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At Least Retailers Are Upbeat About The Virtual Economy

imageMore proof that the virtual goods business continues to do well: Linden Lab is forecasting that users will conduct about $450 million dollars worth of virtual transactions in Second Life this year, up 28 percent from 2008. The company also surveyed more than 2,600 of its virtual business owners, including landlords, event promoters and retailers, and found that they’re quite optimistic about the state of the virtual economy:

— 64 percent reported that they generate positive net income from the products/services they sell
— 52 percent said they generated up to 20 percent of their total income from Second Life
— 61 percent were optimistic that their revenues will grow this year, with 19 percent saying they were “very optimistic”
— 31 percent planned to invest slightly or significantly more in their virtual business over the next six months

So what’s keeping the virtual economy afloat while consumers pull back on real world spending? It’s simple. The average shopper may be wary of spending $150 on a new pair of heels right now — but if she’s involved in Second Life or even has an avatar for an instant messaging platform (like IMVU or Meez), spending $2 for a new pair of virtual heels is much easier to justify. And when taken to scale, those thousands and millions of micro-transactions add up to substantial revenues for companies like Linden Lab, Habbo and WeeWorld.

Photo Credit: matteopenzo

6 Responses to “At Least Retailers Are Upbeat About The Virtual Economy”

  1. Tameka Kee

    I think virtual worlds offer escapism — people can be characters that they're not. Whether that escapism comes in the form of medieval or vampire-style roleplay, or a designer-stacked virtual closet, it still provides value (which is why people spend money building up their virtual identities).

  2. Thank you Tameka for writing something about the TRUE paid content sector that makes REAL money, as opposed to the false one — all these ad-supported sites, that mostly bleed cash. YouTube, for example, a clear dear-child of the industry, is said to be losing something like $470 million a year. Compare it to the $450 million that Second Life is most likely to make this year.

    And still, most of the journalists and so-called industry analysts spend a lot more time covering YouTube or Twitter than Second Life. Ironic, isn't it? Or, perhaps it is not the Linden Lab's clients but YouTube's and Twitter's who dwell in some fantasy world?

  3. I guess virtual goods has the power to do just what it's supposed to do: make the consumer feel like he does own it, even though not in reality but in the virtual world. In a way, it does fulfill the inner need of the consumer (to own something) so probably that's why virtual goods don't seem to be doing too badly in the current economy – they're cheaper, more justifiable to buy, and still fulfill the need of the consumer.