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Summary:

Roughly 12 percent of Americans, or more than one in 10, have bought a virtual item at some point in the last 12 months, according to a new study by analyst firm Frank N. Magid Associates and commissioned by virtual currency provider PlaySpan. With the virtual […]

Virtual goods demographicsRoughly 12 percent of Americans, or more than one in 10, have bought a virtual item at some point in the last 12 months, according to a new study by analyst firm Frank N. Magid Associates and commissioned by virtual currency provider PlaySpan. With the virtual goods and currency market estimated to reach $1.8 billion this year, the Magid study offers some insight into exactly who’s doing the buying, and where.
Demographically, for example, while 15 percent of males aged 12-24 reported purchasing virtual goods, 15 percent of women between ages 35-44 did so, too. As Mike Vorhaus, president of Magid Advisors, put it to me, the boys are getting virtual swords for their MMORPGs, while the women are buying virtual flowers on Facebook. Vorhaus noted that categorization by ethnicity was also diverse, with Asian-Americans on the high end (16 percent), and the rest some 1-5 percent behind.

Segmenting that 12 percent according to consumers’ Internet activity and device ownership, social network gamers and iPhone owners are strongly represented (27 and 28 percent, respectively); PC and handheld console gamers were almost as likely to buy virtual items (between 19 and 22 percent.) However, active console gamers lag just a bit behind those segments.

Virtual goods purchases by Net mobile usage

Unsurprisingly, the most significant variable in purchase rate is virtual world usage: Nearly half of the respondents who report being active MMO participants are also virtual item consumers. (The key challenge for virtual world developers is figuring out how to monetize the other half, something I cover in my recent GigaOM Pro report, subscription required.)

Meanwhile, Eric Hartness, chief marketing officer at PlaySpan, told me he expects that by this time next year, that 12 percent figure will rise to 15-18 percent.

All charts and data courtesy Frank N. Magid Associates and PlaySpan.

  1. [...] study offers some insight into exactly who’s doing the buying, and where. Read Wagner James Au at GigaOm for [...]

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  2. [...] – GigaOm Tagged with: social network, virtual goods, Virtual World leave a comment « [...]

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  3. Bullshit. Could anyone even begin to believe this? There is no way 1% of Americans have done this.

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    1. Agreed. Was this gathered via internet survey, or what? That sample is definitely skewed.

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  4. [...] to a report on GigaOm, the demographics break down as [...]

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  5. [...] chunk of these virtual worlds is owning virtual goods, that cost no-virtual, but real money:  GigaOM reports that the virtual goods market is estimated to reach $1.8 billion this [...]

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  6. [...] chunk of these virtual worlds is owning virtual goods, that cost no-virtual, but real money:  GigaOM reports that the virtual goods market is estimated to reach $1.8 billion this [...]

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  7. There is no way this is good data seems everyone involved in the survey is a little biased.

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  8. you guys are all out of touch. tons of people are buying virtual items. between World of Warcraft and all the mobster games on Facebook and Myspace, how can you NOT see the scale?

    heck, i would argue ringtones are a virtual good too, if you included those, i bet the number would be a lot higher even.

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  9. yea this data is ridiculously wrong. maybe if “virtual good” included digital music, ringtones, and unboxed apps.

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  10. Thanks James, good points!

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  11. The survey seems consistent with my analysis for GigaOM Pro. 1 in 2 virtual world users buy virtual goods, according to this survey. Counting regular US users of just some of the very largest worlds like Habbo, Club Penguin, WoW, YoVille, RuneScape, and Maple Story, we’re already talking (very roughly, this is back of envelope estimating) about 25 million. I.E. That means about 12 million virtual goods buyers just from some of the top players in the virtual world space, which comes out to around 4 percent of the US population between 12-64, which this study was measuring. And again, virtual world users are only part of the market for virtual goods. As James above suggests, social network games also have a user base in the tens of millions.

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    1. I haven’t seen the analysis for GigaOm Pro since it’s behind a wall, but the idea that 1 in 2 virtual world have bought virtual goods (meaning spend actual cash, not just acquired currency) in the last 12 months doesn’t mesh with literally any virtual world you mention, based on my conversations with each of their teams.

      Even if you eliminated all of the users who come to the site only once (generally the bulk of uniques each month) from the analysis to focus solely on active users, the ratio of active payers is below 25% at every site mentioned, which means that this entire study about virtual goods purchases is just insanely overstated.

      The VGood business in the US is a robust, fast growing sector, which may hit as high as $1B this year, but the bulk of the purchases are still coming from a small percentage of users.

      Sean Ryan
      Loki Partners
      Monetizing Digital and Social Media

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      1. Sean, the survey I cite in the article doesn’t say half the users of virtual worlds buy virtual goods, it says half the 12% US consumers who buy virtual goods are also regular virtual worlds user. My intent in the comment above was to suggest how that 12% figure is plausible, partly based on how large the user bases of the biggest MMOs are. However, I didn’t express that very clearly, because you’re right that the monetization rates of Habbo etc. aren’t 46% — sorry for the confusion. In any case, my GigaOM Pro analysis doesn’t discuss monetization rates, but active user numbers in virtual worlds, and trends around them.

