Hardcore gamers are accepting virtual goods in video games, report says

Free-to-play games, where you can play a game for free but are then encouraged to buy virtual goods such as weapons, have taken off. Even though this business model is like a return to the expensive old days when gamers paid a quarter for minutes of play, hardcore gamers are embracing virtual goods.

About 88 percent of 4,816 gamers surveyed said they had purchased some form of digital content, including music, movies and games. About 60 percent of respondents said they had purchased a virtual good inside a game (where the virtual good was not a full game), according to a new report by market researcher DFC Intelligence and virtual goods platform company Live Gamer.

Many of the virtual goods games fall into the category of MMO Lite, or relatively casual massively multiplayer online games. These games don’t have the high monthly fees of World of Warcraft, which charges $14.95 a month. DFC Intelligence forecasts that the North American and European MMO Lite market will grow from $800 million in 2009 to $3 billion by 2015.

Gamers in both Europe and North America are now comfortable with buying digital content, the report said. Buying virtual characters, weapons, decorations or other items is now common in games ranging from Zynga’s FarmVille on Facebook to Nexon’s Combat Arms. These sorts of online games have hundreds of millions of users around the world.

While buying games via micro-transactions can add up (just like putting quarters into arcade machines once did), the virtual goods business model offers consumers more choices. Those who want to play for free — especially at a time of recession — can do so. Gamers view free-to-play games as low risk, because they can try them out extensively before they decide to buy anything, said David Cole, analyst at DFC.

“The retail model of charging $60 for a game has put limitations on consumers who will get involved,” Cole said.

The survey was conducted in January and February in North America and Europe. The target demographic was gamers ages 13 to 24, mostly male. DFC Intelligence also analyzed over seven years of historical Live Gamer micro-transaction data from multiple countries including South Korea, U.S., Japan, Germany, Vietnam and the Philippines. Korea still has the highest revenue and longest history of embracing virtual goods, but gamers in Germany, Japan and the U.S. are now spending more per transaction.

Virtual goods aren’t limited to any one game genre. Music titles, shooters, sports games and just about any other category can benefit from virtual goods models. And while they are popular on social networks such as Facebook, free-to-play games thrive on any platform. The findings suggest that the gold rush to build games with virtual goods business models is justified.

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