Free-to-Play Developers Drive Boom in Virtual Commerce

According to the industry news source GamesBeat – an offshoot of VentureBeat – cash transactions for virtual goods are booming, with pay-to-play MMORPG's like World of Warcraft surprisingly knocked out of first place by a surprise challenger.

Pixels and Policy explores the stats behind the claim, and why the biggest commercial growth isn't in the big-name worlds you might imagine.

Waist Deep in Gold Pieces

From the article:

The median purchase was the highest in free-to-play games at $75, followed by MMOs ($60), and social networks ($50).

The average player is currently playing three online games and 80 percent of the players report buying digital goods for their own use. About 20 percent spend money on digital goods as gifts for others.

The 20% of users who spend real cash on virtual gifts for others likely comes from Facebook's gifting function, which set the standard for microtransactions several years ago by charging $1 for virtual thinking-of-you trinkets ranging from a pet puppy to an engagement ring.


           Graph courtesy of Playspan (click to enlarge)

Gamespan, the company that conducted the study of just how much physical currency players are sinking into Golgrath the Conqueror, also broke down expenses by category of purchase.

Not surprisingly, with games like World of Warcraft dominating the market, weapons sales clocked in the largest percentage overall. But a significant portion of "weapons" sales came from browser games like Mafia Wars.

It's my guess that actual totals for weapons and in-game items could be much higher, as by far the runaway purchase was in-game currency, the gold coins and platinums that power every warrior's lifestyle.

The Metaverse as Market Leader

Virtual worlds could prove more recession-proof than old means of entertainment. An article in this month's Esquire discussed how casinos are seeing sharp drops in return business, some by as much as 12 to 15%. Compare this with virtual worlds, where the rate of real-to-virtual currency swaps has remained constant or increased over the past year. 

Increasing numbers of virtual world subscriptions (Warcraft, etc.) can't account for the huge boom in virtual commerce. It takes browser games to fill in the market gap.

Zynga built a profit titan on the back of free browser games with premium for-pay elements. The same goes for the notorious Evony and myriad other Facebook pretenders.

There's also evidence that free browser games are pulling coin from pockets traditionally passed over by online games: Working players without the time commitment necessary for the serious rewards of Warcraft or EVE Online. Browser games bridge the gap by providing immediate reward, as well as the company-sponsored real-to-virtual currency exchange designed to quickly boost levels.