Farmville and the Virtual Goods Market

So, it looks like FarmVille (you know, the game that everyone seems to be on each time you visit Facebook) is big news. Really big news.

Its vast number of players are handing over millions of dollars each day in exchange for virtual goods, like land, farm equipment and animals. In fact, the game is so successful, that its developers, Zynga, are reported to have harvested (excuse the pun) revenues of more than £91m this year alone.

Hold on a minute. The virtual goods market? This is the kind of concept that would blow the minds of most people over the age of 50. People paying for virtual goods? Whether it’s a $1 bunny icon on Facebook or a plot of land in Second Life, why are people paying for what is essentially a load of digital 1s and 0s?

But they are, and the market is now thought to be worth $1n this year, according to the Virtual Good News blog

James Hong from dating site HotorNot explains it quite nicely, he says: “Virtual objects aren’t really objects – they are graphical metaphors for packaging up behaviors that people are already engaging in. [Our] virtual flower service has 3 components: there’s the object itself represented by a graphical flower icon, there’s the gesture of someone sending the flower to their online crush, and finally, there’s the trophy effect of everyone else being able to see that you got a flower.”

This is interesting stuff, not least for for media businesses, struggling to find a revenue generating model outside of online advertising (Rupert Murdoch, anyone?),  the Virtual Goods market could be a compelling way for consumers to pay for content. And in a way that avoids the monthly subscription model that may media owners are flirting with, and undoubtedly, puts many consumers off.

On that note, I’m off to take a delivery of some virtual stock.

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