Virtual good
Encyclopedia
Virtual goods are non-physical objects purchased for use in online communities
or online game
s. They have no intrinsic value and are intangible by definition.
Including digital gifts
and digital clothing for avatars
, virtual goods may be classified as services instead of goods and are usually sold by companies that operate social network
s, community sites, or online game
s. Sales of virtual goods are sometimes referred to as microtransactions, and the games that utilize this model are usually referred to as freemium
(free + premium) games.
A large majority of recent sales have been in Asia.
s, early, text-only online games. This practice continued with the advent of MMORPG
s. Players would sell virtual goods, such as swords, coins, potions, and avatar
s, to each other in the informal sector. While this practice is forbidden in most blockbuster
online games, such as World of Warcraft
, many online games now derive revenue from the sale of virtual goods.
When Iron Realms Entertainment
began auctioning items to players of its MUD
, Achaea, Dreams of Divine Lands
, in 1998, it became the first company to profit from the sale of virtual goods. But it wasn't until the mid-2000s, with companies like the Korean Cyworld
leading the way, 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.
, games that primarily derive revenue from the sale of virtual goods, brought in 1 billion USD, and that is expected to increase to 1.6 billion in 2010. Worldwide, 7.3 billion USD was made from virtual goods that same year.
Estimates of the future market for these small items vary wildly depending upon who is making the prediction. 2013 sales will be 4 billion USD according to one analyst and a year later reach 14 billion according to a different analyst.
In 2010 a virtual space station in the game Entropia Universe
sold for $330,000.
, hashing, encryption
, digital certificates, and fingerprinting.
games, 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–violating their agreement with the game's operator in the process.
In an odd juxtaposition, the Chinese State
outlawed the practice of buying real-world goods with virtual currency
in 2009, something that had become popular in some parts of the country.
Online community
An online community is a virtual community that exists online and whose members enable its existence through taking part in membership ritual. An online community can take the form of an information system where anyone can post content, such as a Bulletin board system or one where only a restricted...
or online game
Online game
An online game is a game played over some form of computer network. This almost always means the Internet or equivalent technology, but games have always used whatever technology was current: modems before the Internet, and hard wired terminals before modems...
s. They have no intrinsic value and are intangible by definition.
Including digital gifts
Virtual gift
Virtual gift may refer to:* A gift consisting a picture of an item, instead of the item itself, usually through the internet....
and digital clothing for avatars
Avatar (computing)
In computing, an avatar is the graphical representation of the user or the user's alter ego or character. It may take either a three-dimensional form, as in games or virtual worlds, or a two-dimensional form as an icon in Internet forums and other online communities. It can also refer to a text...
, virtual goods may be classified as services instead of goods and are usually sold by companies that operate social network
Social network
A social network is a social structure made up of individuals called "nodes", which are tied by one or more specific types of interdependency, such as friendship, kinship, common interest, financial exchange, dislike, sexual relationships, or relationships of beliefs, knowledge or prestige.Social...
s, community sites, or online game
Online game
An online game is a game played over some form of computer network. This almost always means the Internet or equivalent technology, but games have always used whatever technology was current: modems before the Internet, and hard wired terminals before modems...
s. Sales of virtual goods are sometimes referred to as microtransactions, and the games that utilize this model are usually referred to as freemium
Freemium
Freemium is a business model that works by offering a product or service free of charge while charging a premium for advanced features, functionality, or related products and services...
(free + premium) games.
A large majority of recent sales have been in Asia.
History
The first virtual goods to be sold were items for use in MUDMUD
A MUD , pronounced , is a multiplayer real-time virtual world, with the term usually referring to text-based instances of these. MUDs combine elements of role-playing games, hack and slash, player versus player, interactive fiction, and online chat...
s, early, text-only online games. This practice continued with the advent of MMORPG
MMORPG
Massively multiplayer online role-playing game is a genre of role-playing video games in which a very large number of players interact with one another within a virtual game world....
s. Players would sell virtual goods, such as swords, coins, potions, and avatar
Avatar (computing)
In computing, an avatar is the graphical representation of the user or the user's alter ego or character. It may take either a three-dimensional form, as in games or virtual worlds, or a two-dimensional form as an icon in Internet forums and other online communities. It can also refer to a text...
