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Gamers are spending billions on virtual goods in the U.S.

When a lot of people think of gamers, they automatically think of mostly male teens who sit around a game console or computer screen all day playing alone. The reality is that the average gamers today are in their 30's and have a significant disposable income to support the expensive hobby. More and more women are also becoming gamers.

A new study recently found that women tend to be more hardcore gamers than men are, but they also tend to lie about how much time they spend playing games. More and more people are also playing games that are closely tied to social networks like MySpace and Facebook.

These gamers often report that they play the games not so much for the game itself, but to interact with friends and family. The virtual economy that was created to cater to the goods that many of these social games sell is booming. BBC News reports that the virtual economy in the U.S. is set to make billions selling goods that don’t really exist. The sale of virtual goods is one of the hottest trends in technology and is showing no signs of letting up.

Venture Capitalist Jeremy Liew said, "This [virtual goods] is just an exploding part of the gaming business right now. It is the most exciting area in gaming."

Liew's company Lightspeed Venture Partners has invested about $10 million in virtual goods so far. He said, "We have seen companies go from nothing in the last 18-24 months to tens and hundreds of millions of dollars in revenue."

Virtual goods like fertilizer and seeds in farming games are big sellers and there are a myriad of other games that sell virtual goods to players seeking to get ahead. Social gaming firm Playfish says that virtual goods are key to its success.

Playfish's Tom Sarris told BBC News, "Virtual items within the Playfish games are the centre point of the way in which Playfish derives its revenue." He continued saying, "We have two different revenue models. The primary is the sale of virtual goods and the second is in-game advertising, but that is a very minor aspect at this stage."

Liew says that making the lion's share of revenue from digital goods is very common for social gaming companies. He says that virtual goods often make up 90-95% of the revenue for the game developers. Virtual goods and the games that sell them are attracting women in increasing numbers and the players don’t consider themselves to be average gamers.

Social gamer Emma Cox told BBC News she only plays to keep in contact with friends and family. She said, "I am not a traditional gamer. I don't buy console games or go out and spend $40 on a game for my PlayStation." She continued saying, "I am playing online games for a different reason and it's instant gratification, playing with friends, showing off to others and have them see all the virtual goods you have bought for yourself and even for them."

Cox and other players like her buy things like digital birthday cards, bottles of digital champagne, seeds and fertilizer, and other items for virtual games. Gamers and the game firms behind the popular titles liken the buying of digital goods to renting movies. Cox said, "The way we look at it is it's no different from paying money to go and see a movie or rent a DVD. What you are paying for is the experience and that notion of entertainment."



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Disturbing
By Litzner on 12/30/2009 10:07:44 PM , Rating: 4
This is such a disturbing trend. I think many people in America have lost sight of the worth of money.




RE: Disturbing
By cmdrdredd on 12/30/2009 10:19:12 PM , Rating: 4
People have been, are now, and will always be responsible and welcome to spend THEIR money however they want to. If they want to buy DLC for a game that's their business.


RE: Disturbing
By omnicronx on 12/31/2009 1:31:34 AM , Rating: 2
Didnt anyone learn anything from the financial crisis? The wrongdoings of the financial sector was only a tiny piece of the puzzle, as a result of it crumbling, it exposed the great weakness that is consumer overspending. We already have enough to worry about, do we really need to be spending money on items that don't even exist? We are talking the masses here, not just a bunch of kids selling their diablo items =P


RE: Disturbing
By someguy123 on 12/31/2009 3:44:58 AM , Rating: 3
I think it exposed executive overspending and legislation abuse more than consumer overspending.


RE: Disturbing
By therealnickdanger on 1/4/2010 9:00:11 AM , Rating: 2
Executives and legislators are consumers too. Ultimately, it all comes down to the poor financial decisions of everyone involved. Trying to pin the majority of blame on any one party is like a dog chasing its tail.

If you have debt - ANY debt - then you're part of the problem. Make 2010 the year that you choose to get out of debt - or at least limit your debt to a single home mortgage... one that you can actually afford, not what the government or bank tells you that you can afford. If people in this country really wanted to punch "big business" in the face and kick "big brother" in the balls, they would focus on being out of debt. Debt is the ONE thing that both can hold over you, keeping you a slave to the system... to the MATRIX! haha

2010, debt free, baby!


RE: Disturbing
By Drag0nFire on 12/31/2009 11:24:59 AM , Rating: 2
Yeah, we just pay for their healthcare when they are broke and jobless...

Seriously, though, people need to change their expectations. People are saving nothing or taking on credit card debt while buying new cars, big screen tvs, and paying iphone bills. What can they expect when they reach retirement age?


