Gamers are not just making purchases to enhance their gaming experience but also selling virtual assets to other players, according to new research from video game market research firm VGMarket.
Sales of virtual goods are expected to reach $1 billion this year and already generate near $4 billion annually in China. But there are some challenges, primarily the fact that once you convert your real money to virtual cash you can't readily get the dough back out.
The research revealed that in-game currency is the most frequently sold digital good from player to player and that two out of three sellers sold in-game currency in the last 12 months, earning a median of $22. PlaySpan, a provider of monetization and payment solutions for games and virtual worlds and sponsor of the research, considers that to be good news as its platform enables game developers to provide player to player marketplaces for their players. In addition, the PlaySpan Marketplace currently provides a secondary market for IMVU players to buy and sell goods as well.
One out of two sellers made a sale in a social network game over the last 12 months and earned a median of $50, while one out of four sellers made a sale in a free-to-play game over the last 12 months, with their median earning being $98, or nearly double that on social networks.
Eric Hartness, chief marketing officer at PlaySpan, told me that the secondary market is a boon for games, adding value, real and perceived, to all players by associating a real world dollar value on their playing time, game accounts, and digital items.
... Read moreNew data released by Gambit, a micro-transaction platform provider, illustrates the complexity of both customer targeting and analyzing micro-transaction buying patterns. The major takeaway: older players seem like a good target market until you dig in to find out that they don't spend a whole lot.
But, it takes a minute to understand the data, as Gambit's Susan Su points out in a blog post on how age impacts social-gaming monetization. While it would appear that older users are a good target market thanks to their high revenue-per-user statistic, they are actually pretty meaningless in terms of revenue.
So what does this mean for game developers looking to monetize users?
First, the older demographic shouldn't be ignored as it offers a very high revenue-per-user ratio. Second, it shows that younger gamers are figuring out ways to pay for things, leading me to believe that alternative noncash payment platforms such as game cards and in-game currency have a strong future.
The other important factor in this data is that game developers (and really any marketers) need reliable data to target the best customer. Even customers with low annual revenue figures can be very meaningful provided you can find enough of them. Think of Paypal or Visa in terms of low-margin high-volume transactional systems that bring in high-quality revenue streams.
(Thanks to Susan Su (@susanfsu)of Gambit Payments for use of the data.)
The Creative Coast Alliance and the Savannah (Ga.) Economic Development Authority are offering qualified video game developers up to a year of free rent in a bid to boost the industry's presence in the historic city.
(Credit: The Creative Coast Alliance)They're calling it "the offer," and if you're part of a video game development team looking for a financial boost, it might indeed be hard to refuse: up to a year's free rent in a riverside building in beautiful Savannah, Ga.
The initiative was the brainchild of Brenda Brathwaite, a longtime developer and a professor of game development and interactive design at the Savannah College of Art and Design (SCAD). She says as the recession kicked in and she saw layoffs affecting everyone, including friends and colleagues, she asked herself what she could do to help and stop feeling powerless in the face of the economic storm.
"I wondered," Brathwaite recalled, "'what if game developers had free office space, so...that worry was taken away. It's not a lack of talent that's causing these layoffs."
Given that Savannah and its surrounding area have a number of colleges and universities, including SCAD and Georgia Tech, Brathwaite said there is a plethora of local video game developers looking to get projects off the ground. And so, she took her idea to the Savannah Economic Development Authority where, rather than being politely ignored, her idea was fully embraced.
"Within 24 hours," Brathwaite said, "they said they're going to do it."
In fact, The Creative Coast Alliance, a nonprofit comprised of the Savannah Economic Development Authority, the city of Savannah and Chatham County, had an office building at the ready for the project. And now, the first floor of that building is known as the Game Development and Digital Media Center.
Brathwaite said that in order to be eligible for the free office space--as well as a 30 percent tax credit on "qualified Georgia expenditures"--applicants must be able to demonstrate real potential for making games. That means, she said, that a company has already secured funding, or that it has previously published games. There's no set rules, though. "It's judged on a case by case basis."
And why would a city like Savannah make such an offer?
"It's an opportunity cost," Brathwaite said. Bringing more successful game developers to Savannah will be good for the city, and that, she explained, is worth the investment.
Here's hoping other cities follow suit.
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