An extract from a recent KZero report on B2B virtual goods (also published by the Journal of Virtual Worlds Research):
Whilst 2008 saw the emergence of the virtual worlds sector, 2009 has to be called the year of the virtual good with 2010 seeing even broader usage. With online destinations such as social networks seeing the creation of brand-new revenue steams and virtual worlds ‘giving the users want they want’, the virtual goods sector is one of the fastest growing areas of the Internet.
In its most popular form, virtual goods relate to accessories for avatars – clothing, hair and other person-related apparel. These are purchased by users to customise their appearance and are popular across all types of virtual worlds, from kids and tweens right through grown up worlds and also apply across all genres. There is an incumbent demand for users to want to change and control how they are seen in virtual worlds.
But virtual goods don’t just include avatar appearance customisation. Online communities are learning how to monetise all aspects of the user experience, including the ability for example to buy a bespoke user name or access specific areas inside a virtual world. On the SocNet side, virtual goods are being used to great effect with social/mini-games, providing ‘tools’ to complete the game faster / level-up.
Interestingly, average revenues per paying user (ARPPU) increases in line with age, highlighting the value in older demographics. Typically ARPPUs from SocNets peak at around $5 per month, rising slightly to around $6 for virtual worlds. In terms of the overall market in total revenue terms, we estimate it to currently be worth $5bn globally (as of June 2010), rising to $14bn in 2012.
This growth rate is potentially under-estimating the future market-value when you factor in the impact of augmented reality revenues and other sources of virtual goods platforms, such as the AppStore. Continue reading →