Virtual Goods and Virtual Currency are gaining a significant amount of attention these days among the press and the technology industry as a new way to drive revenue. With online ad revenues plummeting, it is easy to understand that everyone is searching for that next big thing which will help replace lost revenue. But for a publisher, how do you cut through all the hype, and get down to truly evaluating if virtual goods are right for your product? Is Your Product Social? Virtual goods are valued by users based on their social implications. A user doesn’t send a virtual gift because...

While the size of the global virtual goods market is a robust $5.5 Billion, it is no secret that the majority of this is generated in Asia. Asia makes up about $5 Billion (or 90%) of the global virtual goods market. Are virtual goods an isolated occurrence in Asia? Will the size of the North American virtual goods market ever be equal to or greater then Asia’s? We Are Still Early North America is still in the first inning of the virtual goods ballgame. Virtual goods only started to gain serious traction in the US near the end of 2007, early 2008. The Asian virtual goods market, however,...

Virtual goods is emerging as a major business model for community driven products such as social networks, dating sites, multiplayer games, and more. Virtual Goods have proven to drive significant revenues for many companies, but compared to other models such as advertising, subscription, and fixed fees, what are the additional benefits from a virtual goods model, in regard to community based products? Value Add Business Model Everyone can agree that online ads do not contribute positively to the user experience in an online community. Mostly, this is due to that fact that users behave quite...

There is no question that virtual goods is the hot new business to be in. Social networks, games and virtual worlds are implementing virtual goods at an increasing rate. $408 million of venture capital was invested in virtual goods companies in 2008 , and that number already exceeds $300 million in the first two quarters of 2009. But virtual goods have been successful in Asia since 2000. Social networks, games, and even virtual worlds such as Second Life have been around for years. This begs the question, why are virtual goods just recently becoming the new “it girl”? Advertising, The Lazy...

After explaining why people buy virtual goods, I often get follow up questions around what type of people are active virtual goods buysers. There is a common myth that virtual goods are only bought by teens or kids. But if you look at industry data you will notice that all ages, demographics, and cultures actively spend real dollars on virtual goods. Here are just a few examples in each age segment: 35 – 50 Years Old Dogster – 67% between 35 – 50 years old. In 2007, Founder Ted Rheingold stated at the Virtual Goods Summit that over 50 million virtual gifts had been sent by 500,000 users...

Last Thursday, Facebook officially announced the alpha testing of their Facebook Payment platform. While they are just rolling it out now, it certainly hasn’t hindered a virtual goods ecosystem from forming across many applications. Certain bloggers have even predicted up to $500 million in 2009 virtual goods revenue for application developers. But now that Facebook has started focusing on a key component which will accelerate the development of the virtual goods ecosystem, how will this impact virtual goods sales on Facebook? 1. Facebook Payments Will Expand The Market Of Virtual Goods Purchasers Facebook’s...

Social Gaming Summit is coming up in June in San Francisco. Â This is one of a few small conferences that Charles Hudson of Serious Business organizes. Â Others include Virtual Goods Summit and iGames Summit. Â Charles and his crew always do an amazing job at bringing together some incredibly smart people. Â These summits are by far the most productive conferences I have been to in the past couple years. Even if you aren’t directly involved with gaming I encourage you to go. Â The rest of the web can learn a lot from the gaming world about motivating user interaction and monetizing their...

Everyone knows that the Facebook application gold rush is long over.  Facebook continues to impose restrictions, users have application fatigue, and as a result conversion on distribution methods has fallen through the floor. In fact, if you look at most of the early successes such as Free Gifts, Flixster Movies, and Zombies, their daily active users is on a downward trend. To fight this trend, many of the applications will have to make the transformation from features to destinations themselves. This means that social interaction and relationships are being established within the application...

Jeremy Liew over at Lightspeed Ventures had an interesting post today titled, “Top Social Networks For Engagement” where he proceeds to list out of the top social networks in rank of engagement. I was glad to see some lesser known communities like VampireFreaks, which I have covered before, on the list. Jeremy defines engagement by average pages per visitor per month, and average visits per user per month. I think Jeremy did a good job on the post, and he definitely includes a lot of valuable information. But the question that becomes most apparent to me is, is this the best way...

I think a lot of people don’t understand that when it comes to building an amazing online community, it is less about the features, and more about the environment that you create. Many have a hard time grasping this concept because a community’s environment is an intangible item. You can’t explain it in numbers, or paragraphs of text. Its just there. And if you partake in the community, you know when a kick ass environment exists, and when it doesn’t. Do features, design and UI help create the environment? Absolutely. But...