JULY 22, 2010 •

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As online MMOs and social networks gain further popularity, strong voice support in games has become a primary feature set. On PCs, stand-alone applications such as Teamspeak and Ventrilo have filled the void successfully for years. These clients do require independent set-up, however, and force added expenditure on separate servers to host the voice chat feature. With social gaming showing continued growth, it makes sense to integrate voice into games directly, and take the chore off the hands of developers and gamers.

vivoxVivox, Inc. stepped into that voice integration role back in 2005, and landed its first major client within a year. Founded by a group of  technologists and businessmen, the company has received $23 million in total venture capital funding from Benchmark Capital, Canaan Partners, Grandbanks Capital, IDG Ventures and Peacock Ventures. The last, a joint investment fund of GE Capital and NBC Universal, invested $2 million on July 13.

SeaverAs Vivox expands through ongoing relationships with Sony Online Entertainment and BigPoint, DFC sought out Vivox chief executive Ron Seaver to discuss where the voice business is going.

DFC: So give us the big picture overview of Vivox, Inc. today.  What are your primary products? How many employees do you have?  How many users do you have?

RS: Vivox was founded in 2005 and has about 38 employees. Headquartered in Natick, MA, Vivox also has professional service offices in Austin, TX and San Francisco. To date, Vivox delivers 2 billion-plus minutes of voice chat per month to 30 million-plus users – and counting.

With customers like Sony Online Entertainment, Big Point and Linden Lab/Second Life, Vivox has established a reputation for delivering leading edge voice services to users around the world. We have primarily served the online game and virtual world market but now we are expanding to address the communication needs of the social web as a whole.

Vivox Network is the most reliable, scalable, cost-effective and risk-free solution available, providing developers with the best tools to bring the power of voice to their communities.  Vivox services can be customized to each experience, and run on the Vivox Network. Vivox works side by side with partners and provides support for the launch of the product and throughout the duration of the service contract.

Vivox offers an unmatched set of features that improve the user experience and create revenue opportunities for the developers. In addition to the basic communication functionality of voice and instant messaging, Vivox offers voice fonts, voicemail, massive live event support, mobile phone to online calls, voice session recording, management tools and various complementary revenue generators, such as virtual goods and audio advertising.

DFC: From a consumer perspective what is the advantage of using voice in games?  Are there any solid data points that show voice increases consumer interest in or usage of a product?

voice_chatRS: Voice chat in games and any other social platform opens connections between individuals and makes the experience more engaging. Whether you become further immersed in the game/virtual world or just chat with friends, voice chat makes it better.

We have conducted studies on new players comparing voice versus non-voice users and trends show that voice users have sessions that are twice as long on average than non-voice users.  Academic studies have shown that players who use voice feel closer to others than those who use text.

DFC: What problems do you see with voice in-game?  Are there any concerns with bandwidth consumption, or performance issues?  What about issues of language or racial or sexual slurs or activity?  How are these issues being addressed?

RS: We specifically designed our voice chat so that it would not impact the experience it is a part of. By using a low bandwidth codec and maximizing server performance we are able to deliver high-quality audio with no impact on the game/world experience. So from the technical side there are really no concerns.

As for issues of language and questionable behavior, we periodically poll our customers about issues involving voice harassment and they had zero reports. This does not surprise us as voice in an online experience is much like real-life where known and accepted social norms kick into play. We have also taken measure to pro-actively curtail offensive behavior with tools for users and developers alike to moderate, monitor and control behaviors. Password protected channels, moderator controls that allow you to mute, kick or ban offensive users from conversations and recording capabilities help developers and publishers reinforce the AUP’s already in place.

DFC: There are many free voice chat programs and voice comes as part of the Xbox Live service and is a built-in feature in some games.  What does Vivox add to make your service unique?

RS: There are two things that make us unique: our scalability and our service. No other voice chat solution or service on the market today can scale and support the as many simultaneous users as Vivox. We had 6,000 people in a game channel participating in a live keynote address from SOE’s Fan Faire. They were in the game playing and able to be a part of the bigger live event. It was very effective for SOE to connect their community and share their message. Our infrastructure and operations team provide for unmatched scalability.

In addition, Vivox is a managed service – we take care of the communications so that the developer and user do not have to worry about accessing servers, managing an infrastructure or impacting the servers supporting the experience, be it a game, virtual world or social network. Because of that our quality is superior. In addition, we work with each developer individually to bring a solution that meets the unique needs of their audience from security and accessibility to the UI.

