Mobile virtual goods generated $168M in revenue in past year

Americans spent about $168 million on mobile virtual goods in the past year, according to a report from Frank N. Magid Associates and Aurora Feint.

Virtual goods are used in free-to-play apps. Those apps are free for consumers to play, but they have to pay real money to buy virtual goods such as a weapon in a shooting game. The market has taken off on Facebook, fueling the growth of such companies as Zynga. But on the iPhone and other smartphones, the market is in a nascent state. Still, the report shows that virtual goods are picking up steam on mobile.

The report estimated that over 70 million Americans now own smartphones, which have internet access and computer-like screens. That’s about 23 percent of the U.S. population. Of the smartphone owners, 45 percent play mobile games and 16 percent of those spend an average of $41 per year on in-game virtual goods.

“The market for virtual goods has already exploded in web-based games like Zynga’s Farmville, and we’re just now starting to see this trend in the mobile space,” said Steve Lin, vice president of operations of Aurora Feint, which makes a social game platform for the iPhone. “In just the last few months we’ve seen amazing interest from our game developers in building mobile social games with virtual goods. Our internal numbers reflect the study in that free-to-play models will be the dominant pricing structure in the future.”

About 55 percent of smartphone gamers are interested in buying virtual goods. Most smartphone gamers are male and are between 18 and 34. They download an average of 14 games per year. Of these games, the gamers paid money for four of them and got the rest for free. The gamers rely on word of mouth for suggestions.

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