RE: Disturbing
By Hakuryu on 12/30/2009 11:14:21 PM , Rating: 4
I have to agree to a point... personally I find alot of this virtual economy to be a rip-off, yet if people will spend money on these things, then I can't fault a company to try and make a profit off it.

The problem as I see it, is not selling virtual goods, but the direction many game developers and publishers seem to be gravitating towards - releasing incomplete games with the purpose of charging for content after release.

As an example, Assassins Creed 2 came out lately, and the developers mentioned how an upcoming DLC was in the works and meant to be part of the final game, yet now will be a DLC at a cost of $10 or so. If you have played the game, you might notice the large area in the main city that isn't accesible... you'll have to pay extra to go there when the DLC comes out.

AC 2 was a great game, and I didn't miss the DLC parts as part of the game, but eventually I can see this type of thing becoming a problem. I heard about Gran Turismo, the Playstation hit, taking their newest title into this pay after purchase scheme - instead of releasing a ton of cars and tracks (like previous versions), you get like 6 cars and 3 tracks and have to pay for the individual remaining 300 cars and 40 tracks... each individually. Instead of paying $59.99 for a great game, you will parting with $200 plus for the same content as previous games. I find that disturbing for future gamers.


RE: Disturbing
By jonmcc33 on 12/31/2009 9:24:55 AM , Rating: 2
You are kidding me? I wasn't aware of that (about the new Gran Turismo going DLC). What a disturbing thing to read. I was going to purchase a PS3 soley based upon Gran Turismo coming out for it. Now I think I will pass on both.


RE: Disturbing
By driver01z on 12/31/2009 11:43:17 AM , Rating: 2
I would like to see a source for this before I believe it.


RE: Disturbing
By Omega215D on 12/31/2009 1:41:15 PM , Rating: 2
I've come across articles about that in publications or sites like Game Informer and IGN.

They plan on giving you a decent amount of vehicles and tracks to start off on and you add/ purchase them as you go along. GT5 Prologue was supposed to be an example but since I don't have the game I don't know.


RE: Disturbing
By nafhan on 1/4/2010 10:37:05 AM , Rating: 2
For most games, you can get around this and save a lot of money by not being an early adopter. Buy the "Game of the Year" edition in 12 months, and you'll get the game + important DLC for $20.


RE: Disturbing
By someguy123 on 12/30/2009 11:20:38 PM , Rating: 4
Pretty much everything we buy outside of food, shelter, water, and clothing can be seen as luxuries. Arguing the value of something outside of these categories is a slippery slope.


RE: Disturbing
By jonmcc33 on 12/31/09, Rating: -1
RE: Disturbing
By straycat74 on 12/31/2009 12:48:21 PM , Rating: 2
luxury
quote:
something adding to pleasure or comfort but not absolutely necessary <one of life's luxuries> b : an indulgence in something that provides pleasure, satisfaction, or ease

You might be able to argue a computer with internet access, but it isn't a necessity. Brand new vehicles of any price = luxury. No one needs a 3000 sq ft (or larger) home. Most of the crap I buy is unnecessary, not a need. Your thought process is part of the problem.

What is more important, paying for health insurance or a game? or a new car?


RE: Disturbing
By Ammohunt on 12/31/2009 12:32:14 AM , Rating: 2
Question: What is the difference between this and plugging quarters into a pinball machine or Defender Arcade game back in the day?

Answer: Nothing!


RE: Disturbing
By jonmcc33 on 12/31/2009 9:17:16 AM , Rating: 1
It didn't require a $1000 down payment to play that pinball game did it? You need a gaming PC to be able to play that PC game. The pinball game is $0.25 per attempt. Much cheaper.


RE: Disturbing
By ClownPuncher on 12/31/2009 11:24:20 AM , Rating: 2
Pinball machines cost thousands of dollars. You are comparing buying a pc to using a pinball machine, which is not analogous. Technically, buying a netbook to play 3D Pinball is far cheaper than buying a pinball machine.

What a lame tangent though.


RE: Disturbing
By Fritzr on 12/31/2009 8:34:25 PM , Rating: 2
$1000 upfront or $1000 1 quarter at a time. Actually the game console probably costs less than the quarter munchers.

$1000 (laptop)
$30 per month (internet)
$250 (2 years game purchases)
$1000+$720+$250
$1970 (two years of game including hardware)
vs
$20 per week $0.25*20 (plays per day) *5 (days per week)
104*20
$2080 (2 years of quarter muncher)

Of course quarter munchers today are often asking $0.50 to $1 per play, including the pinballs. Back in the day pinball was 3 plays per quarter.

Numbers are arbitrary. I know I used to spend $10+ per session getting to where I could set high scores on Centipede & Donkey Kong at the local pizza parlor. Nowadays I relax with a laptop and a free to play game server that offers ingame weapons, equipment and hard to get quest items for sale on their website. There are a few power items and nice appearance items that are only available from the shop, but they are also available to cheapskates as prizes for ingame events. Unlike WoW & many others, the installation package is a free download.

