By contrast, a virtual world owner (without user-generated content and with a continuous virtual world) would have to add a lot of fixed costs as it expands. That means that IMVU doesn’t have to buy or lease a lot of new servers or hire a lot of artists as it adds more users or catalog items. But IMVU’s virtual spaces are limited to rooms or scenes (like the beach or an estate), and its content is user-generated. Companies such as Linden Lab, which runs virtual world Second Life, have enormous server costs because they have to maintain a physically interconnected virtual world 24 hours a day. Porn isn’t allowed and the audience is predominantly female.ĭespite its large growth, the company has been able to keep its costs low. But Rosenzweig says it’s not a predominant part of the experience. Some folks like to joke that it’s all sex chat, since there are a lot of racy avatars in IMVU. That represents a level of engagement that is enviable among entertainment sites. Users engage in 770,000 chat sessions per day, with the average chat session lasting 60 minutes. Revenue has been growing each month for the last 13 months, even with the downturn. With all of these changes, revenue has grown from roughly $2.5 million in the first quarter of 2008 to an expected $6 million-plus in the third quarter of 2009.
It accommodates younger users (who don’t have credit cards) with the sale of prepaid cards in 24,000 outlets, and it also lets users buy credits by filling out surveys or special offers from Offerpal. IMVU also recently started inserting advertisements into the site and spending some of its profits on online marketing. “We’re kind of like an eBay for virtual goods,” Rosenzweig said. After they sell credits, these brokers transfer the credits to the buyer on IMVU, where IMVU takes a small processing fee in the form of credits.
If developers want to cash out, they can do so through a free market economy that allows them to sell credits directly to third-party registered credit brokers, who buy and sell credits on third-party websites. They keep the vast majority of the credits proceeds from sales of their virtual goods. Developers can get training on 3-D artistry and within a very short time upload their creations for a nominal credit fee.
Users buy credits from IMVU and then use those credits to buy items from each other. Rosenzweig said the business model is dependent mostly on the sale of virtual currency. Those users are adding more than 4,000 customized 3-D items for sale each day. With the new interface, more users are clicking on “buy it.” In the past 30 days, more than 35,000 user-developers have sold virtual goods. They can then purchase the clothing with virtual currency by clicking on a “buy it” button. That interface allows users to try clothes on their avatars using a “try it” button. Users can create their own avatars for free, but IMVU got a big boost this summer after it launched a new user interface. Since 2004, IMVU’s own users have created more than 3 million items, giving IMVU the biggest catalog of virtual goods in the world. IMVU grew its revenue primarily by increasing the sale of virtual currency to its members, who use that currency to purchase virtual goods ranging from clothing for their avatars to furniture for their rooms. Join gaming leaders live this October 25-26 in San Francisco to examine the next big opportunities within the gaming industry.