Update Regarding Price Increases in IMVU’s Virtual Catalog

To our Creators:

This provides an update to the recent price increases in our virtual catalog.

We regularly monitor the forums for your comments and we receive ongoing feedback directly as well.  We always listen, even if we choose not to comment or to reply to every individual post or letter.

In the case of the recent price increase, we understand that any change to our virtual catalog and economy is a sensitive topic for power users, especially Creators.

Some of you have asked us for specific information related to our price test, including data collection, user behavior, detailed results and more.  To maintain IMVU’s competitive advantage versus similar businesses, we generally keep such information confidential.  IMVU is a growing, profitable social entertainment company.  Our goals include continuing to grow users, to grow IMVU revenue and profit, and to grow our Creators’ revenue and profit (in total).

We instituted the recent price increase based on user testing. Considering prior feedback from Creators, we also automatically increased profits for the first product in the derivation chain at the same time.  This automatic profit increase has been controversial.  Some Creators have complained publicly that we made a big mistake.  Other Creators have told us they are happy with the changes, but these Creators have mostly spoken to us privately.

We also heard some of you ask that we provide greater flexibility for Meshers to change their profit margins, even on derivable products where the profits of Texturers would be affected.  We try to balance the interests of both Meshers and Texturers in our decision-making.  For now, we will maintain our recent price increase and profit adjustment.

Despite fears that the price increase would yield negative results, so far in December we are seeing catalog sales higher in both items and credits.  Most of you should be seeing the same increase in item and credit sales; however, not all of you will see increases.  That’s because the IMVU catalog is a marketplace.  Some Creators grow fast, others grow slow and some actually see sales decline.  Every month, over 30,000 Creators sell at least one item to one other person.  That’s a big marketplace.  Many factors affect whether items sell or not including… the popularity of your items… the quality of your items… the price of your items… and your personal marketing of your items to IMVU members.  The IMVU economy is like the economy in your city or town – some businesses are growing and some are not.

We are working hard this month to help us all have a great Holiday Season!  We are offering holiday promotions on catalog items, credit sales and offer promotions, and free gifts.  We expect this month to be a record for number of IMVU members, record catalog item sales, and catalog credit sales.   Most of you will celebrate a Happy New Year, with records of your own!

We will continue to look for ways to increase the success of both IMVU and Creators.  Specifically, we will work hard to increase the number of credit-paying customers and the number of catalog items and credits sold.

I wish you a very merry holiday season, one of joy and good fortune.

Cary (“CaryJay”) Rosenzweig, CEO

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