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 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.
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Play Sushi, a gaming portal, has attracted 3 million visitors less than three months after launching, reports site owner Future Ads, yet another example of the explosive growth taking place in the free online gaming space. Sites offering free games clocked 87 million U.S. visitors in May 2009, according to comScore, a 22 percent year-over-year increase. And the rise is clearly coming at the expense of the retail-driven side of the game industry. According to NPD, sales of game-related hardware and software dropped 31 percent in June over the same month in 2008, continuing a downward slide that has been underway for months.

The recession is an obvious culprit, pushing consumers with lighter wallets away from store shelves in search of free gaming on the web. While retail games had previously been considered recession-proof, the quality and variety of free online games has been steadily improving. But this is part of a larger trend, one that’s already impacted recorded music, movies/TV, and print publications: When costly physical media comes into direct competition with free digital delivery on the Net, the latter eventually wins out.

When the Rock Band Network — essentially an App Store for musicians who want to upload and sell Rock Band-playable versions of their songs — opens for business later this year, it has the potential to transform the music industry by giving musicians large and small a distribution platform on one of the few online services that’s managed to successfully monetize music downloads. If, that is, the Network can make their songs easy to find and enjoyable to play.  Continue »

Mochi Media is adding a virtual currency/microtransaction system to its network of online Flash games today. Players can use Mochi Coins to buy in-game upgrades for 16 titles from its game developer partners. Want a “tactical chain saw” in SAS Zombie Assault II>? (And really, who doesn’t?), it’ll cost you 600 Mochi Coins — around 75 cents, given the 800-to-$1 exchange rate.

Mochi joins an increasingly crowded and competitive market for virtual currency solutions to monetize online games, with Facebook’s own system soon to come. (And in all likelihood, a standards war among competing virtual currencies soon to follow.) With 100 million monthly unique users across its network, however, Mochi immediately becomes one of its lead players. I’m watching this space closely, because as I noted in my GigaOM Pro analysis of virtual worlds (subscription required), monetization of virtual currency is one of the market’s biggest opportunities. Unsurprisingly, while Mochi currently has no virtual worlds in its network, in a phone call earlier today, Mochi’s Jameson Hsu told me to expect MMO partnership announcements soon.

Image credit: Mochi/Ninjakiwi.