Virtual goods

Last updated

Virtual goods are non-physical objects and money purchased for use in online communities or online games. Digital goods, on the other hand, may be a broader category including digital books, music, and movies. [1] Virtual goods are intangible by definition. [2]

Contents

Including digital gifts [3] and digital clothing for avatars, [4] virtual goods may be classified as services instead of goods [2] and are usually sold by companies that operate social networking services, community sites, or online games. [2] Sales of virtual goods are sometimes referred to as microtransactions, [5] and the games that use this model are usually referred to as freemium games.

Virtual money

Virtual money (or in-game currency) is used to purchase virtual goods within a variety of online communities, which include social networking websites, virtual worlds and online gaming sites.

A key revenue driver within social media, virtual currencies are specific within each game and are used to purchase in-game goods. Characters or avatars in virtual worlds own things within the context of the virtual world and users will collect each games' virtual currency to purchase land, supplies and various items used to enhance their status and add points. Some virtual currencies are time-based, relying upon measurement of in-game achievements in order to accrue exchangeable points.

History

The first virtual goods to be sold were items for use in MUDs, early, graphical online multiplayer games on the PLATO system and text-only games on other computers. This practice continued with the advent of MMORPGs. Players would sell virtual goods, such as swords, coins, potions, and avatars, to each other in the informal sector. While this practice is forbidden in most blockbuster online games, such as World of Warcraft, [6] many online games now derive revenue from the sale of virtual goods. [7]

When Iron Realms Entertainment began auctioning items to players of its MUD, Achaea, Dreams of Divine Lands, in 1997, it became the first company to profit from the sale of virtual goods. [8] But it wasn't until the mid-2000s, with companies like Korean Cyworld leading the way, [9] that virtual good sales became instituted as a legitimate revenue-making scheme.

Virtual goods may continue to be a primarily Asian phenomenon, as between 2007–2010 70% of worldwide sales were made in this region. [10]

Revenue

In 2009, games played on social networks such as Facebook, games that primarily derive revenue from the sale of virtual goods, brought in US$1 billion, and that is expected to increase to 1.6 billion in 2010. [11] Worldwide, US$7.3 billion was made from virtual goods that same year. [10]

Estimates of the future market for these small items vary wildly depending upon who is making the prediction. 2013 sales will be US$4 billion according to one analyst [11] and a year later reach 14 billion according to a different analyst. [10]

In 2010, a virtual space station in the game Entropia Universe sold for $330,000. [12]

The popular, free-to-play video game Fortnite: Battle Royale generated more than $1 billion in revenue across all platforms. This revenue comes entirely from in-game purchases, which — in Fortnite's case — offer no competitive advantage to the game. [13]

Research

In online games, virtual goods could be lost due to some unexpected reasons. This brings problems for service providers as well as purchaser. Encryption techniques primarily used for other purposes may, here too, provide functionality. These may include access control, hashing, encryption, digital certificates, and fingerprinting.

Illicit sale

While many companies have embraced exchanging cash for virtual goods, the practice is forbidden in most blockbuster games, [14] which derive income from subscription fees. This doesn't deter all players from saving playing time by illicitly buying in-game currency with real-world cash from an alternate source– violating their agreement with the game's operator in the process. [15]

China outlawed the practice of buying real-world goods with virtual currency in 2009, [16] something that had become popular in some parts of the country. [17]

Virtual goods purveyors

See also

Related Research Articles

A massively multiplayer online role-playing game (MMORPG) is a video game that combines aspects of a role-playing video game and a massively multiplayer online game.

A virtual economy is an emergent economy existing in a virtual world, usually exchanging virtual goods in the context of an online game, particularly in massively multiplayer online games (MMOs). People enter these virtual economies for recreation and entertainment rather than necessity, which means that virtual economies lack the aspects of a real economy that are not considered to be "fun". However, some people do interact with virtual economies for "real" economic benefit.

A massively multiplayer online game is an online video game with a large number of players on the same server. MMOs usually feature a huge, persistent open world, although there are games that differ. These games can be found for most network-capable platforms, including the personal computer, video game console, or smartphones and other mobile devices.