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  12. There must be some confusion, because I don’t consider an iPhone app a “virtual good” at all. At least a few iPhone users who took the survey, on the other hand, definitely consider that so.

    If an iPhone app is a “virtual good,” then Rosetta Stone and any other software is also a virtual good – and in that case, we’re all using virtual goods.

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  13. [...] item at some point in the last 12 months, according to Frank N. Magid Associates and reported by Gigaom. The research also predicts that the virtual goods and currency market is estimated to reach $1.8 [...]

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  14. I would argue the % is a lot higher then 12%. I have been playing these games for over 20 years. You have a handful of people that can’t stand the idea of someone with money buying their way through a game. These people post and whine like they are 95% of the current gaming community but are increasingly becoming the minority.

    Are you going to argue with the revenue of all the Cash shop games available? Are you going to argue with big name companies all scrambling to make these games? Are you going to argue with big name companies allowing RMT? Lastly, if you play the biggest MMO out currently, WOW, are you going to argue they don’t constantly say how big a problem RMT is?

    Instead of fighting a loosing battle and try to tell customers they shouldn’t have a want to buy virtual goods, smart big companies are giving customers what they want. To pretend you know more then where all the big money and new development is going and saying virtual goods for real money is not close to 12% is burying your heads.

    Do you havve a reason to be upset that someone that doesn’t have a lot of time buy something in a game you play that you can”t afford? Sure that can be debated and I am not arguing that point. However, these big companies are smart, they are offering the player rich in time ways to obtain all virtual goods that a player who is rich in real world dollars but lacking in time can get.

    The days where all the players who have little money but unlimited time to play are the dominating players is over and people are screaming to defend their once monoploies.

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  15. It’s clear this wave is just getting started. With the market growing at a 35% CAGR on a TAM of 3.6B, and one of the primary markets for these goods being teenagers, this wave will only continue to fuel mobile banking. Teenagers will need accounts to transact and associating a prepaid gaming card with a mobile phone, there’s potential for massive disruption in the banking industry – to serve consumers at a fraction of the cost of today banks: no ATMs, no branches, just prepaid cards and virtual currency.

    See more at: http://expostfacto.tumblr.com/post/152710336/virtual-goods-are-driving-a-revolution-in-banking

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  16. [...] A new study released yesterday by Frank N. Magid Associates and PlaySpan shows that more than one in 10 Americans or roughly 12 percent have bought a virtual item at some point in the last 12 months. The virtual goods and currency market is estimated to reach $1.8 billion this year and demographic research offers insights into who is buying what and where. Virtual world usage is significant as nearly half of the respondents who report being active MMO participants are also virtual item consumers. More info can be found in the article by Wagner James Au here. [...]

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  17. [...] “12% of Americans Bought Virtual Goods in Past 12 Months: Survey” – I was always curious who buys those virtual gifts on Facebook, apparently quite a lot of people. [...]

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  18. this “research” is hilarious. the sample size is probably from the 10 people that completed the survey. PLZ have consideration for statistical relevancy before posting this garbage.

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  19. Actually, the sample size was nearly 2000 Americans between 12-64, selected to conform to US census data by age, race, gender.

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  20. [...] be announced soon, Long and Kuper tell me, including partnerships with several Hollywood studios. As with so many social games nowadays, digital goods will also be a future revenue source. Right now, you can use the Hollywood Credits [...]

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  21. As much as I would love to believe this, it doesn’t add up from any angle. For example, the study indicates that revenue from virtual goods stands at $200-$250MM in the US alone. Given their estimate of $30 per person in virtual goods sales, that would be roughly 8 million virtual goods customers. Given the US population of roughly 300MM individuals, that would correlate to just under 3% of the population, not 12%. A much more believable figure.

    My suspicion is that the confusion resides in the description of “Virtual Goods” and people’s understanding of that. It may be that the handful of free tokens I get (and spend) when I join a game are being counted as a “yes” for study purposes, even though they don’t result in any revenue for the company or the marketplace in general.

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  22. [...] Wagner James Au, “12 Percent of Americans Bought Virtual Goods In Past 12 Months: Survey,&#822… Share and [...]

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  23. [...] Игровой мир, Интересности, MMO trackback Сайт GigaOM сообщил об исследовании готовности американских [...]

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  24. [...] dépensés microtransactions en Dans les univers virtuels en 2009, dont plus de 200 millions aux Etats-Unis. Une étude Prévoit même Une croissance vertigineuse (crédible?) à 17, 3 milliards de dollars [...]

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  25. [...] on selling to Facebook members. A recent study estimated that the virtual goods and currency market will reach $1.8 billion this year, with a startling 12% of Americans having bought a virtual item at some point in the last 12 [...]

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  26. [...] the overall assessment of the data.) Last July, a Magid study commissioned by PlaySpan found that roughly 12 percent of Americans had purchased a virtual [...]

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  27. [...] good chunk of these virtual worlds is owning virtual goods, that cost no-virtual, but real money:  GigaOM reports that the virtual goods market is estimated to reach $1.8 billion this [...]

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  28. [...] good chunk of these virtual worlds is owning virtual goods, that cost no-virtual, but real money:  GigaOM reports that the virtual goods market is estimated to reach $1.8 billion this [...]

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