Good News For Facebook: Virtual Stuff “To Make Billions”

Facebook – along with a few other social sites and the developers of games for them – may be in for a great few years. Certain experts believe that the business of virtual goods is going to take off in a big and very profitable way.

Here’s the opening line of a new article from the BBC: "Virtual goods such as weapons or digital bottles of champagne traded in the US could be worth up to $5bn in the next five years . . ." Which would correspond to a whole lot of nonphysical stuff, if you consider that transaction prices are often in the $1-$2 range.

Still, the BBC interviewed Jeremy Liew of Lightspeed Venture Partners, Playfish’s Tom Sarris, and a casual gamer on its path to that conclusion. Plus, there are the recent deals involving Zynga and Playfish to consider ($180 million and $400 million changed hands), along with the fact that Asia’s virtual goods market is already worth around $5 billion.

Toss in Facebook’s semi-sporadic support for its payment system and the new Preferred Developer Consultant Program, and it’s not hard to imagine that a great deal of growth in the virtual goods space is indeed possible.

Sarris addressed critics by saying, "The way we look at it is it’s no different from paying money to go and see a movie or rent a DVD. What you are paying for is the experience and that notion of entertainment."

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There are 5 Comments. Add Yours.

Carl Thomas
January 3, 2010 at 8:45 am

It’s like Christmas in that most people will feel obliged to give a gift back. A bit like smilies but at a cost. Personally I think it’s a waste of money and something I would never buy into. Facebook is pointless as it is and only good for keeping track of people.
Daniel Jones
January 3, 2010 at 10:52 am

I agree with you Carl! I get on facebook from time to time, mainly to contact a friend or family member.
Mats
January 3, 2010 at 11:13 am

I must say business in the sector is picking up with figures in dollars touching multi-billion. Even in developing countries like India, the 3G boom is phenomenal. People are too deep into social networking. They buy hardware without a second thought. But software and non-physical stuff, I don’t really know.
Joe
January 3, 2010 at 12:24 pm

eople just love buying those virtual gifts. It is mind boggling that anybody would buy or for example virtual flowers and send it to a friend. One can no longer be bothered buying the real things anymore.
Adscend Media
January 3, 2010 at 2:10 pm

The trade of virtual goods is already hugely popular and no doubt it will continue to grow. I think we’ll see more and more trading of goods by ways other than simply paying for them. Not everyone wants to pay the $1-2 that was mentioned for some virtual item. But how many people would be wiling to complete a short survey and receive that virtual item for free? A lot more. That’s what our company facilitates, and I expect there will be more innovation in this area by many different companies.