<span class="mw-page-title-main">Gaia Online</span> Anime-centered social media and forum website

Gaia Online is an English-language, anime-themed social networking and forums-based website with Chibi-style animations. It was founded as go-gaia on February 18, 2003, by Derek Liu, Long Vo, Josh Gainsbrugh, and the name was changed to GaiaOnline.com in 2004 by its owner, Gaia Interactive. Gaia originally began as an anime linklist and eventually developed a small community, but following a statement by founder Derek Liu, the website moved towards social gaming and eventually became forum-based.

Free-to-play video games are games that give players access to a significant portion of their content without paying or do not require paying to continue playing. Free-to-play is distinct from traditional commercial software, which requires a payment before using the game or service. It is also separate from freeware games, which are entirely costless. Free-to-play's model is sometimes derisively referred to as free-to-start due to not being entirely free. Free to play games have also been widely criticized as "pay-to-win"— that is, that players can generally pay to obtain competitive or power advantages over other players.

<span class="mw-page-title-main">Cyworld</span> South Korean social network service

Cyworld (Korean: 싸이월드) is a South Korean social network service. Cyworld was originally part of SK communication, and became an independent company in 2014. Members cultivate relationships by forming Ilchon or "friendships" with each other through their minihompy. Avatars and "mini-rooms" are features of the service, which can make for a Sims-like experience.

Virtual crime, can be described as a criminal act conducted in a virtual world -- usually massively multiplayer online role-playing games, MMORPGs. To grasp the definition of virtual crime, the modern interpretation of the term "virtual" must be assessed to portray the implications of virtual crime. In this sense, virtual crime describes those online acts that “evoke the effects of real crime” but are not widely considered to be prosecutable acts.

IGE is a company that trades in virtual currency and accounts for MMORPGs. The company sold virtual goods for real money in more than a dozen popular games. Members of the gaming community were often critical of IGE, as its services were against the rules of the games, though not illegal by the laws of the real countries in which the games would operate.

Gold farming is the practice of playing a massively multiplayer online game (MMO) to acquire in-game currency, later selling it for real-world money.

<i>Achaea, Dreams of Divine Lands</i> 1997 video game

Achaea, Dreams of Divine Lands is a roleplay-focused, text-based multi-user dungeon (MUD) released on September 9, 1997. It was published by Achaea LLC, now known as Iron Realms Entertainment. Achaea is operated by collecting the revenue through a microtransaction system, which allows payment for the acquisition of in-game benefits.

Microtransactions (mtx) are a business model where users can purchase in-game virtual goods with micropayments. Microtransactions are often used in free-to-play games to provide a revenue source for the developers. While microtransactions are a staple of the mobile app market, they are also seen on PC software such as Valve's Steam digital distribution platform, as well as console gaming.

Virtual tax is a proposed USA tax on internet gamers for items bought or traded solely within the virtual world. The tax on a transaction would be considered as if it were a purchase or sale or barter. Virtual property, on the death of the owner, would be considered as if it were any other intangible property for the purpose of estate or inheritance tax. The Joint Economic Committee of the U.S. Congress has investigated taxing such transactions. This tax might include items bought with virtual currency, virtual items traded for other virtual items, real items traded for virtual items, and real currency traded for virtual items.

Roblox is an online game platform and game creation system developed by Roblox Corporation that allows users to program games and play games created by other users. Created by David Baszucki and Erik Cassel in 2004 and released in 2006, the platform hosts user-created games of multiple genres coded in the programming language Lua. For most of Roblox's history, it was relatively small, both as a platform and as a company. Roblox began to grow rapidly in the second half of the 2010s, and this growth has been accelerated by the COVID-19 pandemic.

Playfish was a developer of free-to-play social network games. Playfish was founded in 2007 by Kristian Segerstråle, Sebastien de Halleux, Sami Lababidi, and Shukri Shammas. It closed in 2013. Playfish in the past had attracted up to 55 million users a month, with over 37 million users coming from Facebook users. In October 2008, they secured US$17 million in venture capital funding from Accel Partners and Index Ventures. The company was acquired by Electronic Arts in 2009, with the last of Playfish's games being retired in 2013.

