Virtual goods are non-physical objects and money purchased for use in online communities or online games. Digital goods, on the other hand, may be a broader category including digital books, music, and movies.Amazon may benefit as digital goods sales jump reuters.com, Fri Dec 23, 2011 11:32am EST Virtual goods are a subclass of intangible goods.
Including digital giftsSales of virtual goods boom in US news.bbc.co.uk, 10:32 GMT, Thursday, 22 October 2009 and digital clothing for avatars, virtual goods may be classified as services instead of goods and are usually sold by companies that operate social networking services, community sites, or online games.Virtual Goods: the next big business model techcrunch.com, Jun 20, 2007 Sales of virtual goods are sometimes referred to as microtransactions, and the games that use this model are usually referred to as freemium games.
Virtual money Virtual money (or in-game currency) is used to purchase virtual goods within a variety of online communities, which include social networking websites, virtual worlds and online gaming sites.
A key revenue driver within social media, virtual currencies are specific within each game and are used to purchase in-game goods. Characters or avatars in virtual worlds own things within the context of the virtual world and users will collect each games' virtual currency to purchase land, supplies and various items used to enhance their status and add points. Some virtual currencies are time-based, relying upon measurement of in-game achievements in order to accrue exchangeable points.
History The first virtual goods to be sold were items for use in MUDs, early, graphical online multiplayer games on the PLATO system and text-only games on other computers. This practice continued with the advent of MMORPGs. Players would sell virtual goods, such as swords, coins, potions, and avatars, to each other in the informal sector. While this practice is forbidden in most blockbuster online games, such as World of Warcraft,How to Stay in the Game (Part 2 of 2) blizzard.com many online games now derive revenue from the sale of virtual goods.
When Iron Realms Entertainment began auctioning items to players of its MUD, Achaea, Dreams of Divine Lands, in 1997, it became the first company to profit from the sale of virtual goods.The World of text MMOs / MUDs – An Interview with Matt Mihaly, CEO of Iron Realms Entertainment playnoevil.com, Friday, September 8. 2006 But it wasn't until the mid-2000s, with companies like Korean Cyworld leading the way,Cyworld ready to attack MySpace money.cnn.com, July 27, 2006: 11:35 AM EDT that virtual good sales became instituted as a legitimate revenue-making scheme.
Virtual goods may continue to be a primarily Asian phenomenon, as between 2007–2010 70% of worldwide sales were made in this region.
Revenue In 2009, games played on social networks such as Facebook, games that primarily derive revenue from the sale of virtual goods, brought in US$1 billion, and that is expected to increase to 1.6 billion in 2010. Worldwide, US$7.3 billion was made from virtual goods that same year.
Estimates of the future market for these small items vary wildly depending upon who is making the prediction. 2013 sales will be US$4 billion according to one analystA virtual farm turns new ground for game developers reuters.com, Thu Mar 25, 2010 7:05am EDT and a year later reach 14 billion according to a different analyst.Virtual goods revenue to hit $7.3 billion this year cnet.com, November 15, 2010 9:51 AM PST
In 2010, a virtual space station in the game Entropia Universe sold for $330,000.
The popular, free-to-play video game Fortnite: Battle Royale generated more than $1 billion in revenue across all platforms. This revenue comes entirely from in-game purchases, which — in Fortnites case — offer no competitive advantage to the game.Kaylee Fagan, "Fortnite — a free video game — is a billion- dollar money machine", "Business Insider", July 29, 2018
Research In online games, virtual goods could be lost due to some unexpected reasons. This brings problems for service providers as well as purchaser. Encryption techniques primarily used for other purposes may, here too, provide functionality. These may include access control, hashing, encryption, digital certificates, and fingerprinting.
Illicit sale
While many companies have embraced exchanging cash for virtual goods, the practice is forbidden in most blockbuster games,Poor earning virtual gaming gold bbc.com, 01:36 GMT, Friday, 22 August 2008 which derive income from subscription fees. This does not deter all players from saving playing time by illicitly buying in-game currency with real-world cash from an alternate source, violating their agreement with the game's operator in the process.
China outlawed the practice of buying real-world goods with virtual currency in 2009,China bars use of virtual money for trading in real goods PRC Ministry of Commerce, Monday, June 29, 2009 2100 GMT something that had become popular in some parts of the country.QQ: China's New Coin of the Realm? wsj.com, March 30, 2007
Virtual goods purveyors
CellufunUnlike reality, virtual retail sales are hot, especially for avatars USA Today, 23 Dec 2009 Changyou Cyworld Facebook Gaia online Habbo hotel Hi5The world’s most lucrative social network? China’s Tencent beats $1 billion revenue mark venturebeat.com, March 19, 2009 Hotornot IMVUABC News March 15, 2010 Kongzhong NexonAbout Company Nexon Official Site NingVirtual goods give Web firms new revenue in ad slump reuters.com, Tue Dec 29, 2009 12:50pm EST Iron Realms Entertainment PlaydomPlaydom Fuels Its Virtual Goods Business Press Release, playdom.com, September 30, 2009 PlayfishPlayfish sees social games as industry driver Wed Nov 4, 2009 6:02am EST Second Life MarketplaceSecond Life Marketplace Featured Items Wed April 26, 2011 RuneScapeRunescape begins first microtransaction experiment develop-online.net, April 2, 2012 Slide.comVirtual Products = Real Cash cnbc.com, Oct. 09 SmallWorldsTrade Me founder invests in gaming tvnz.co.nz, Mar. 11 Sony Online EntertainmentRedefining MMOs: The massive money of microtransactions massively.com, Sep 11th 2009 ValveThe MANN-conomy update: FAQ Valve 2010 Tencent World of WarcraftUh-Oh: World of Warcraft Introduces Microtransactions Wired's Game | Life blog, November 6, 2009 Xbox Live MarketplaceXbox 360: Get the Points Microsoft's Xbox Official Site ZyngaZynga's Gaming Gamble forbes.com, 10.29.09, 12:40 PM EDT FlirtomaticDigital tills are ringing to the sound of an unreal Christmas The Guardian, 17 Dec 2009 OPSkinsSimon Coutu, "Here's How You Make $12,000 In Profit a Day Selling Virtual Guns", "Vice", June 30, 2015
See also Skin gambling Walled garden (technology) Virtual economy
References