Avatars as well as virtual (game) items were quite popular as a media topic back in the late 90s. To be honest, I myself even worked as the “manager” of a “star avatar” called E-Cyas in 1999. This included giving TV and press interviews in his name, answering fan mails and representing his alter ego in online chat rooms. Yes it was a crazy time! The most prominent star avatar that comes to one’s mind might be Lara Croft.  But the concept of online avatars and virtual items dates back to the mid-80s.  After nearly 30 years and after two major dot-com bubble bursts this business has come to a mature state. The popularity of social networks and high speed networks as well as the revolution of the mobile internet helped to turn it into serious business. In Asia this can be seen even stronger than in the rest of the world. There over $ 18 billion have been generated through the sales of virtual items and the use of virtual currencies. (Compared to around $2 billion in the US) We covered this phenomenon in the chapter about “Mobile Businessmodels” in our book.

Looking at Japan

Let’s take a brief look at Japan: Here the biggest social networks (mixi, mobage, GREE) are mainly accessed via mobile devices. A trend we can also see happening in the West right now, as more and more people are moving towards data-flatrate plans.  Mobage and GREE –one of Japans biggest social networks- are centered around avatars and social games.  GREE was launched back in 2004 and mobage in 2006.  Each has around 24 Million members. On these platform users can play free games with others, buy/win in-game items and also purchase or be rewarded with new items, clothes and accessories for their personalized avatar or decoration items for their virtual rooms. And this strategy seems to pay off: Over 85% of GREES $1.5 billion revenue was generated by the sale of virtual avatar goods and in-game items.  Interestingly the heavy users of these platforms and the most avid virtual item and accessories collectors are not teens but mostly females in their mid-20s to mid-30s. All virtual goods purchase is handled through virtual currencies. In mobages case it is called mobage gold. Users can also receive mobage gold coins by clicking on ads or by making an online purchase through a partner store.

Brands becoming active

Also brands could see this growing trend and started to embrace these platforms quickly. Coca Cola Japan for example has partnered with Mobage back in 2006 to offer Coca-Cola branded limited edition avatar clothes and accessories. Other brands like Pizza-La and SevenEleven followed soon after with their own limited edition items and accessories.  Fashion brands even went a step further and launched their new collections within these social networks by providing virtual versions of their new line-ups for the users avatar. Aeon department stores teamed up with mobage recently to have users vote on their favorite Aeon clothes and participants would receive the virtual version of the selected clothes for their avatar.

Ameba Pigg is another good example. This very cute avatar platform that launched in 2009 already has around 15 million users. The service cashed in around 1 million US$ on virtual item sales during last year’s new year’s season. Beyond this it is used heavily by brands as an engagement platform. In late 2011 fashion brand Gucci even took it one step further by opening a virtual shop in Ameba Pigg and selling virtual Gucci items for real money. A virtual Gucci bag sells for around 28$.

The West is catching up

But also in the West it has become more and more popular for brands to offer virtual items for example in Facebook games like Farmville. McDonald partnered with Zyngas in 2011 to offer special FarmVille in-game items like a hot air balloon.  Bing and SevenEleven also have tried similar partnerships. IMVU, a Western avatar chat platform with over 50 million registered users is another good example. They have the largest virtual goods catalogues and brands are already strong involved in providing branded items. Also Japanese platforms are expanding into the West: Both mobage and GREE recently made major global acquisitions and are already offering English versions of their platforms.  Ameba also launched a global PC & mobile version of Ameba Pigg recently. Global game companies are also more and more shifting towards the “item-sale” monetization model. A good recent example is “Smurf’s Village” by Capcom.  Given all that is does not come to a surprise that DeNA, the company behind mobage teamed up with game maker Bandai-Namco this year to start a new global gaming enterprise.

The Takeaway

What we see here is just the beginning of a bigger trend. And it is a good time to start engaging existing and potential customers through these new possibilities.

For outside players like brands or telcos to dip their toes into this field, here are some possible benefits:

-potential tool to reward existing customers (with virtual branded items/goods)

-stronger, more direct brand engagement

-attract potential new targets in a very “playful” way

-more meaningful and personal from the users point of view

-users become brand ambassadors (avatars wear the virtual accessory and by talking about it)

-possibility to collect valuable consumer insights (virtual sampling)

You can also expect to see many more platforms and opportunities evolving mostly on the mobile platform.

This entry was posted on Thursday, August 22nd, 2013 at 10:20 pm

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