<span class="mw-page-title-main">PlayerAuctions</span> Digital marketplace

PlayerAuctions is a digital marketplace that connects buyers and sellers of various types of gaming genre such as Massively multiplayer online game (MMO) games, First-person shooters (FPS), Multiplayer online battle arena (MOBA), Mobile game, survival games, battle royale game etc. so they can buy and sell digital assets. These include in-game currency, items, skins, accounts, power leveling and boosting services, and CD keys for games and applications. The site is a neutral marketplace that supports player-to-player trading for popular online games such as RuneScape, Old School RuneScape, World of Warcraft, CSGO, PUBG, Path of Exile, League of Legends, Fortnite, Overwatch, GTA V, Warframe, Pokémon Go, Clash of Clans, EverQuest, ArcheAge, Final Fantasy XIV, Apex Legends, Elder Scrolls Online, Habbo, Fallout 76, and over 250 other games.

The 2010s was the fifth decade in the industry's history. The decade was notable for producing the first truly "3D" games and consoles, introducing cloud gaming and virtual reality to consumers, and the rising influence of tablet-based and mobile casual games, including a boom in freemium titles. The industry remained heavily dominated by the actions of Nintendo, Sony, and Microsoft. The eighth generation of video game consoles was released, including the Wii U, PlayStation 4, Xbox One, Nintendo Switch, Nintendo 3DS, and PlayStation Vita. Notable games released in the decade included Minecraft, Fortnite, PUBG: Battlegrounds,Grand Theft Auto V, The Elder Scrolls V: Skyrim, The Last of Us, The Legend of Zelda: Breath of the Wild, The Witcher 3: Wild Hunt, Uncharted 4: A Thief's End, Red Dead Redemption, Marvel's Spider-Man, Dark Souls, Super Smash Bros. Ultimate, Batman: Arkham City, BioShock Infinite, Dishonored, Halo: Reach,Mass Effect 2, Disco Elysium, Undertale, Overwatch, Super Mario Odyssey, Red Dead Redemption 2, L.A. Noire,Bloodborne, Sekiro: Shadows Die Twice, Far Cry 3, Destiny, StarCraft II: Wings of Liberty, The Walking Dead, Persona 5,Dragon Age: Inquisition, Portal 2, Diablo III, Horizon Zero Dawn, Journey, Shovel Knight, Metal Gear Solid V: The Phantom Pain, XCOM: Enemy Unknown, Super Mario Galaxy 2, Wolfenstein: The New Order, Death Stranding, Titanfall 2, Xenoblade Chronicles,Cuphead, and God of War.

<span class="mw-page-title-main">Facebook Credits</span>

Facebook Credits was a virtual currency that enabled people to purchase items in games and non-gaming applications on the Facebook Platform. One U.S. dollar was the equivalent of 10 Facebook Credits. Facebook Credits were available in 15 currencies including U.S. dollars, pound sterling, euros, and Danish kroner. Facebook was hoping eventually to expand Credits into a micropayment system open to any Facebook application, whether a game or a media company application. Facebook deprecated Credits in favour of users' local currencies.

<i>Crossfire</i> (2007 video game) Online game

Crossfire is an online tactical first-person shooter game developed by Smilegate Entertainment for Microsoft Windows. It was first released in South Korea on May 3, 2007.

Video game monetization is a type of process that a video game publisher can use to generate revenue from a video game product. The methods of monetization may vary between games, especially when they come from different genres or platforms, but they all serve the same purpose to return money to the game developers, copyright owners, and other stakeholders. As the monetization methods continue to diversify, they also affect the game design in a way that sometimes leads to criticism.

In the video game industry, games as a service (GaaS) represents providing video games or game content on a continuing revenue model, similar to software as a service. Games as a service are ways to monetize video games either after their initial sale, or to support a free-to-play model. Games released under the GaaS model typically receive a long or indefinite stream of monetized new content over time to encourage players to continue paying to support the game. This often leads to games that work under a GaaS model to be called "living games", "live games", or "live service games" since they continually change with these updates.

