virtual goodsVirtual goods companies raised $598 million in venture capital in 2009, according to a report released today by Engage Digital Media.

Virtual goods are digital items in games and other applications that don’t exist in the real world. In the world of online entertainment, you can play many games for free, but you may have to buy a virtual good, such as a better sword in a role-playing game, using real money.

Engage Digital Media said that $1.38 billion was invested in the space in 2009, but that figure requires some clarification.

If you count Facebook and China’s Sina social networks as virtual goods companies, and if you note acquisition values, then the amount rises to $1.38 billion. About 70 percent of Sina’s revenues are ad based, and most of Facebook’s revenues also come from ads. But a minority of the revenue comes from virtual goods, so Engage Digital Media included the investments in Facebook ($200 million), and Sina ($180 million). Counting those two companies, the total is 87 companies that raised money for virtual goods businesses in 2009, which compares to just 34 in 2008.

There were 18 acquisitions in the space during the year, with half of those happening in the fourth quarter. The value of the acquisitions was $398.3 million (which Engage also counted in its tally of $1.38 billion for the year). Most of that value was the $300 million that Electronic Arts paid for social gaming firm Playfish in November.

In the fourth quarter alone virtual goods companies raised $944 million, said Chris Sherman, chief executive of Engage Digital Media.Most of the money raised went into social game companies. If you exclude that data, then virtual goods platform and service companies raised about $100 million in 2009. Overall, the list includes game companies as well as ad-offer, services, goods and currency-related companies.

Our own count of publicly disclosed game-related investments in 2009 added up to $600.5 million raised. No matter how you count the numbers, the performance of the virtual goods industry in 2009 was impressive, considering the downturn that happened in most tech industries. There was a deep freeze in investments in the first half of 2009. Revenues for virtual goods were expected to hit $1 billion in 2009, according to Inside Newtork.

Engage Digital Media is hosting its Engage Expo in New York on Feb. 16 and 17.

Be sure to check out our latest announcements on GamesBeat@GDC, our video game conference taking place March 10 in San Francisco.