There is no question that virtual goods is the hot new business to be in. Social networks, games and virtual worlds are implementing virtual goods at an increasing rate. $408 million of venture capital was invested in virtual goods companies in 2008 , and that number already exceeds $300 million in the first two quarters of 2009. But virtual goods have been successful in Asia since 2000. Social networks, games, and even virtual worlds such as Second Life have been around for years. This begs the question, why are virtual goods just recently becoming the new “it girl”? Advertising, The Lazy...

After explaining why people buy virtual goods, I often get follow up questions around what type of people are active virtual goods buysers. There is a common myth that virtual goods are only bought by teens or kids. But if you look at industry data you will notice that all ages, demographics, and cultures actively spend real dollars on virtual goods. Here are just a few examples in each age segment: 35 – 50 Years Old Dogster – 67% between 35 – 50 years old. In 2007, Founder Ted Rheingold stated at the Virtual Goods Summit that over 50 million virtual gifts had been sent by 500,000 users...

Last Thursday, Facebook officially announced the alpha testing of their Facebook Payment platform. While they are just rolling it out now, it certainly hasn’t hindered a virtual goods ecosystem from forming across many applications. Certain bloggers have even predicted up to $500 million in 2009 virtual goods revenue for application developers. But now that Facebook has started focusing on a key component which will accelerate the development of the virtual goods ecosystem, how will this impact virtual goods sales on Facebook? 1. Facebook Payments Will Expand The Market Of Virtual Goods Purchasers Facebook’s...

The Virtual Goods industry is growing extremely quickly. Some estimate the size of the industry to reach $5.5 billion globally this year, and it is just beginning. There is no escaping the fact that consumers spend money on virtual goods, even in economic down times. Others in the virtual goods industry, such as Charles Hudson and Jeremy Liew, have written articles explaining the psychology behind buying virtual items. Yet, the question of why people spend money on virtual goods is still one of the most common questions I am asked. So I decided I would add an additional perspective as to why...