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Virtually Ridiculous: US Virtual Goods is a Billion Dollar Industry
By: Jeff Louis
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When I first learned about virtual worlds, my first thought was "big deal." I wasn't impressed, and I thought that there was a limited life expectancy for these online communities. Virtual Goods are non-physical objects that are purchased and exchanged on the Internet. They have no "real world" value and items or gifts sent to others on social networks, via instant messaging, and those purchased in virtual communities, such as Second Life. The more complex the Virtual Good, the more it costs.

In 2006, I was shocked to read about Anshe Chung, the first Virtual Goods millionaire. Earlier this week, a report issued by Inside Virtual Goods states that the US market for fake stuff will reach $1 billion dollars in 2009, and $1.6 billion in 2010. This is up significantly from 2008, which saw virtual good sales top out at a mere $450 million. This is, in my opinion, a ridiculous amount of money spent on items that are really just pictures. It seems a bit out-of-whack that as the economy tanked and unemployment skyrocketed, the virtual goods market doubled. Clearly, there's a secret pocket of people out there that have access to some "rainy day" money.

Venture Capital and online ad spending have decreased during the recession, so one of the methods for social and virtual networks to make money is to sell items directly to their users. The extraordinary growth of Facebook, and other social networks, over the past year has boosted the sales of virtual goods. According to an eMarketer article:

“Last year, it was likely that the majority of virtual goods based revenue in the US came from virtual worlds,” according to the report’s authors. “However, this year we believe the trend is shifting to more virtual goods revenue coming from social networks.”

And, to paraphrase Debra Aho Williamson, an eMarketer senior analyst, there is nothing that shows engagement more than a bunch of virtual people showing up at a virtual store to buy virtual stuff to put in their virtual homes.

All this points to the fact that many people take their virtual lives seriously. In October, 2008, a Japanese woman was arrested for killing her virtual husband after she found out that she had been virtually divorced by the virtual man who, after discovering his death, reported it to the reality police.
 

 

   

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About the Author

Jeff Louis: Media Planner, Brand Project Manager, blogger, and aspiring writer. Please leave a comment or get in touch with Jeff on Twitter. As always, thank you for reading!

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