Business in Virtual Worlds, Virtual World Platforms

China Quintuples U.S. Spending in VWs

CNN is reporting that, according to research firms, the sales of virtual goods in China topped $5-billion in 2009, more than five times the estimate for the US.

One of the main reasons for this surge in sales is that click-through rates for advertising take up a much smaller slice of the revenue pie, according to researchers. Another reason is that China is replete with game designers, and though monetization is a difficult challenge, selling virtual goods has been of the bright spots of the industry. The piece cites the success of Tencent, a company that offers QQ Instant Messanger and Qzone and which brought in $300-million from ‘value-added’ services.

A third reason for the growth in the Chinese market is the ubiquity of mobile phones and prepaid cards, which makes the administrative side of buying much easier. And yet another factor – strict government regulation of physical game consoles and software has forced those interested in computer gaming to head online.

Justin Smith, founder of Inside Social Games, also predicts a bright future at the intersection of social games and virtual goods, where friends and family will become key elements.

“This could mean buying a virtual gift for a potential love interest, buying a power-up to defeat your old classmate in a friendly competition, or buying a nice accessory for your virtual home,” Smith said to CNN. “Because everyone can relate to one of these situations in which virtual goods meet a real emotional need, virtual goods in social games have the potential to be huge.”



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