Beginning in the first quarter of 2010, social sites IMVU and MyYearbook will launch a virtual currency exchange allowing users from either service to exchange currency between the sites.
Currency Connect is billed as a "cross property virtual currency exchange" system similar to how you would change U.S. dollars into euros if you were traveling in Europe. Users simply swap their currencies depending on what site they are on. Overall this is not a bad idea as I still find it surprising that users pony up real money for virtual money that can never be taken out of a specific site.
But, it does make me wonder when a bigger payments vendor, like PayPal, will get into the game and offer more of a de facto universal virtual. It's all well and good that two large-ish sites have launched this effort, but it can't be long before other social sites like Facebook join the fray. And, ultimately the site or currency with the most users is likely to be the one with the most users.
This opens up an opportunity for other sites with large user bases such as Google and Yahoo to offer a currency program. If users are already joining multiple social-networking sites, there is no doubt that they are also using search engines and instant messaging.
On the technical side, the service uses a simple set of REST APIs that implement the various checks and balances of the system. Security is maintained through tracking methods and server-to-server connections, which will initially limit how many sites can participate in the service. Again, a larger online service might have an easier time deploying a fully distributed, trusted service that didn't require point-to-point connections.
It's clear that virtual currencies have become an important part of social networking and gaming infrastructure. But, sooner or later fickle users will change their allegiances. A currency exchange offers a palatable escape method but still doesn't ever let you turn your virtual currency back into real money.
(Via VentureBeat)
The buying and selling of virtual goods is an extremely nascent market that seems to be heating up dramatically. Almost daily there are announcements pronouncing large virtual good revenues on the horizon and new forms of payments and rewards for the intrepid user.
Just today social network Hi5 introduced multicultural holiday gifts along with a new payment system. Virtual world Habbo also introduced a new type of currency and reward program for loyal users.
With all of this interest and efforts toward monetization, is this a bubble waiting to burst?
So far, my answer is no.
Virtual goods are part of the walled garden in which they are purchased and consumed. If they fail, they only fail within that specific environment and don't take down the ecosystem because there really isn't one.
There is no portability of the goods between social networks or virtual worlds due to technical and business reasons and therefore there are limited opportunities for outside providers to base their businesses in other-world environments. That insulates others (meaning not the base site) from going down with ship.
For example, I can't start a company to sell virtual cookies on Facebook (though I can use Viximo, which takes the lion's share of the revenue) and even if I could sell on Facebook the virtual cookies wouldn't transfer to other sites Gaia or Habbo. I also can't take the sword I purchased in WoW and use it in IMVU. And while that might be nice, it probably doesn't matter.
It's not clear just how big the virtual goods market is, nor have we seen it become completely bastardized as we eventually will when marketers try to sell anything and everything. In the mean time, it's nice to see any economy flourishing.
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