Eight virtual goods companies, including Facebook, raised $237 M in second quarter

July 13, 2009 | Dean Takahashi | Comments | |

virtual-goodsEight virtual goods companies raised $237 million from investors in the second quarter, Engage Digital announced today.

Game companies are adopting virtual goods models as a way to monetize games. They make the games free to play, but players have to buy virtual goods if they want to upgrade their play experience or customize their characters. Of course, $200 million of that was raised by Facebook, which has virtual goods payment options in its business but isn’t really a virtual goods company. That means that seven virtual goods companies raised $37 million in the quarter.

The $37 million figure compares to $69.1 million invested in virtual goods companies in the first quarter and $100.7 million invested in virtual goods companies in the second quarter of 2008.

“Taken in context of the worldwide economic downturn, this quarter’s numbers held up fairly well when compared to the general decline in venture capital investments, especially in technology-related industries,” said Christopher Sherman,  executive director of Engage Digital.

After Facebook (which, again, doesn’t really count), the second largest investment of the quarter was $13 million for Boku, a mobile payments start-up that purchased Paymo and Mobillcash. If you exclude Facebook, mobile playments investments account for 40 percent of the funding this quarter. There were no investments in mobile payments related to virtual goods in the first quarter or the second quarter of 2008. Keep in mind, the second quarter was extremely weak overall.

[photo: getcontagio]

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About the Author, Dean Takahashi

Dean is lead writer for GamesBeat at VentureBeat. He covers video games, security, chips and a variety of other subjects. Dean previously worked at the San Jose Mercury News, the Wall Street Journal, the Red Herring, the Los Angeles Times, the Orange County Register and the Dallas Times Herald. He is the author of two books, Opening the Xbox and the Xbox 360 Uncloaked. Follow him on Twitter at @deantak, and follow VentureBeat on Twitter at @venturebeat.

  • Windtee
    Very interesting to read. Those games sure have one thing in common...
  • robertweber
    The "freemium" model of giving away the virtual world and selling virtual goods seems to be working quite well. As a user, I like the standalone Windows application models like IMVU (http://www.imvu.com) versus those that rely on Facebook.

    In addition to the "freemium" model, several of the virtual goods companies are using an ad-supported model. For example, OfferPal was financed not too long ago and provides an offer path for Facebook application developers/marketers. The company I founded, W3i (http://www.W3i.com), has been hired by two virtual good companies which utilize Windows applications to provide additional distribution and/or monetization for their virtual world applications. The free, ad-supported model converts at a much higher rate than micropayments.