In addition, Vivox voice is cross-platform – we support PC, Online, mobile & console platforms. Wherever a community connects, Vivox voice is there making sure people can effectively communicate.

DFC: Who do you consider your main competitors?  What advantage do you give publishers who incorporate Vivox Voice into their products?

RS: Although Vivox has no direct competitors we do consider Dolby, Ventrilo, Teamspeak peripheral competition.

The biggest advantage we offer publishers over anyone else is our breadth of service – functionality, revenue generating features, experienced operations team and a sophisticated infrastructure focused solely on voice communications. Our track record supports all of these elements – no other voice provider in this space has as many live clients as we do.

DFC: How do you entice gamers who prefer an independent client like Ventrilo over in-game voice features specifically because they want cross-faction communication?

RS: Vivox not only matches but exceeds the functionality of the independent clients. Vivox voice also opens connections to everyone in the experience, not just a few with the correct passwords shared amongst a group. It is a matter of showing users the advantages our integrated technology brings to their experience. We also work with the developers and publishers on programs that encourage players to use the solution which include events and fun features like voice fonts and voice mail.

The bottom line is simplicity, players who use integrated voice play the game and everything with voice is automatic.  For external solutions they need to set up a server, hand out credentials and then decide which channel to join.  This is why in games with solid voice integrations we see 80% utilization.

DFC: Please give us a snapshot of which publishers you are working with today?

RS: We are working with:

  • BigPoint.com
  • Nexon: Combat Arms
  • RealTime Worlds: APB
  • Gaia Online: zOMG!
  • IMVU
  • Hi-Rez Studios: Global Agenda
  • Runewaker Entertainment: Runes of Magic
  • Ndoors: Atlantica Online
  • 38 Studios
  • Sony Online Entertainment (SOE)
  • CCP Games: EVE Online
  • Linden Lab: Second Life
  • Wizards of the Coast
  • Icarus Studios: Fallen Earth
  • Cybersports: Football Superstars

DFC: Are there any differences in working with a CCP and EVE Online, versus Nexon and Combat Arms?

RS: Different genres do have different needs, and with all of the integrations Vivox has done we have adjusted the solutions for each.  For example in an MMO you need to build out a solution that takes into the social organizations that exist from guilds to alliances and large combat units like fleets, which require multiple channels.  In a FPS you need to deal with minimal UI and rapid channel switching, we see orders of magnitude greater channel activity in a FPS than we do a MMO.  On top of that social areas in a game need to have a simple and natural way to talk to the other players in the area.

DFC: Vivox is only five years old. Who was your first publishing partner and how did you land them?

CCP_with_VivoxRS: CCP Games with EVE Online was our first customer. We started by developing a initial test for them so they could experience voice in the game. The first trial of this was made more exciting when one of the CCP staff was attacked and killed when they left the space station.  From this test, which showed how much voice added to the game, we spent three days with the CCP team and designed a solution to fit their needs.  Thanks to their support and vision we have been able to build a solution that is respected by everyone in the market..

DFC: You’re working closely with Bigpoint.  How did the relationship come about?

RS: We have been watching Bigpoint’s success for quite a while. Our relationship came together at a point where Bigpoint was expanding their business and player community exponentially and we were expanding our service with our Web Voice solution. The stars were aligned and we have not looked back.

DFC: How extensively is Bigpoint integrating Vivox Voice into their operation? All at once, or specific titles at a time?  If the latter, please identify which games.

RS: Bigpoint is integrating voice in stages – first with a toolbar plug-in on their site targeted at their casual game players, and then into specific titles as those projects come to development. Those titles are not public yet but I can say that we are very excited to be a part of them.

DFC: Is the breadth of Bigpoint’s potential market share providing you with unexpected challenges?  If so, please explain.

RS: Not at all. We are made to scale to these large communities by design.

DFC: Bigpoint has more than 50 full-title games in 25 different languages.  How is Vivox addressing language support for Voice in these different markets?

RS: Bigpoint is supporting us with the translation services needed to support so many users in the varied geographical locations. But as far as the voice chat experience, it is global. Though the dominant language will be that of where the game servers are located people will be able to connect no matter what language they speak.  The localization effort is restricted to the UI and since Bigpoint controls the UI, players will see it in the same language as the rest of the game UI.

