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August 22, 2011

Gamers Shell Out Millions For Virtual Goods

Once shunned by serious game developers, games titles that are distributed at no cost are showing value in the marketplace. Fans and players of video games are shelling out small payments for in-app purchases and those few dollars are adding up nicely, Reuters is reporting.

Upgraded levels, improved weapons and in-app treasures are just some of the virtual goods that are being snapped up by game players.

According to a survey published by German tech industry association Bitkom earlier this month, 45 percent of German gamers opt for free or inexpensive versions of popular titles exclusively. Head of mobile development at German game developer Exozet, Matthias Hellmund, says the target group for $70 console games was gradually shrinking as gamers begin to prefer the free or very cheap mobile version of game titles.

Christian Funk, a virus analyst at Russian computer security company Kapersky Lab, monitored Ebay for sales of virtual game goods and found more than 3,641 virtual items for use in Activision Blizzard´s “World of Warcraft” game and they were sold at an average price of $186.4 during a 14-day period.

Based on these figures, Funk estimates that gamers spend around $16.5 million on virtual goods for that one game per year, giving a glimpse of what kind of sums the micro transaction industry was handling, he said.

“The value is in the rarity - gamers are prepared to pay real money for virtual goods,” he said, adding some virtual items were status symbols for players. “Just as in the real world people are willing to spend lots of money on nice glasses, watches or sports cars, this is just a hobby,” Funk continued.

Europe´s largest social game developer, Wooga, has seen the number of people who play its free games on Facebook rise from over 3 million active users in January 2010 to over 32 million in June 2011, according to data from media research firm Screen Digest.

Around 3 percent of people who play Wooga´s games pay for virtual goods such as magic wands or for the ability to complete a mission instantly. “It´s more attractive to pay if I like a game and if I want to progress faster and not pay 60 euros ($85) but not know what I get,” Wooga spokeswoman Sina Kaufmann told Reuters.

The company claims to be the world´s biggest supplier of “magic equipment” after selling more than 28 million magic wands to gamers who play its “Monster World” since the game´s launch in May 2010.

These are impressive sales figures for what costs a game developer almost nothing, but the micro transactions business has brought challenges with it. Free downloadable games are “here to stay”, says Game developer Richard Garriott.

Garriott concludes by warning the industry to become more creative about monetizing seemingly free-to-play games by charging players to move to the next level or by converting people to paying a subscription are some of the ideas being played with.


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