The San Jose Mercury News published an article today on a new report that found one sector of the economy that has actually been thriving: virtual goods. These are defined as anything consumers can buy online that doesn't exist in real life, including Facebook gifts, clothes for an online avatar, or battle items for RPG sites like World of Warcraft.
The virtual goods market will hit $1 billion by the end of this year and climb to $1.6 billion by 2010, according to the article. This comes at a time when declining online ad revenues are causing some sites to rethink their business models, but the authors of the report suggested sagging ad stats might by why so many companies are pushing virtual goods as an alternate means of profit.
The reporter from the News seemed a little horrified that consumers are spending so much money on virtual goods—instead of, you know, groceries—but he did provide a couple of justifications. First, money for online goods could be considered part of an entertainment budget, and some people enjoy playing an RPG more than they would going to a movie (and after the popcorn's eaten and the movie watched, do you really have anything more tangible to show for your evening?). And second, fashion-based avatar sites might even help soothe shoppers who can't afford extravagant wardrobes in real life.
I have to confess, I went through a brief avatar-site phase last winter, and I did wind up spending some cash on virtual items. I figured it wasn't that much money, and it made me happy, but I knew it was the kind of thing most people would find frivolous. I mean, obviously the best way to save money is to cut spending, but if you cut out everything you love, you wind up going crazy.
I suppose a premium subscription to Xanga doesn't count as a virtual good, since its results are a little more tangible, but I think it still falls under the category of Online Purchases Not Everyone Would Understand. And yet, for many people, it's worth it.
What do you think about virtual goods? How about online spending as a whole?
I think virtual goods are a waste of money. I've participated in a couple graphical chat sites where I actually earned money by selling small avatars, and I could charge pretty steeply (steeply being around $2/avatar, since when I first started I was charging like 10 cents) because as long as people liked my work, they'd buy it.
Now I'm spending more time on Second Life as part of a class, and for being a user-based and user-built world, I'm severely disappointed by the necessitation of money to build, upload, wear, and buy a variation of creations that actually don't suck. I'm sure I would be all over MMOs if they didn't cost money too.
Facebook gifts are just dumb.
i think they're a waste of money, too.
it is pretty lame and wasteful yet smart for the busines owners at the same time. people who are not happy with how things are and relaxing away in online worlds and purchasing dumb stuff which is fairly cheap (but adds up if u dont watch out) can relax your mind away,,, enough people doing this and theres your money.
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I think virtual goods are a waste of money. I've participated in a couple graphical chat sites where I actually earned money by selling small avatars, and I could charge pretty steeply (steeply being around $2/avatar, since when I first started I was charging like 10 cents) because as long as people liked my work, they'd buy it.
Now I'm spending more time on Second Life as part of a class, and for being a user-based and user-built world, I'm severely disappointed by the necessitation of money to build, upload, wear, and buy a variation of creations that actually don't suck. I'm sure I would be all over MMOs if they didn't cost money too.
Facebook gifts are just dumb.
i think they're a waste of money, too.
it is pretty lame and wasteful yet smart for the busines owners at the same time. people who are not happy with how things are and relaxing away in online worlds and purchasing dumb stuff which is fairly cheap (but adds up if u dont watch out) can relax your mind away,,, enough people doing this and theres your money.