DFC: Bigpoint is primarily a European enterprise with strong inroads into North America and South America. How does Bigpoint fit into Vivox’s own global strategy?

RS: We have customers in Europe, Asia and North America with users in over 200 countries worldwide.  We are a global company and will expand where the business is.

DFC: What is Vivox’s strategy for emerging markets? Where are you now and where do you need to be?

RS: The future of Vivox is across the social web. We are presently expanding our service and technology to address not only the needs of games and virtual worlds, but of the social web on a whole. People no longer communicate solely one-to-one on a phone call. Our online activities are our social web and hence our rolodex. We communicate within our activities and communities and Vivox will be there to pull it together so that people can communicate in the context of whatever they are doing and across devices.

Vivox is making tremendous progress towards this goal with new partnerships that highlight these capabilities and maximize our technology.

DFC: As we understand your business model, you generate revenue through licensing of your technology, and managing virtual goods, and voice advertising. Please give us more details on where Vivox’s revenue is coming from.  Do you have a scalable business model where you make more revenue as more users access your voice features?

RS: The simple answer is yes.  As the user base grows subscription revenue grows, as do virtual goods and ad revenue.  We find that free to play games prefer to use the ad and virtual goods model while paid games pay the fees.  We see both as strong revenue streams in the future and we will follow the industry as it moves.

DFC: Five years from, how will Vivox’s revenue mix look differently from today?

RS: It is hard to predict right now we see two extremes in the market and we expect the industry to work between those over the next few years to find the optimal point.

DFC: Please give us a rundown of what virtual goods products you have available, and examples of what Vivox virtual goods can be found in what games.

RS: Vivox voice-based virtual goods include:

  • Quick Chat – user can only select pre built phrases
  • Token based permission
  • Voicemail
  • Group voice messaging (Voice IM)
  • PSTN Services – dial an avatar, dial a channel/group, call out of world to phone
  • SMS support
  • Voice Fonts
  • Voice Macros – “Taunts & Flaunts” & “Audio Cart”
  • Recording – client & server side

EVE Online, IMVU & APB have voice fonts implemented. Second Life utilizes Vivox voicemail, PSTN and SMS services. Vivox Voice for Facebook has recording and PSTN services available. APB will be releasing voice fonts soon.

Upcoming titles are also using other voice-based virtual goods and those will be announced along with partnerships.

DFC: Tell us more about iAudio: what it can do, what publishers are using it, and how are consumers responding to being whispered marketing in their ears.

RS: Vivox iAudio ads are uniquely designed to be non-intrusive so as not to disrupt a user’s online experience yet deliver a relevant message to the targeted demographic. Unlike typical ad units, Vivox iAudio ads literally become part of the custom, in-world experiences that boast established user communities. Ad spots are offered in 3, 10 and 15 second spots. This allows for CPA business models in addition to the more traditional online CPM RON & ROS models.

To date, IMVU, Vivox Voice for Facebook, Realtime Worlds with APB, Runewaker Entertainment with Runes of Magic, Nexon with Combat Arms and Bigpoint are participating. Some publishers have implemented a business model that deletes iAudio ads from the experience in exchange for a VIP subscription. They have found it to be an effective revenue generator so that they can effectively bring voice chat to the community.

Consumers to date have been receptive to the ads. This is a generation open to new methods of branding and marketing which plays into our favor with this offering.

DFC: We gather your publishing partners are pretty pleased by the ease of integration of Voice into their titles. But what about consumers?  What are the ease of use advantages over a core gamer application such as Ventrilo?

RS: End users have been very receptive and we have won over a good share of converts. Users enjoy how it is integrated into the context of their activity, ease of use, connections to buddy lists and the audio quality most of all. There is no need for an additional application or credentials which is a major benefit and quality is superior to any stand-alone app that they have used because it is on our infrastructure, not run off of volunteered desktop server in someone’s basement.

DFC: We’ve read where you recently conducted a user survey tracking 100,000 new users that showed if players used in-game voice they were four times more likely to still be playing the game five weeks later. Please elaborate on this data.

RS: We looked at the average number of session per user over a seven week period starting the week of March 1, 2010. Seventeen percent of voice users logged in at least 17 times per week (on average) compared to 3% of non-voice users. This study covered five different titles in different genres.

