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Nicole Ferraro

Survey Says Virtual Goods Starting to Catch On

Written by Nicole Ferraro
7/30/2009 44 comments
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A new survey of nearly 2,000 Web users suggests that 12 percent of Americans -- more than one in 10 -- have purchased virtual goods this year, with most of those goods being purchased by social network gamers, virtual world users, and iPhone owners.

The study, undertaken by analyst firm Frank N. Magid Associates, was commissioned by PlaySpan, a virtual currency provider, which obviously has a vested interest in the results being awesome.

Nevertheless, the study was less a testament to the idea that virtual goods are the greatest things since tattooed eyebrows, and more an analysis of who is buying virtual goods and from where.

According to a report on GigaOm, the demographics break down as follows:

  • Of the 12 percent buying, 15 percent were male aged 12-24
  • Another 15 percent were female aged 35-44
  • Men are buying weapons for Massively Multiplayer Online Role Playing Games (MMORPGs)
  • Women are buying Flowers on Facebook (aww...)
  • The largest ethnic group buying virtual goods is Asian-Americans (16 percent)

According to the report, the global value of microtransactions is supposed to reach $1.8 billion for 2009, with $200 million to $250 million coming from the U.S.

Micropayments, whether for virtual goods or digital content, may very well help define the future of business on the Web. But with 75 percent of the American population using the Internet, this alleged 12 percent will not necessarily turn virtual goods into a booming enterprise. Further, even if that 12 percent is accurate, said buyers could have just purchased one virtual good at some point this year, which could very well mean it was a one-off thing (I'll try anything once!) -- not a sustainable business model.

Now, if only Twitter started selling virtual mirrors for its merry band of Narcissists, we might be in business for real.

Just a thought.

— Nicole Ferraro, Site Editor, Internet Evolution

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Terri Eberle
IQ Crew
Monday August 3, 2009 9:08:44 PM
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Nicole are we talking about paying to download something like a game or music... or buying someone a flower online?  Because I have done the former but not the latter! thanks

Murugan
IQ Crew
Friday July 31, 2009 5:01:50 PM
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Excellent mention of how culture influences how we perceive things in the world.

Murugan
IQ Crew
Friday July 31, 2009 5:00:32 PM
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You raise a good point in that virtual goods can enhance the communication for those who are separated by large geographical distance.

Murugan
IQ Crew
Friday July 31, 2009 4:57:00 PM
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I still have not considered purchasing virtual goods on the Internet, but if there’s a market for it then I can see the business value of pushing that venture.  After all, the small percentage of those who purchase virtual goods will increase.  Interesting how there’s the evolution of shifting real world objects to the virtual world.

Paul Whyte
Researcher
Friday July 31, 2009 10:01:42 AM
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Virtual goods is not only a 'young people' phenomenon but even older folks are pretty much into it as this report suggested:

35 – 50 Years Old

Dogster – 67% between 35 – 50 years old. In 2007, Founder Ted Rheingold stated at the Virtual Goods Summit that over 50 million virtual gifts had been sent by 500,000 users in 2 years.

Scrapblog – 58% older than 34. In February 2009, Scrapblog moved to a virtual goods business model. Revenue figures are unknown.

Viximo Network – While I am unable to release specific data, across the Viximo network, the demographic of women between the age of 30 -45 purchase virtual goods at much higher rate than younger audiences.

I think there is a thin line of diferennce between virtual worlds like SecondLife and virtual goods. I know those who are into virtual worlds may be more inclined to buy virtual goods but you don't have to be into virtual worlds in order to use virtual goods. I don't know if the survey takes that into consideration.

Mary Jander
Thinkernetter
Friday July 31, 2009 9:23:16 AM
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An open mind is key to viewing the future, and I think Kim's blog does a fine job of provoking us to see in new ways. The reason young people appear to be more adaptable to virtual worlds and goods is that they are more open to new forms of entertainment.

They scoffed at Einstein too. The more unlikely you think a future trend might be, the more surprised you'll be when it actually takes shape.

KimSolez
Thinkernetter
Friday July 31, 2009 1:09:41 AM
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Hi Paul,

Your psychological reaction to traditional money is rooted in culture.  If we change that culture so virtual currency is highly respected then you could come to like virtual currency just as much or more than real money.

The future is always "fiction" until we get there, then it's fact.  It is still worth thinking about what it will be like when that point is reached.  A site devoted to "evolution" has to partly be about the future.

It may not seem to be practical to think ahead like that, but it is relevant to your life, you will be around to see the changes we are describing!

The Vreebees are earned to some extent. Sending someone something that they have 'earned' makes it seem meaningful to the receiver.

All the best. - Kim

Paul Whyte
Researcher
Thursday July 30, 2009 10:42:00 PM
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They say dollars, you say "VreeBees,”!! I think Kim Solez enjoys very mcuh handling the fictional aspect of the internet and that's fine with me because I'm a great lover of fiction. Butr here we are talking about people using dollars meant for grcoceries to buy virtual goods. If all facebook users can make the commitment of just buying $5 virtual goods per month, then all the ramblings of FB not having a business model would evaporate quickly.

I would appreciate very much a friend who can send me a virtual flower costing $1 than one who can send me one costing 100,000 VreeBees!!!

viboons
Researcher
Thursday July 30, 2009 9:54:15 PM
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I think virtual goods make more sense when we don't think of them as goods but rather service. We pay for entertainment of some sort every day. Gamers create a demand for virtual weapons so they can enhance their gaming experience and entertain themselves. As nonsensical as it may seem, people buy and send facebook gifts coz doing that pleases them - no difference than renting a DVD in that sense. That said, I've never bought any virtual goods coz I don't find them entertaining or offering any value of service to me...

Though, I doubt that the survey of only 2,000 Web users would realistically represent about 250 million Internet users in North America. But it's an interesting survey nonetheless.

Paul Whyte
Researcher
Thursday July 30, 2009 5:53:00 PM
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You will be surprised to learn that all age groups are very much into this virtual goods phenomenon as it is reported here:

Who Buy Virtual Goods? It is not who you think

So I pretty much belive you can see how your age group is faring in the virtual goods space. I don't know why the survey failed to portray the real demographics.

But in all honesty, would it be hard for you to send a virtual flower costing $2 to an online friend living in a distance land on his/her birthday? I really don't see why this sounds so foolish to some people!!

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