Magid I-FACTS™ - 7/30/2009

PlaySpan, Magid Release Survey On Virtual Goods Market  -  Frank N. Magid Associates and PlaySpan, which specializes in monetization solutions for online games, virtual worlds, and social networks, have released the results of a new study that evaluates attitudes and behaviors of media and entertainment consumers on virtual goods expenditures.

According to the study, 12% of the overall population surveyed reported that they had bought virtual goods in the last 12 months.

Virtual world visitors are the heaviest virtual goods buyers, with 46% of these consumers buying virtual goods (from virtual worlds, games, or social networks) and nearly one-third of iPhone owners buying from the same platforms.

Other results were reported as follows:

Demographic groups most likely to have reported buying virtual goods:

• 17% of females ages 25 to 34
• 15% of males ages12 to 17 and ages18 to 24
• 15% of females ages 12 to 17
• 15% of females ages 35 to 44

Where consumers are buying from:

• Marketplace of the virtual world or game that a user is playing in (29%)
• The official Web site of the virtual world or game (29%)
• A Web site of an authorized reseller of the virtual items (25%)
• A Web site of an unauthorized reseller of the virtual items (8%)
• Another player (7%)
• Other (5%)
• Not sure (27%)

Ethnic breakdown of virtual goods purchasers:

• 16% of Asian Americans
• 14% of Latinos
• 12% of Caucasians
• 10% of African Americans

While the greatest number of consumers (51%) that bought virtual goods said they were not sure how much they spent last year, those who did recall (27%) said they spent less than $50 in the last year on virtual goods, with the price of transactions averaging $30. Another group of consumers (15%) said they spent $100 or more, driving substantial annual revenue per user.

“The fact that lots of people are reaching into their pocket to buy virtual goods is impressive, but even more impressive is that some of those consumers are spending considerable dollars,” said Mike Vorhaus, president, Magid Advisors. “As this market grows, Magid believes that the majority of consumers will continue to spend $50 or more on virtual goods every year, and this will grow to be a multi-billion dollar market.”

“This data reinforces the high growth potential of microtransactions and digital goods for online games and virtual world developers,” said Eric Hartness, chief marketing officer of PlaySpan. “Our internal data and client conversations also corroborate the findings, and we’ve noticed a significant increase in the number of customers who now spend several hundred dollars per month on digital goods.”

According to various sources, revenue from virtual goods now stands at a $200-250 million dollar market in the U.S. alone, with firms such as Strategy Analytics forecasting growth in microtransactions will grow from slightly over $1 billion worldwide today to $17.3 billion in 2015.

Please note: In the study Virtual goods were defined as non-physical objects that are purchased and exchanged on the Internet in games, virtual worlds, and social networks. The actual description of virtual goods can be simple items such as virtual points or tokens or more complex items such as avatars.

The survey was conducted from April 20 through April 25, 2009. It was a nationally representative online survey of 1,927 people, of whom 1,697 were between the ages of 18 and 64 and 230 were between the ages of 12 and 17.

Copies of the research may be requested via email at gus.perez@playspan.com.

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