Nowadays everyone is speaking about virtual goods market- its key players and who should be involved. Some say it is only for social networks and online games, others are determine that others could also ride on that wave. It’s no wonder, analysts estimate, this year, virtual goods revenue will be $1 billion in the U.S. and about $5 billion worldwide. Another analyst predicts annual revenues will reach $15 billion by 2012. Things have become even more interesting as already universities have been involved to study virtual goods buying habits to have more solid projections for the whole ecosystem (you can read more from here). But what do we know about virtual goods market so far?
Online games were the first adopters of virtual goods. They started to offer users the ability to upgrade their game characters and tools with new features for a small fee. Many such games generate most of their revenue using a virtual goods model.
Social networks were the next ones, they enable members to send virtual hugs, cards and other gifts for much less than buying and mailing a tangible gift to a friend. As most of the people have an account in at least one social network, it has rapidly grew into really big business as everything is moving online these days.
Others, such as luxury brands are beginning to deal with virtual goods as add-on, just-for-fun services. Such companies choose to adopt virtual goods as it is a great way for brands to get additional reach and put a brand in an environment where people can interact with it.
The biggest benefit is the incredible profit margin for virtual goods. Online games for example are providing virtual goods that do not have outstanding manufacturing or physical distribution costs. Marketing virtual goods is minimal as well—most promotion occurs via social media. So basically everything they make is the pure profit.
It is an interesting time with a lot of opportunities and I believe many cool changes are to come. So lets get all virtual and be part of the revolution. I also advice to see the presentation below about virtual goods market in Asia, you’ll be surprised what is actually happening there.
[...] wrote recently here that analysts estimate, this year, virtual goods revenue will be $1 billion in the U.S. and about [...]