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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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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.


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