s, to each other in the informal sector. While this practice is forbidden in most blockbuster
Blockbuster (entertainment)
Blockbuster, as applied to film or theatre, denotes a very popular or successful production. The entertainment industry use was originally theatrical slang referring to a particularly successful play but is now used primarily by the film industry...
online games, such as World of Warcraft
World of Warcraft
World of Warcraft is a massively multiplayer online role-playing game by Blizzard Entertainment. It is the fourth released game set in the fantasy Warcraft universe, which was first introduced by Warcraft: Orcs & Humans in 1994...
, many online games now derive revenue from the sale of virtual goods.
When Iron Realms Entertainment
Iron Realms Entertainment
Iron Realms Entertainment is a computer game development company that has created the MUDs Achaea, Dreams of Divine Lands; Aetolia, The Midnight Age; Imperian, the Sundered Heavens; Lusternia, Age of Ascension; and Midkemia Online...
began auctioning items to players of its MUD
MUD
A MUD , pronounced , is a multiplayer real-time virtual world, with the term usually referring to text-based instances of these. MUDs combine elements of role-playing games, hack and slash, player versus player, interactive fiction, and online chat...
, Achaea, Dreams of Divine Lands
Achaea, Dreams of Divine Lands
Achaea, Dreams of Divine Lands is a roleplay-focused, text-based multi-user dungeon released in 1997. It was published by Achaea LLC, now known as Iron Realms Entertainment...
, in 1998, it became the first company to profit from the sale of virtual goods. But it wasn't until the mid-2000s, with companies like the Korean Cyworld
Cyworld
Cyworld is a South Korean social network service operated by SK Communications , a subsidiary of SK Telecom .Members cultivate relationships by forming Ilchon or "friendships" with each other through their minihompy....
leading the way, 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.
Revenue
In 2009, games played on social networks such as FacebookFacebook
Facebook is a social networking service and website launched in February 2004, operated and privately owned by Facebook, Inc. , Facebook has more than 800 million active users. Users must register before using the site, after which they may create a personal profile, add other users as...
, games that primarily derive revenue from the sale of virtual goods, brought in 1 billion USD, and that is expected to increase to 1.6 billion in 2010. Worldwide, 7.3 billion USD was made from virtual goods that same year.
Estimates of the future market for these small items vary wildly depending upon who is making the prediction. 2013 sales will be 4 billion USD according to one analyst and a year later reach 14 billion according to a different analyst.
In 2010 a virtual space station in the game Entropia Universe
Entropia Universe
Entropia Universe is a massively multiplayer online virtual universe designed by the Swedish software company MindArk, based in Gothenburg. Entropia uses a micropayment business model, in which players may buy in-game currency with real money that can be redeemed back into real world funds at a...
sold for $330,000.
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 to, provide functionality. These may include access controlAccess control
Access control refers to exerting control over who can interact with a resource. Often but not always, this involves an authority, who does the controlling. The resource can be a given building, group of buildings, or computer-based information system...
, hashing, encryption
Encryption
In cryptography, encryption is the process of transforming information using an algorithm to make it unreadable to anyone except those possessing special knowledge, usually referred to as a key. The result of the process is encrypted information...
, digital certificates, and fingerprinting.
Illicit sale
While many companies have embraced exchanging cash for virtual goods, the practice is forbidden in most blockbusterBlockbuster (entertainment)
Blockbuster, as applied to film or theatre, denotes a very popular or successful production. The entertainment industry use was originally theatrical slang referring to a particularly successful play but is now used primarily by the film industry...
games, 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–violating their agreement with the game's operator in the process.
In an odd juxtaposition, the Chinese State
People's Republic of China
China , officially the People's Republic of China , is the most populous country in the world, with over 1.3 billion citizens. Located in East Asia, the country covers approximately 9.6 million square kilometres...
outlawed the practice of buying real-world goods with virtual currency
Virtual currency
Virtual currency is used to purchase virtual goods within a variety of online communities; which include social networking websites, virtual worlds and online gaming sites....
in 2009, something that had become popular in some parts of the country.
