A couple of years ago, if you'd have said "virtual goods" to someone, they would have assumed you meant digital consumer items like electronic books or music. Not anymore. Now, Virtual Goods are the hottest new market on the Web and it's expected to hit $1 billion or more next year in the U.S. alone and several times that world-wide.
Virtual goods are those things you see advertised and have probably purchased to enhance your Facebook game, beef up you character in an MMO, or sent to a friend as an online gift. They're the "power ups," the virtual flowers," and the Second Life bonuses that were purchased by 12 percent of American Internet users in 2009.
Most of those who purchase these are women aged 12 to 44 and young men between 15 and 25. In fact, InformationWeek
did a survey and data sweep culminating in a report detailing how virtual goods were used (and abused) in 2009.
The world wide market could top $5 billion before 2015, most experts seem to agree. That's a big chunk of virtual change right there that translates to real money for real businesses.
Davide Di Cillo
, founder of Thirtynine
, a Fort Lauderdale-based company that specializes in development of web and iPhone applications including Christmasfy Me says: "Virtual goods are the natural evolution of burger toppings and options on cars. The only difference is that most of the times the original product is free. It's a market that can only grow, because more of our lives will be spent online. The more we spend online, the more we we will use and exchange digital products. People love to have personalized experiences and/or feel unique, that's why they will always be willing to spend money and buy something, even if just made of bits and bytes that makes them feel that way."
An FSU doctoral student, who remains unnamed, took the job of analyzing virtual goods buying habits in November in cooperation with First Planet Company. FPC owns the popular online game Planet Calypso, a virtual world or MMORPG (massively multi-player online role playing game).
In the study, the FSU student looked at how players in the special Miss Calypso beauty pageant held over a weekend in the game used virtual goods to enhance their chances. Looking at percentages of users who normally buy virtuals versus how many bought them during this special event, the analysis hoped to show the relationship between user interactions and virtual goods purchases.
The space of Virtual Goods is not just for online games either. Other, more traditional markets are beginning to see the potential and step in to try the waters. The online porn industry, which is heavy here in Florida, has had virtual games for years and is now making those games sexier (so to speak) by adding virtual goods that players can purchase to enhance their experience.
Other businesses such as online photo editing software to enhance Facebook profiles, extras to pimp your MySpace page, and more are popping up daily. Why have a boring old Facebook profile pic when you can upgrade it to look like Mr. T or Liberace? Di Cillio further states, "I think you will see a lot more companies down in the South Florida area looking to break into this business. A virtual good has a one time cost to make the graphic, and can be used on and on. Soon you will probably see many of these companies putting real world use to these 'fake' products."
There is definitely a lot going on with virtual markets and goods. I'm surprised I wasn't able to find more going on in Florida around this space. Do you have a virtual goods biz? Tell me about it!