I attended the Virtual Goods Summit on Friday and walked away struggling to figure what topics might be interesting to write about. My net takeaway is that not much has changed in the year that I've been writing about social gaming and virtual goods, with the exception of two facts:
1. Virtual good providers are being lauded as the next big thing to replace advertising
2. There's something weird going on with the ads and offers that have taken over the more traditional banner advertising role
There is no question that virtual goods have become an integral part of social network revenue streams. And the mainstream media has finally started to catch on.
But, I didn't realize the oddities of the way users are being monetized until I attended the event and saw the heavy emphasis not just on monetizing users but on doing so in a way that was transparent and non-intrusive. Theoretically, it's a good idea, but in practice, many of the "offer" providers are purposely or inadvertently running Ponzi schemes.
TechCrunch's Michael Arrington arrived at my second point above and took the theory much further with data that shows many social gaming offers and advertising practices amount to little more than a complicated scam that gets people in the door for free only to take advantage of their lack of understanding of what they've technically agreed to in the various offers.
In short, these games try to get people to pay cash for in game currency so they can level up faster and have a better overall experience. Which is fine. But for users who won't pay cash, a wide variety of "offers" are available where they can get in-game currency in exchange for lead gen-type offers. Most of these offers are bad for consumers because it confusingly gets them to pay far more for in-game currency than if they just paid cash (there are notable exceptions, but the scammy stuff tends to crowd out the legitimate offers). And it's also bad for legitimate advertisers.... Read more
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.
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