You'll find it somewhere in this list :P
http://www.mmorpg.com/


RE: Disturbing
By Targon on 12/31/2009 7:10:43 AM , Rating: 2
If you think about it, entertainment is something people have ALWAYS spent money on. The more someone works, the more there is a need for entertainment. The problem is how much money people will spend, and if there is any real entertainment value in what gets purchased.

Spending real money for decorative items in a game has always seemed like a BAD way to spend money, but items that provide extra entertainment value by themselves, such as extra levels in a game, or other play features that encourage more use of existing parts of the game(which extends their value even after paying for it) might be seen as valid purchases.

My own feeling is that if you feel that $10 for a 1.5-3 hour movie can be justified, then spending $10 for something that will make you want to play something for that amount of time seems like a fair trade-off. This is where the price of expansion packs for games and DLC comes into play.

Now, the question is, is one object by itself worth spending money on? How about multiple objects? To this, I personally say no. Things that add game features on the other hand may very well be worth it.

The weird thing is when companies buy things in a game environment in the hopes of selling them for a profit. This is where things REALLY get strange. Most games have rules saying that it is against the rules of the game to sell in-game items for real money to any third party. This would prohibit these companies from doing business if they follow the rules of the game they are trying to make money off of. Gold/Platinum sellers in games for example are generally breaking the rules, and it is an offense that can get people banned from the game. So, it is possible that the "virtual assets" could suddenly become worthless. THAT is what makes this sort of thing a bad business model.


RE: Disturbing
By Hiawa23 on 12/31/09, Rating: 0
RE: Disturbing
By Hiawa23 on 12/31/2009 2:43:33 PM , Rating: 1
You guys think too much. I just bought the Africa dynamic background for my PS3 in the Sony store for $2.99. Did I need it, no, did I have to have it no, but I wanted it, & it looks real nice on my HDTV, I guess base on what some of you have said, I did not need that either, but, life is too short not to enjoy it, & I work everyday so I can buy the things I want. You do you, I will do me.


RE: Disturbing
By MrBlastman on 1/4/2010 11:32:37 AM , Rating: 2
You are absolutely free to spend your money however you like. It still doesn't mean though that everything you spend your money on is useful or of any value (except perhaps to yourself). Even that is not neccesarily true in that it is valuable to you, as I have known people who just spend money to collect items/things and to have them without ever really using them at all.

Americans have become obsessed with pissing money down the drain. The problem is, much of the generation that lived through the great depression has either passed on or are so old they have passed their peak earning/spending years to provide any great influence on the majority spending base. People forget how years ago money was hard to come by and spending it was a big decision as it was not easily replaced.

This problem has been exacerbated by the extension of credit that _was_ so easy to come by. It was a simple swipe of a card and you got your next fix that lasted for a few fleeting seconds and then it was off to another one. The amount of money that is spent on things with little or no resale value has exploded in recent years. I was watching my friends father-in-law over Christmas weekend play some silly game called Farmville. Now, I don't use Facebook nor have ever seen the game but was intrigued at my friend hyping it constantly. After watching it a while I was less amused by the game(it really _is_ quite dull as the competitive potential for it is nil) and more amused by how they tried to hook people into continuing to play--and, more importantly, how they tried to hook people into paying for virtual cash which could be used to buy things only accesible with said cash (which could not be sold to other players I believe)--and if you did not buy the cash, you had to wait for a painfully long time to finally earn enough to use it. This was very amusing to me and alarming at the same time. People that bought this virtual cash really pissed it down the drain to then buy a virtual good which couldn't be bought nor sold.

I suppose, in the end, you have to weigh the old time versus money choice and decide which of the two you have more of. For those with the means, they are free to spend it as they will. It still doesn't mean they have much of physical "worth" at the end of the day.

There are two types of people in the world throughout their lifetime--those who live to work (they constantly spend and have little of true net gain so in order to continue they have to keep earning more) and many of which work into their seventies and eighties, and then there are those who work to live (they spend frugally realizing that each purchase is a major decision and only do so after realizing utility and intrinsic resalable value in the good at question) who typically retire and are able to sit back and relax in their elder years.

Who do you want to be?


RE: Disturbing
By EricMartello on 1/1/2010 12:52:18 AM , Rating: 1
The driving force behind these games are MICRO PAYMENTS. Little sub-$5 transactions that occur in the hundreds of thousands each day with popular games like Farmville on Facebook. Not really breaking anyone's bank...and that's what makes these games so lucrative.

You shouldn't be irresponsible to the point where you spend money on fun to the exclusion of everything else...but life isn't permanent and living like a penny-pinching jew isn't going to earn you some kind of reward in the end.

