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How to succeed in the mobile game space by Lloyd Melnick

Day: February 8, 2013

Physical virtual goods prove their value to game publishers

by Lloyd MelnickFebruary 8, 2013February 19, 2013

Activision’s earnings announcement yesterday shows how attractive successfully conquering the physical virtual goods market is. On November 27, I blogged that Activision would be the big winner Q4 2012 on the strength of the Skylanders franchise and its reliance on a new business model, selling physical versions of virtual goods. I elaborated on that post earlier this month, commenting that the emergence of the Physical Virtual Goods monetization model was one of the most exciting developments in the gaming space in years .

Image from 5minutesformom.com

Today, Activision’s stock rose 14 percent because earnings tripled from the fourth quarter last year (in a period in which overall video games sales slumped). Net income increased 257.58 percent to $354 million in the quarter versus a net gain of $99 million in the year-earlier quarter. Revenue rose 25.66 percent to $1.77 billion from the year-earlier quarter (unfortunately, some of that is due to my family).

This report affirms my belief that physical virtual goods are an incredible opportunity. While I do not advocate trying to copy exactly what Activision has done (I believe in blue oceans, not fast following), there are many elements in this space (e.g., product type, demographic) that represent incredible opportunities for game companies.

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This is Lloyd Melnick’s personal blog.  All views and opinions expressed on this website are mine alone and do not represent those of people, institutions or organizations that I may or may not be associated with in professional or personal capacity.

I am a serial builder of businesses (senior leadership on three exits worth over $700 million), successful in big (Disney, Stars Group/PokerStars, Zynga) and small companies (Merscom, Spooky Cool Labs) with over 20 years experience in the gaming and casino space.  Currently, I am the GM of VGW’s Chumba Casino and on the Board of Directors of Murka Games and Luckbox.

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