In addition, over those weeks, voice users returned to the game 4.9 times more than non-voice users. We recently replicated the study and also found that voice users had session lengths that were about 2.5 times that of non-voice users.

While we do not know to what degree the effect is causal we do know that the core players of games love integrated voice and it impacts the whole community.

DFC: What else of interest did you learn from this survey?

RS: Through this data we also got insight into the people who are listening and the value that this brings to the experience. Like any social situation there are those who lead the conversation and those listen – one party does not bring more value than the other in the dynamic. Being engaged in the social experience is important and valuable for developers to know.

DFC: Vivox has stated it has supported up to 6,000 users in one voice channel. How often does that happen and in what titles is that happening?

RS: That size group marks special events that we host for publishers where we connect live player events like the SOE Fan Faire keynote address with the game. It really enhances the community when we can connect the online community with a live one. We have also done similar events for CCP Games. It also makes a global community feel smaller. All of our partners have taken advantage of the scalability and cross-platform access that we provide to enhance their community communications.

While these large events occur occasionally we regularly see channels sizes of 100+ in MMOs and 400 or so in virtual worlds.  We have been consistently surprised with the size of channels in some titles.

DFC: Social networks are all the rage these days. Tell us more about how Facebook users are taking to your Voice browser plugin, how they are using Voice, and what kind of growth rates you are experiencing?

RS: We have had a very positive response to Vivox Voice for Facebook. The adoption and usage rate is steady and we expect it to rise with new functionalities that we will be introducing in the coming months. We are seeing Facebook users utilize voice in many different ways from holding meetings for business or social groups, one-to-one calls as an alternative to Skype or as ad-hoc group gatherings as more friends appear online. One of the greatest benefits people like is that it is a shared platform that they know that their friends are using and compatible with. They do not need to exchange numbers or credentials and they know when they are available because Vivox Voice is tapped into Facebook presence.

We are always impressed with how people are utilizing the service. Some examples we have seen recently:

–       Vivox partners hosting developer Q&A sessions with 150-plus live participants

–       A user in Australia was chatting with a friend in Florida. They saw that another friend was online while on a business trip in Spain and they instantly pulled her into the conversation.

–       English Out There uses their Vivox Voice Channel for language immersion classes.

–       A nun hosts bible studies and discussions

–       Sport smack talk channels around special tournament events

DFC: Are any Facebook games integrating Voice into their features?  If so, please detail further.

RS: We have been having some great conversations with quite a few Facebook game developers. They are receptive and excited about what we can bring to the table for them.

DFC: How do you make money on Voice via Facebook?

RS: Presently we are not making money with Vivox Voice for Facebook. We want to get the app into the hands of as many users as we can. Down the road we are looking to create an avenue for iAudio revenue as well as voice based virtual goods such as voice mail

DFC: What are your strategic plans for growing on social networks, as well as mobile platforms?

RS: Our plan is to have Vivox Voice available to all communities on any platform. We are working on porting our SDK to mobile and other devices. The key to do doing this is simplicity – make it simple to integrate, use and access. We have a solid base and are looking forward to extending our reached based on this strong core.

DFC: What are the challenges of supporting multiple platforms like the Mac, PC and PS3?  How hard is to keep the user experience uniform?

RS: There are always inherent challenges in working with unique OS’s and platforms but we have able to keep the experience consistent through our server code.  We port the client code to various platforms but the server hold much of the power.  As we expend to various platforms we will continue to move more of the features to the server and minimize any differences created by the client platform.

DFC: Tell us more about what titles on the PS3 are using Vivox, and how consumers are responding to the voice option on that platform.

RS: We are getting ready to roll out DCU Online with SOE later in the year. There is a lot of anticipation around the integration and the ability for players to chat with online players as well as PS3 players. Voice chat is not a niche to have anymore, it is a must have and we are happy to deliver.

DFC: Last February Vivox raised $6.8 million in Round C funding. IDG Ventures led the round with follow-on investment from Benchmark Capital, Canaan Partners and GrandBanks Capital. Where is that capital allocated. For instance, Vivox has a substantial investment in API development. How much of a funding round might go to technology R&D?

RS: The majority of our latest round is going to building out our infrastructure to support the growing community and bring us in to the newer markets of the social web. As the Vivox Network grows our innovations grow organically with our clients as they bring new ideas to the table.