Paying for all those virtual tractors and fences on FarmVille ads up. Spending on virtual goods in the U.S. rose 28% to $2.3 billion in 2011, per Visa-owned e-commerce company PlaySpan and Frank N. Magid Associates.
Among consumers, seven in 10 can be classified as gamers. Half of U.S. gamers bought virtual items last year, and one-third of the 600 gamers surveyed overall for the study. The average spent was $64 in 2011. U.S. male gamers were almost twice as likely as their female counterparts to purchase these virtual goods.
Players typically bought virtual goods to be able to advance a level in a game, to have a better in-game experience or create an avatar. Among those who haven’t made purchases, it was because they don’t play games where virtual items are needed or add to the enjoyment of game play.
Nearly half (48%) of gamers that made purchases did so through games played on a console, such as Xbox Live or PlayStation, 42% directly within a game application and 40% from a pre-paid card from a retail store. Only 16% did so through an online store and 13% from a game publisher’s own site.
Among other findings, only 26% have bought virtual goods as gifts, suggesting a bigger opportunity in that area. Key factors affecting purchases included price, the genre of the game, friends’ recommendations, user reviews and if a game can be played with friends.
COMMENTARY: In a blog post dated August 4, 2011, I reported on a survey by PlaySpan that projected virtual goods sales would exceed $2 billion 2011.
That projection appears to be deadon. However, according to PlaySpan, casual and social network-based games were the two categories which saw average spending on virtual goods fall. Average spending on casual games fell from $40 to $25 over the same period, while average spending on social network games fell from $50 to $20. This does not bode well for social gamemaker Zynga which reported it generated $574 million from online games in 2010 when it filed its IPO. This will also affect Facebook, since it keeps 30% of all virtual goods sales.
The overall market for virtual goods in the US is headed towards $2.9 billion for 2012, according to the Inside Virtual Goods report. That’s up from $2.3 billion in 2011, and $1.6 billion in 2010.
Virtual goods on Facebook are continuing to comprise more than half of that, going from $835 million in 2010 to $1.2 billion in 2011 to $1.6 billion in 2012. The gains each year are around $400 million, which means growth is going from 50% down to around 35%. While the report doesn’t break out company-specific numbers publicly, Zynga’s pre-IPO filings indicate it made more than $300 million in Q3 2011. Assuming that number stays around the same, look for Zynga to continue to its historical dominance with about 75% of the Facebook virtual goods market.
Courtesy of an article dated February 29, 2012 appearing in MediaPost Publications Online Media Daily and an article dated December 7, 2011 appearing in TechCrunch
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