References

  1. ↑ Amazon may benefit as digital goods sales jump reuters.com, Fri Dec 23, 2011 11:32am EST
  2. 1 2 3 4 5 6 7 Virtual Goods: the next big business model techcrunch.com, Jun 20, 2007
  3. ↑ Sales of virtual goods boom in US news.bbc.co.uk, 10:32 GMT, Thursday, 22 October 2009
  4. ↑ "Lucrative Alternatives to Online Advertising businessweek.com, October 23, 2008, 5:00PM EST". Businessweek.com. 2008-10-22. Archived from the original on October 27, 2008. Retrieved 2012-11-26.
  5. 1 2 Uh-Oh: World of Warcraft Introduces Microtransactions Wired's Game | Life blog, November 6, 2009
  6. ↑ How to Stay in the Game (Part 2 of 2) Archived 2010-02-07 at the Wayback Machine blizzard.com
  7. 1 2 Virtual goods give Web firms new revenue in ad slump reuters.com, Tue Dec 29, 2009 12:50pm EST
  8. 1 2 The World of text MMOs / MUDs – An Interview with Matt Mihaly, CEO of Iron Realms Entertainment Archived 2008-10-02 at the Wayback Machine playnoevil.com, Friday, September 8. 2006
  9. 1 2 Cyworld ready to attack MySpace money.cnn.com, July 27, 2006: 11:35 AM EDT
  10. 1 2 3 Virtual goods revenue to hit $7.3 billion this year cnet.com, November 15, 2010 9:51 AM PST
  11. 1 2 A virtual farm turns new ground for game developers reuters.com, Thu Mar 25, 2010 7:05am EDT
  12. ↑ "Man buys virtual space station for 330k real dollars" . Retrieved 2010-06-23.
  13. ↑ Kaylee Fagan, "Fortnite — a free video game — is a billion- dollar money machine", "Business Insider", July 29, 2018
  14. ↑ Poor earning virtual gaming gold bbc.com, 01:36 GMT, Friday, 22 August 2008
  15. ↑ Preston Byers. "Valve sent a cease and desist order to OPSkins". Dot Esports. Retrieved 7 August 2019.
  16. ↑ China bars use of virtual money for trading in real goods PRC Ministry of Commerce, Monday, June 29, 2009 2100 GMT
  17. ↑ QQ: China's New Coin of the Realm? wsj.com, March 30, 2007
  18. ↑ Unlike reality, virtual retail sales are hot, especially for avatars USA Today, 23 Dec 2009
  19. ↑ "Changyou Selects PlaySpan's UltimatePay for its Online Game Properties". playspan.com. PlaySpan, Inc. 2010-03-18. Retrieved June 12, 2012.
  20. ↑ "Facebook Blog, February 7, 2007". Blog.facebook.com. 2007-02-07. Retrieved 2012-11-26.
  21. ↑ The world’s most lucrative social network? China’s Tencent beats $1 billion revenue mark venturebeat.com, March 19, 2009
  22. ↑ ABC News March 15, 2010
  23. ↑ "KongZhong Corp (KONG.O): FULL DESCRIPTION". Thomson Reuters. Archived from the original on 2009-11-15. Retrieved 2012-05-28.
  24. ↑ About Company Archived 2009-06-01 at the Wayback Machine Nexon Official Site
  25. ↑ Playdom Fuels Its Virtual Goods Business Archived 2010-12-29 at the Wayback Machine Press Release, playdom.com, September 30, 2009
  26. ↑ Playfish sees social games as industry driver Wed Nov 4, 2009 6:02am EST
  27. ↑ Second Life Marketplace Featured Items Wed April 26, 2011
  28. ↑ Runescape begins first microtransaction experiment Archived 2012-04-05 at the Wayback Machine develop-online.net, April 2, 2012
  29. ↑ Virtual Products = Real Cash cnbc.com, Oct. 09
  30. ↑ Trade Me founder invests in gaming tvnz.co.nz, Mar. 11
  31. ↑ Redefining MMOs: The massive money of microtransactions massively.com, Sep 11th 2009
  32. ↑ The MANN-conomy update: FAQ Valve 2010
  33. ↑ Xbox 360: Get the Points Archived 2009-01-23 at the Wayback Machine Microsoft's Xbox Official Site
  34. ↑ Zynga's Gaming Gamble forbes.com, 10.29.09, 12:40 PM EDT
  35. ↑ Digital tills are ringing to the sound of an unreal Christmas The Guardian, 17 Dec 2009
  36. ↑ Simon Coutu, "Here's How You Make $12,000 In Profit a Day Selling Virtual Guns", "Vice", June 30, 2015
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.