Virtual Goods Make Real Impact

Virtual goods used to be just for serious gamers who were willing to pay real money for a new game level or to buy extra weapons for their character. But today, virtual goods have gone mainstream. Consumers of all ages are buying up products ranging from virtual greeting cards to virtual roses, despite the fact that they will never be able to touch, taste or smell these items.

Like it or not, gamers may have permanently altered the way consumers shop.

When Sebastien de Halleux launched Playfish, a social gaming company, with three friends in 2007, he knew that the video game industry needed to make a change. As he saw it, the industry as a whole was focused more on appealing to consumers who already played video games, rather than going after the non-gamers, and this had hurt the industry’s growth.

“Everyone listens to music, everyone watches movies, but very few comparatively play video games,” de Halleux said in a recent interview with MainStreet.

To rectify this, Playfish decided to release games onto social networking sites like Facebook with the hope of appealing to a wider audience. In between updating their statuses and writing on each other’s walls, tens of millions of Facebook users now had the option to spend a few minutes playing one of the games created by Playfish.

This model proved hugely successful, and the company now boasts 60 million monthly users. In the process, Playfish has become part of the larger movement that has quickly transformed consumer shopping behaviour.

Playfish, along with several newer social gaming services including Farmville, Crowdstar and Playdom offers users the option to pay to expand the in-game experience, either by purchasing new levels or by buying new characters. In Pet Society, a game made by Playfish, users can purchase a virtual fishing pond where they can fish. Similarly, in Farmville, a farm simulation game especially popular among teens, users can continuously pay real money for fake virtual coins to buy more farmland or animals.

This idea of selling virtual goods within games became popular in China, Japan and Korea back in the early 2000s, but in the U.S., virtual goods were nearly nonexistent for most of the past decade. A few niche sites like Second Life, an online virtual world, let users buy and sell everything from virtual clothing to virtual homes.

Yet even by the most liberal estimates, Second Life remains a niche site with about 15 million-20 million registered users. Facebook now has more than 500 million users. So, as this new crop of games partnered with social networks during the past three years, millions more Americans have begun to open up their wallets to buy items that they will never be able to hold in their hand.

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