Virtual goods purveyors
- CellufunCellufunCellufun is a social gaming community accessible from any mobile device, from the latest smartphones and tablets to the smallest feature phones. Cellufun is different from most other social networks, as it is anonymous, with users creating avatars to represent themselves. This has resulted in...
- CyworldCyworldCyworld is a South Korean social network service operated by SK Communications , a subsidiary of SK Telecom .Members cultivate relationships by forming Ilchon or "friendships" with each other through their minihompy....
- FacebookFacebookFacebook is a social networking service and website launched in February 2004, operated and privately owned by Facebook, Inc. , Facebook has more than 800 million active users. Users must register before using the site, after which they may create a personal profile, add other users as...
- Gaia onlineGaia OnlineGaia Online is an English-language, anime-themed social networking and forums-based website. Gaiaonline was founded in 2003. but the name was changed to GaiaOnline.com in 2003 from go-gaia by its owner, Gaia Interactive...
- Habbo hotelHabbo HotelHabbo is a social networking site aimed at teenagers. The website is owned and operated by Sulake Corporation. The service began in 2000 and has expanded to include 11 online communities , with users in over 150 countries. As of August 2011, over 230 million avatars have been registered...
- Hi5Hi5 (website)hi5 is a social networking website based in San Francisco, California. The company was founded in 2003 by Ramu Yalamanchi. By 2008, comScore reported that hi5 had become the third most popular social networking site in terms of monthly unique visitors....
- Hotornot
- IMVUIMVUIMVU, Inc. is an online social entertainment destination in which members use 3D avatars to meet new people, chat, create, and play games created by Fydor Guthenschlag. IMVU has over 50 million registered users, 10 million unique visitors per month and three million monthly active users...
- Nexon
- Ning
- Iron Realms EntertainmentIron Realms EntertainmentIron Realms Entertainment is a computer game development company that has created the MUDs Achaea, Dreams of Divine Lands; Aetolia, The Midnight Age; Imperian, the Sundered Heavens; Lusternia, Age of Ascension; and Midkemia Online...
- Little World Gifts
- PlaydomPlaydomPlaydom is an online social network game developer popular on Facebook and on MySpace; it is currently the largest social game developer on MySpace and one of the larger ones on Facebook. The company was founded in the San Francisco Bay Area by University of California, Berkeley graduates Ling Xiao...
- PlayfishPlayfishPlayfish, currently a property of Electronic Arts, is 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. In October 2008, they secured USD$17 million in venture capital funding from Accel...
- Second Life Marketplace
- Slide.comSlide.comSlide, Inc., operator of the Slide.com website, is a Web 2.0 company founded by Max Levchin and based in San Francisco, California. Originally formed to make photo sharing software for social networking services such as MySpace, the company achieved its greatest success as the largest developer of...
- Sony Online EntertainmentSony Online EntertainmentSony Online Entertainment is a game development and game publishing division of Sony that is best known for creating massively multiplayer online games, including EverQuest, EverQuest II, The Matrix Online, PlanetSide, Star Wars Galaxies, Free Realms, and Vanguard: Saga of Heroes, DC Universe...
- Valve CorporationValve CorporationValve Corporation is an American video game development and digital distribution company based in Bellevue, Washington, United States...
- Tencent
- World of WarcraftWorld of WarcraftWorld of Warcraft is a massively multiplayer online role-playing game by Blizzard Entertainment. It is the fourth released game set in the fantasy Warcraft universe, which was first introduced by Warcraft: Orcs & Humans in 1994...
- Xbox Live MarketplaceXbox Live MarketplaceThe Xbox Live Marketplace is a virtual market designed for Microsoft's Xbox 360 console that allows Xbox Live members to download purchased or promotional content...
- ZyngaZyngaZynga is a social network game developer located in San Francisco, United States. The company develops browser-based games that work both stand-alone and as application widgets on social networking websites such as Facebook and MySpace....
- FlirtomaticFlirtomaticFlirtomatic is an online flirting and social networking service for people connected to the Internet via mobile phone or PC. Operated by Handmade Mobile Entertainment, Flirtomatic was named the number one mobile dating site in the U.S...