VC firm Lightspeed Ventures is emerging as one of the key players in the social games and MMO spaces, and analyst Jeremy Liew has just published some interesting research into monetisation of free-to-play MMOs and virtual worlds. The topline conclusion: the most successful examples can expect to generate $1-2 per active user every month.
This was based on analysis of public figures from Second Life, Habbo, Runescape and Club Penguin, showing that on average, they generated around $1.40 per monthly active user every month - this is item sales and other micropayments. There’s some quibbling about Second Life stats, but the conclusion is that $1-2 per active user is a pretty good return.
In some separate research, he’s also looked into what proportion of a freeplay MMO or virtual world’s userbase can be expected to pay for content. Second Life outperforms everyone, with a paying ratio of 45%, compared to Club Penguin (27%), Dungeon Runners (25%), Runescape (17%) and Puzzle Pirates (15%), although he quotes NPD figures indicating that the average within the industry is closer to 9%.
Of course, for anyone seeking VC funding from Lightspeed or elsewhere, these figures are useful when putting a workable business model together.
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