Lessons in Launching Virtual Worlds. Mistake #2: We’re targeting kids aged six to 13

This is the second in a series of posts examining common mistakes made by companies launching virtual worlds for the KT&T market. The first post, ‘We don’t need a Marketing Budget’, is here.

We get a stack of business cases every month at KZero for new virtual worlds. Obviously a critical element of any plan is the target market, so here’s some actual extracts from a number of these business cases:

‘Targeting boys aged 5 to 12′

‘Targeting boys aged 6 to 15′

Targeting girls aged 5 to 11′

‘Targeting girls aged 7 to 16′

And my personal favourite ‘targeting girls and boys aged 3 – 14′

Here lies the problem, and the topic we almost always raise first with clients…..

The activities that five year old boys like to do online (and in virtual worlds) differs massively from those aged 8, let alone 12 year olds. They have different play patterns and interests. Now compare boys with girls. Again, even though for early ages there’s a little overlap, once you get to tween and early teen ages, again, user profiles and interests differ greatly.

The point here is that having a wide age range as the target market in a business case may give you a larger addressable market but really, can a virtual world concept proposition engage both ends of the scale? Short answer, no. Only the early movers into the space (the likes of Habbo, Stardoll and Club Penguin) have enjoyed this type of wide penetration and this is mainly due to the massive brand awareness pulling users in in the first instance. Continue reading →

Lessons in Launching Virtual Worlds. Mistake #1: We don’t need a Marketing Budget

This is the first in a series of posts highlighting some very common mistakes made by (primarily) start-up companies launching virtual worlds and MMOs for KT&T (kids, tweens and teens).

The insight we’re going to share in this series is gleaned from over five years of consulting for and working with a wide range of companies in the sector.

When we speak with Venture Capitalists and Financiers looking into the KT&T virtual worlds and MMO space a comment we hear a lot is that the space is crowded. Indeed, looking at the Universe and Radar charts, its clear there’s a lot of companies in the market – ‘Chasing the Penguin’ as we used to call it.

However, a large majority of these companies have failed to scale and grow their userbases to critical mass levels. We define these levels on a registered account basis as being 1m, 3m, 5m and 10m. We measure these critical mass levels alongside the K-Factor (viral sign-ups as a % of paid-for) and see measurable uplifts in the K-Factor at each level. For example, once a virtual world reaches 5m registered accounts it sh0uld be seeing a ‘1 for 1′ K-Factor, meaning the world gets a viral sign-up for every paid-for sign-up.

Virtual worlds and MMOs with insufficient marketing budgets are floating around in the market and failing to ramp up. This isn’t because their worlds are boring or don’t have great games or quests – worlds are not built to be boring. It’s primarily because when initial funding was raised for the development of the world, insuffiicent funds were allocated to user acquisition. Why did this happen? Here are some reasons:

• Arrogance. ‘Our virtual world will be so great that we won’t need to spend much of marketing and acquisition. Sign-ups will be viral’.

• Ignorance. Marketing was an after-thought, only brought up and considered once the world was open beta. This mistake was typically caused when the management team was mainly technical as opposed to commercial.

And, on the topic of marketing and user acquisition, this doesn’t mean banging out a few press releases or having a stand at a conference. Do you see many kids walking around virtual world or gaming expos? No, we don’t either. User acquisition means using measurable and scaleable online channels such as gaming portals, paid-search and the like. There are many worlds using these channels to great effect.

From a CPA perspective (cost per acquisiiton) we deem worlds to be performing well on a paid-for acqusition basis if their CPA is in the $0.50 – $0.80 range. In terms of an overall starting aquistition budget, we always advise at least $750k. Then and importantly, profits from monetization need to go back into the acquisition budget (at least 50%).

And what happens when the companies don’t have a sufficient launch budget? Not much unfortunately. And then they have to go back to the market or existing investors for another funding round. This is a painful process.

In the next of this series exploring Lessons in Launching Virtual Worlds, we’ll be covering off geographical targeting and target market age ranges.

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