Just look at all the people who believed they were playing by "the rules" and did things "the right way", saving for a house, saving for a 20% down payment so they could get a fixed rate mortgage...and after all that, STILL having their home foreclosed on.

Wow, must suck to have lived so righteously only to be smacked down with the sub-prime $0 down 100% financed fools. :D

The fact is there are no rules in life, there is no "right way" to manage your money, and living a certain way assures you nothing in the end. So if you think that you're "smart" because you don't spend money on video games or other forums of digital entertainment then enjoy being bored, but it's hardly an example of financial irresponsibility.


I think its great!
By HrilL on 12/31/2009 1:13:06 PM , Rating: 3
Got to love people wasting money when it helps support the company you work for =). Some of the biggest social gaming customers use cloud computing to keep these games working. They use our platform so it is great.

I don't really understand it. I'd much rather spend my money on something tangible. Buying a virtual cow seems completely retarded.




RE: I think its great!
By limitedaccess on 12/31/2009 4:29:47 PM , Rating: 3
But if you think about it what is the difference between these $10 worth of the these 3 items-

1) Virtual Game Item

2) Movie Ticket

3) Beer

All 3 provide essentially will provide you some enjoyment. While the beer and movie ticket is tangible, what does that mean really? They are both gone when used, you can't really enjoy either of them without using them.

Its simply social conditioning that makes beers/movies acceptable.


RE: I think its great!
By elgueroloco on 1/2/2010 6:30:48 PM , Rating: 2
The problem I have with this argument is that when I spend 10$ on a movie, somebody spent probably $100 million to make that movie. I really doubt they spent anywhere near $100 million developing every part of Farmville combined, much less on the items I could buy, so I don't think you get as much value. Further, the movie ticket also pays for the facility and equipment in which to watch the movie. I think this is comparing apples to oranges here.

As for beer, your body actually derives some nourishment from beer, so it's still "with you" after you drink it, just as food is. Again, you're comparing two different things.

In conclusion: though I consider the game items to be of less value than the other two items, and a stupid purchase, value is wholly subjective. Others apparently consider it a fair trade. I agree with others who have stated it is everyone's right to spend their own money however they see fit. I'll spend mine elsewhere.


Entropia Universe just set a record
By glennforum on 12/30/2009 10:31:41 PM , Rating: 2
They just auctioned off a virtual space station for 3.3 million PED (their currency) $330K USD equiv.

You can deposit and cash out of the game. The space station collects taxes, etc and can be a real money maker.

These virtual economies will definitely take hold and interestingly enough they seem somewhat immune to the real world economy fluctuations.




By glennforum on 12/30/2009 10:34:36 PM , Rating: 2
yeah
By rmclean816 on 12/30/2009 10:40:11 PM , Rating: 3
I'm gonna fart in a box and sell it for 20 dollars.
How's that for instant gratification.




RE: yeah
By jonmcc33 on 12/31/2009 9:26:45 AM , Rating: 1
Now I have heard of d*ck in a box but never fart in a box.


Sub
By bubbastrangelove on 12/31/2009 9:36:58 AM , Rating: 2
I pay $15 a month to play Dungeons & Dragons Online but I don't purchase anything from their store. I figure it's cold out this time of year, I'd spend about the same on two glasses of Guinness if were to go out to the pub and it's obviously enjoyable to me.

There is a disturbing trend however that allow people to beat the hell out of a quest with their credit card rather than playing with skill, taking time to come to a solution through wits and teamwork which was the reason I came to enjoy the game.

Is this where I say "up hill both ways in three feet of snow back in my day"?




RE: Sub
By Targon on 1/1/2010 6:35:48 AM , Rating: 2
I think the weird thing is those who start a business based around a game, and when that business is violating the rules of the game they base their business on. Gold sellers for example are violating the terms of use for almost every game out there, and that just strikes me as odd.

Then again, I find it odd that people would spend real life to a third party for items they can get in a game. Micro transactions and buying from the official game store are strange enough, but going to a third party to do it is even stranger yet. I certainly wouldn't want to give someone real money to buy crafted items or for the use of some in-game facility like a virtual space ship.


I need a gun
By PenGun on 1/1/2010 5:26:10 PM , Rating: 2
It would be very fine if we shooter types could get in these lame jerk-off games and dispenses some justice.

Playing Stalker COP and my favorite way to make a buck is to get in fights and then sell their weapons, they do not need them anymore ;). The artifact farming is way less fun.




Sexism below
By hashish2020 on 1/4/2010 4:23:57 AM , Rating: 2
This is what happens when you let women game. They will find a way to go shopping no matter what.




"If a man really wants to make a million dollars, the best way would be to start his own religion." -- Scientology founder L. Ron. Hubbard

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