Virtual goods sales to rise 40% in 2011 - Study

Market research firm predicts microtransaction revenue will spike to $2.1 billion in the US from $1.5 billion in 2010.

Once prevalent only in Asian markets, the free-to-play, microtransaction-supported business model is increasingly gaining steam in Western markets. As reported by Venture Beat, the latest research from Inside Virtual Goods indicates that the US virtual goods market is poised to grow by 40 percent in 2011, rising to a projected $2.1 billion. The report goes on to note that worldwide sales will be several times larger, due to the model's popularity in Asia.

If Farmville's virtual tractors are expected to run, gamers had better be ready to pony up some virtual gas money.

The report defines virtual goods as objects such as in-game weapons or decorations that gamers spend real-world currency on. Market leaders in the sector include Zynga, which operates the hit Facebook app Farmville. Mainstream gaming companies such as EA and Disney have also gotten into the sector, thanks largely to their recent multimillion dollar purchases of Playfish and Playdom, respectively.

However, despite the sizable double-digit growth, the Inside Virtual Goods report indicates that the sector's prosperity will slow percentage-wise in 2011, compared to 2010, when sales rose to $1.5 billion from 2009's $1.1 billion. (The report's coauthor, Inside Network's Justin Smith, corrected 2009's tally for GameSpot, which Venture Beat reports as $1.6 billion.)

According to Smith, the slowdown can be attributed in large part to the difficulty in sustaining massive growth. Smith also noted that Facebook's decision in late 2009 to dramatically scale back the number of notifications sent out from games such as Farmville also contributed to a fall off in growth.

However, services beyond Facebook are increasingly contributing to the US total. Last year, Apple launched in-App purchase options for the iPhone, and a growing number of Western massively multiplayer online games, such as Everquest II and Lord of the Rings Online, are adopting the free-to-play model. Virtual goods sold through Xbox Live and the PlayStation Network are also on the rise, the report noted.

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Discussion

20 comments
KrazzyDJ
KrazzyDJ

Spending real money on virtual stuff ??? I don't think I'd spend that money even if that virtual stuff was real !!!

jinzo9988
jinzo9988

I've seen transaction records myself. I work in the industry. The amount of money that people are willing to pay for substandard overseas content-less grindfest garbage is ridiculous. I've seen 10 times the amount of money that you would spend on a monthly subscription being payed out by a single person.

green_dominator
green_dominator

@ Gelugon_baat in the report they don't classify DLC, map packs and avatar stuff as virtual goods. If I'm reading it right they only count items sold in MMO's and in games like Farm Town so your issues with others who have a valid point holds no water. I'm sure in the future this report if it continues may adjust their scope to most all DLC but this is now.

Dynamo11
Dynamo11

I read Farmville and then closed the tab

Barighm
Barighm

Items for avatars nobody cares about-the only games that use the avatars are indie games-decorations for your console's dashboard, a few extra songs for Guitar Hero-type games...why does anyone care about this stuff? A lot of the better stuff I actually see people use isn't even that cheap. Yeah, most of it is $1 impulse purchases, but you can derive more enjoyment from a chocolate bar.

blackace
blackace

I don't waste much money on virtual crap. I'm not even playing any of the big MMO's anymore. Buying games and DLC is one thing. Buying avatar clothes and furniture for your HOME is completely different. I haven't paid a cent for anything for my XBox 360 avatar. Some of the stuff is cool, but paying $1-$3 to make your avatar standout is just a waste of money to me. I rather use those dollars to download Hydraphobia or Shank. Know what I mean?

snugglebear
snugglebear

I dished out for the Deathspank games and I'd do it for expansions for games I enjoy, but I'd never pay money for in-game items. If it isn't a preorder extra, I don't get it.

zidan4000
zidan4000

I just can't get why do people buy virtual stuff for their virtual characters,houses etc,,, with REAL money. It is just beyond me.

spudster007
spudster007

I wish I had a virtual car that I could drive virtually anywhere...oh wait...I have a real car...

alexLmx6
alexLmx6

pretty soon, xbox live will introduce the live monkey, where you need to pay to feed it virtual food and take it to the virtual vet.. only problem is, its mandatory for all users, and if you let your monkey die, or he becomes depressed from not being played with enough, then microsoft will release a real monkey in your house when you're at work. sounds like fun, but the reality is that monkeys make an awful mess.

grasshopper6
grasshopper6

hmmm interesting how much for a leather biker jacket and pants and some nice boots to go with it

DennisWZH
DennisWZH

i never use money to buy virtual stuff. it's stupid.

monson21502
monson21502

brb, i gotta buy some fuel to harvest my crops:D

Animatronic64
Animatronic64

I think virtual goods are acceptable in FREE online games, as they help to keep the servers up and running. However, if you're already paying a subscription fee and buy into this crap, then you're just a sucker.

TraXxX
TraXxX

@Gelugon_batt Paying money for online contents such as DLCs and map packs makes more sense to me than buying a fake shirt to customize your avatar with or purchasing a fake cow for your virtual farm. I just think it's idiotic and a waste of money to pay for such virtual goods.

TraXxX
TraXxX

Paying real money for fake stuff -very smart!

fightmusician
fightmusician

Wow 2.1 billion that's a lot of downloaded crap that should have been on the game to begin with or given for free! The world is full of suckers (hell I'm guilty) and big companies have definitely caught on. Oh well.

Stressthesky
Stressthesky

It's recession, but a lot of people managed to put in 1,5 billion $ on absolutely nothing. That's just amazing.