Virtual goods are providing very high-margin sales for many internet companies. According to PaidContent.org, Chinese portal Tencent pulled in nearly $1 billion last year from the sale of virtual goods, while Facebook earns between $50 million and $100 million (your mileage may vary on these estimates). Recently Hi5 Networks made the move to include far more virtual goods as part of its social-networking site.
Obviously every site is a bit different, but there are two common threads of items that people seem ready to pay for:
- Customization of the environment -- page decorations and other things that provide some kind of status in the game
- Enhancements to games -- if you can't beat them, you can just pay for items
Of course, there are many other possibilities--virtual gifts play a big role in Facebooks' revenue and I believe there is a huge market for goods such as baseball cards and other tradeable real-world/virtual world crossovers.
Looking at three of the top virtual goods companies, Rory Maher outlined how they make money.
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