Electronic Arts and others.
Liew's keynote was followed by an address by Trip Hawkins, CEO of mobile game developer Digital Chocolate and a founder of gaming behemoth Electronic Arts. Hawkins echoed many of Liew"s sentiments. "We’re going from 100 million gamers, to a billion or more," he said. "These are not the people who are playing Grand Theft Auto or World of Warcraft."
Hawkins went a step further than Liew to say that hardcore gamers’ habits would actually become less "hardcore" as more and more of their friends migrated to the casual gaming model. "If you don"t count the Wii and you don’t count Guitar Hero, spending on hardcore console gaming is trending way down," he said. With casual and social gaming fast becoming the most common gaming experience, more and more hardcore gamers would be swept up in that flow, Hawkins said.
The entrepreneur pointed out that virtual goods was nothing new, and highlighted fantasy sports leagues and collectible card games as two contexts in which real money had been spent on "virtual" items for years. Hawkins identified the social value of virtual goods as the compelling factor in their purchase. "People will pay ten times as much for social value as for pure entertainment," he said.
Hawkins also introduced his latest venture, NanoStars, in essence a set of acquirable virtual characters that will work across a variety of games to be built on the NanoStars platform. Virtual goods or characters — i.e., NanoStars — that are purchased by a player will be used in different ways depending on which game they are used in.
Hawkins gave the example of a Batman character that might give players added strength in a role-playing game, added speed in a racing game, and similar "boosts" in other contexts. The items would be tradeable in a secondary market, and will be available for use in NanoVerse Castles, the first game in the series, to launch in the fourth quarter of 2009. –Mark Wallace
Join us for App Conference – October 18-19, 2012 in Santa Clara