To the average person, buying something that isn’t there would seem a fairly strange concept, but it’s been going on for quite a while now. As such, we felt it would be good to pull together some facts and figures about virtual goods, where they came from, and what might lie ahead...

In the beginning, there was nothing

Virtual goods emerged first in Multi-User Dungeons (MUDs), the text-based role-playing games in which players move by typing-in instructions for their character. Iron Realms Entertainment became the first company to profit from their sales in 1998, when it began to auction items to its players. Although this marked the dawn of virtual goods sales, a few more years had to pass before things started to get serious in the mid 2000’s.

These days, World of Warcraft, Zynga and Facebook regularly make headlines for the money they’re making from virtual goods, and brands such as Volvo, MTV and H&M are keen to get in on the action.

Unreal numbers

• In 2009 it’s estimated that (globally) $2.2bn was spent on virtual goods (source)
• In 2010 it’s estimated that (in the US alone) $1.6bn will be spend on virtual goods (source)
• By 2013, it’s thought the global market* for virtual goods will reach $6bn (source)
• 13% of US consumers with web access bought virtual goods in the past year (source)
• More than 50% of purchases are made in-game (Ibid.)
• At one point in April 2010, the queue to buy a $25 'Celestial Steed' on World of Warcraft was above 140,000; the estimated wait time when it was 71,000 was 7 hours! (source)
• Branded virtual goods (BVGs) are predicted to generate $318 million in 2015 (source)
• Xbox Live’s virtual goods business is thought to have surpassed its subscription business, being now worth an estimated $625 million in revenues per year (source)

*It’s worth noting that for global figures, a fair range of estimates exist - some have suggested the Asian market alone is worth $7bn a year (source)

Virtually unstoppable?

The purchase of virtual goods seems linked to some fairly fundamental behaviours of today's online consumers, so it's reasonable to assume it won't be a passing fad.

Gifting, self-expression through customization, and performance upgrades in online gaming appear to be the largest drivers of consumer-spending on intangible items. Charitable gestures have also encouraged virtual goods purchases, and earlier this year Zynga raised over $1.2 million for Haiti through special item sales in Farmville and Mafiawars.

This handy presentation gives some insights into the ‘why?’ and ‘how?’ behind virtual goods.

The future of make-believe

Aside from the projected statistics, some intriguing predictions have been made for the future of virtual goods, not least that the first $1 million virtual good will be sold in 2012!

In more recent news, Facebook 'likes' have now been extended to virtual goods - in Playfish's Pet Society, the Like button has been added to individual items, freeing them from the confines of the app itself in an attempt to entice more users to join the game. And finally, it was recently announced that Target is selling gift cards for Facebook Credits (with other retailers set to follow).

So when Christmas comes around, why not go virtual with your gift-giving? It should be a fair bit easier to wrap them ; )

In the meantime, contact us to find out how you can benefit from Work at Play's virtual goods experience and expertise.

Quick links

1) Wikipedia - Virtual Goods
2) Wikipedia - Virtual Economy

CC image credit: Torley