SA users pay cash for virtual goods

Global mobile social networking service Mig33 is expanding its presence in Africa as it boosts its revenue beyond virtual paid-for content.

Mig33 says users in developing markets such as SA are indeed willing to pay cash for virtual content and services.

Mig33 chief marketing officer, Doug Bewsher, says Mig33's payment model is gaining traction in developing countries such as SA, Indonesia, Kenya, India and Bosnia, where users are subscribing for virtual goods.

The company claims to control the largest global virtual chat service on a mobile application. Since its debut five years ago, Mig33 has taken off, particularly among young adults and teens, and currently has 40 million users in over 200 countries, doubling from its 20 million users last year.

The application works by using text messages sent via GPRS data. It also connects its members to other instant messenger services such as Google Talk, MSN Messenger, Yahoo Messenger and AOL. It's optimised to work on any mobile phone with Internet.

Bewsher says the company's recent growth rate has been spurred by the development of its mobile chat community into a fully-fledged social entertainment service, as well as its drive to create a thriving virtual economy.

“There have been questions about whether people are willing to pay in dollars for virtual content. We are seeing increasing monetisation of the service, where an average South African is spending the equivalent of R10 per month on virtual gifts and avatars. Our users see this as an investment in their virtual profile, and it makes for a richer and more engaging experience.”

Bewsher explains that Mig33's core services are supplied to the user for free, but if they wish to gain additional rewards for their virtual avatar, they would need to pay in US dollars for special content.

“We've just rolled out Mig Wars; which is social game similar in concept to Facebook's Mafia Wars. A user receives a free set of guns for but paid-for content gives them a better set of abilities.”

However, Bewsher notes that virtual communities don't come without challenges, particularly in emerging regions where cellular costs are still high. “There's no doubt the high cost of data is the key constraint for a typical South African user to adopting these kind of applications. But as data prices come down, this will be a huge spur to mobile applications.

Bewsher says that uncapped data plans will open the doors for mobile operators to create new social networking services in order to retain customers.

Bewsher indicates that in coming months, Mig33 will be rolling out more gaming applications onto its platform. “Gaming is going to be an important dynamic for us. Mig33 continues to be a social entertainment service but we are having interesting conversations with our partners about creating social networking groups and offering more games.”

Mig33 users send more than one million virtual gifts a month and post more than 100 million messages a day on Mig33's network, or 1 000 messages every second. Other Mig33 services include an international VOIP calling service.

According to Bewsher, millions of people in Africa are using mobile phones to pay bills, move cash and buy basic goods. In SA, mobile phones outnumber fixed lines by eight to one. “Our focus is on markets where access to the Internet is primarily made through mobile phones. Currently some 10% of our users come from SA, so this is an important market for us“

According to the World Wide Worx 2010 Internet Access Report, the number of mobile broadband Internet subscribers grew 88% in the past year, meaning there are 930 000 wireless broadband subscribers in SA.

Through a partnership with Blue Label, Mig33 users can purchase a Ukash voucher to top up their points at any Pick n Pay store. Or they can buy vouchers from merchants throughout SA.

Last year, the company set up a joint venture with South African partners to accelerate its market development activities in Africa. During the national elections last year, it extended its services to include a mobile social network for political parties to communicate with their supporters.

“Delivering avatars to our users is the latest step in a long string of initiatives to broaden our proposition to our markets, and in the march to emulate China's Tencent QQ (a $40-billion virtual service company),” says Mig33 founder and CEO, Steven Goh.

AdMob CEO Brett St Clair says consumers in both developed and developing regions are demanding richer content services. “We are seeing a huge trend in mobile Internet traffic with 99% of our South African traffic coming from mobile Internet (275 million monthly impressions).”

He adds that fixed data plans such as BlackBerry's will also play a part in driving social media applications. “Mobile products like augmented reality will take off as cheaper smartphones enter the market. With the introduction of LTE (80MGp downloads) we can be assured that in the future we will see fantastically rich media.”