Virtual goods keep growing…
Sort of an addendum to the previous two posts.
Thanks to the astonishing growth of games on social networks such as Facebook and MySpace, the U.S. virtual goods market is poised to clear $1 billion in revenues in 2009, up more than 50 percent from a year earlier, according to a new report.By 2010, revenues could hit $1.6 billion as users become more comfortable paying for virtual goods in small transactions that are executed in a seamless fashion.
via Virtual goods sales to hit $1 billion in 2009 as social games pay off big | VentureBeat.
Meanwhile, CNet reports that China’s online game market grew almost 40% in Q2 of 2009, reaching over $900m. The bulk of the revenues go to three companies: Tencent, Shanda, and NetEase, which together have over 50% of the market.
9 Responses to “Virtual goods keep growing…”
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I wonder where the extra expenditure gets redirected from.
I’d love to know what people are buying less of in real life, so that they can buy a tractor in FarmVille.
Are people eating less?
Spending less money on alcohol, as they are going out less and spending more time in front of the computer? Hmm.
I suspect some of the extra money is coming from the apartment rental sector. More people living under one roof goes a long way to stretching finances.
I’m curious as to what Facebook and Twitter actually sell as virtual goods. I’ve never seen any. Any ideas?
On Facebook you can use third party applications to buy a fried a drink, send them a flower or give them a gift. The act requires a purcahse for some of the higher valued items.
That said, I like all this talk about the market growing but I’m of the opinion that in the industry’s quest, dare I say obsession, for the iPhone user, we’re forgetting a large group of veteran players. We keep feeding veteran players of MMOs the same theme-park MMO. (Eve being a rare exception) In the wake of the industry’s march to the mass market lies 18+ million veteran players looking for something more than yet another theme park MMO.
I think the MMO industry needs to learn the lesson that Saturn largely failed to learn once all their college kid on a tight budget customers became parents with two kids and family to care for. You better have something for those people or they’ll leave your brand. Right now, there’s no men-in-tights Eve Online or anything similar to it. If Eve is the space game that you play after visiting the theme-park called Star Wars Galaxies then the absence of a men-in-tights version of Eve leaves some 60-70% of the veteran MMO market unserved. There’s only different theme-park MMOs with different shades of lipstick on the same pig. It’s no wonder the industry is seeing shorter subscription cycles. There’s very little innovation happening to encourage the very progression from game to game that Raph’s book talks about.
So while all this growth is great and it should be encouraged in every way, I get the feeling that the casualty of progress here is the very player that helped grow the industry with loyal patronage since the late 90s.
I buy virtual goods with virtual currency I earn doing a virtual job. But before I got the job, the money I put into the virtual world came out of my budget for other games — card games, board games, PC games, console games.
If there were no games, the money probably would have gone into model trains or stamps or something. It’s all discretionary; there’s no skimping on necessities to fund my playtime.
I’ve never really spent anything on any virtual items although I do buy virtual items but with virtual currencies which I made from the virtual world where it is used.
@Derek,
Having just gotten back into the now “free to play” Dungeons and Dragons Online, I’d consider that to likewise be a more veteran than theme-park MMO for the fantasy genre (though not nearly to the same level as EVE). (For the record, I originally played it back near release, when not grouping was simply not an option. They’ve softened it since, which may have made it more theme-parky but also a lot more bearable.)
But, it suffered dearly for the departures it took from the mainstream. Likewise LOTRO, still a theme park in most senses but definitely one for grown-ups, a much more mature feel with a slower, calmer pace (more a promenade and less a Disneyland/casino sort of feel). An also-ran you’d have hoped would have done better.
The question, thus: is high churn necessarily bad? If your business model relies on both high adoption and long retention, you’re stuck. But you can plan for one or the other; EVE has very long retention of those who get into it despite most folks not getting hooked, and DDO’s cash-store model works on high adoption, but doesn’t necessarily need high retention (doesn’t need the *same* players sticking around if new ones keep showing up, since it’s not relying on steady subscription dollars, and there’s no monetary barrier to entry for new players).
The industry may be seeing shorter subscription cycles, but the other solution is to plan around it. Much as all us jaded junkies would prefer more innovative games. 😉
Actually, I can see a game running adds that read “Try our game for free, you can go back to Warcraft when the expansion comes out in March.”
I’m glad to see the growth, as a game developer myself, this is great news. I’m perfectly willing to buy virtual goods myself, but I need to be financially stable first. The biggest reason virtual goods are doing so well is the increase in technology to easily access them. Buying something online when I was younger meant asking for a credit card, and my parents thinking that anything related to the internet, and a credit card, was a scam. Now days we have paypal, a secure way to buy things online that people are actually aware of, it helps a lot.