In Recession, Virtual Economies Thrive

By December 09, 2008 1 comment

Despite the massive slowdown in recession spending, the sale of virtual goods is still going strong. The reason? The recession. “So far, the deepening recession has not slowed sales of virtual goods, which executives attribute to people spending more time at home,” says the NY Times’ Stefanie Olsen. Virtual goods are generally special in-game items or microgifts. Part of the draw is their price, often maxing out at a few dollars (though sometimes they can sell for thousands). According to Olsen, virtual goods have a profit margin of 70-90 percent, but high-volume sales are required for them to be profitable. It is believed that virtual good sales represent $1.5 billion annually. Social games developer Charles Hudson estimates that the US virtual goods economy was worth at least $200 million in 2008.

The numbers are surprising: for example, youth-oriented virtual world Gaia Online sells more than $1 million in virtual goods a month; another, IMVU, does roughly the same amount, and has had sales rise 15 to 20 percent since September. Another virtual world, Habbo, does $60 to $70 million globally per year, and it is estimated that sales of Facebook virtual goods are worth $35 annually.

While the virtual economy is thriving, it is still a nascent beast, thus difficult to predict and control. A recent study by done by Forrester and commissioned by virtual-world consortium Millions of Us finds that virtual worlds grant “unprecedented depth of engagement with customers”, customers who are “difficult to reach via other channels”, especially youth and creative audiences

Up to now, developing metrics for virtual sales have been difficult, but Forrester believes that new and future worlds will do a better job targeting and tracking consumers. Add to this the belief that they will double in popularity in the next few years, growing from 3 to 6 million subscribers in 2010, and their economies should continue to thrive, whatever's going on out there in the physical world.

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Submitted by In Recession, Virtual Economies Thrive « Lelapin&#8217 (not verified) - on December 10, 2008 at 12:10 am

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