Comments on: My Best Estimate for the Size of the Virtual Goods Market in the United States http://www.charleshudson.net/my-best-estimate-for-the-size-of-the-virtual-goods-market-in-the-united-states This is my personal website for posting my views on the world of technology and gadgets. Thu, 04 Mar 2010 22:21:45 -0800 http://wordpress.org/?v=2.9.2 hourly 1 By: ivanwalsh http://www.charleshudson.net/my-best-estimate-for-the-size-of-the-virtual-goods-market-in-the-united-states/comment-page-1#comment-55018 ivanwalsh Mon, 14 Sep 2009 04:00:13 +0000 http://www.charleshudson.net/?p=512#comment-55018 Hello Charles, <br><br>Great article. I work in China and have some insight into the gaming marketing over here. <br><br>Something you might want to factor into other research pieces is the growing trend (at least in China/Korea) for kids to 'rent' virtual goods.<br><br>Why rent?<br><br>They rent things like wallpapers, clothes and other VGs on a try now, buy later philosophy.<br><br>They also rent items when gaming at certain times of the year (market opp there for someone) to boost their profile and bling up. <br><br>also, fwiw, most kids over here dont have PCs at home. too expensive so play games at web cafes often sharing terminals with their mates. sometimes they also share the payments/credits. <br><br>Regards, <br><br>Ivan <br><br><a href="http://www.ivanwalsh.com" rel="nofollow">www.ivanwalsh.com</a> Hello Charles,

Great article. I work in China and have some insight into the gaming marketing over here.

Something you might want to factor into other research pieces is the growing trend (at least in China/Korea) for kids to 'rent' virtual goods.

Why rent?

They rent things like wallpapers, clothes and other VGs on a try now, buy later philosophy.

They also rent items when gaming at certain times of the year (market opp there for someone) to boost their profile and bling up.

also, fwiw, most kids over here dont have PCs at home. too expensive so play games at web cafes often sharing terminals with their mates. sometimes they also share the payments/credits.

Regards,

Ivan

http://www.ivanwalsh.com

]]> By: Virtual Goods Market http://www.charleshudson.net/my-best-estimate-for-the-size-of-the-virtual-goods-market-in-the-united-states/comment-page-1#comment-54955 Virtual Goods Market Tue, 11 Aug 2009 22:57:36 +0000 http://www.charleshudson.net/?p=512#comment-54955 [...] Hudson estimates the virtual goods market to be a whopping 200 million dollars in the United [...] [...] Hudson estimates the virtual goods market to be a whopping 200 million dollars in the United [...]

]]> By: Rare Name http://www.charleshudson.net/my-best-estimate-for-the-size-of-the-virtual-goods-market-in-the-united-states/comment-page-1#comment-54898 Rare Name Wed, 10 Jun 2009 18:15:58 +0000 http://www.charleshudson.net/?p=512#comment-54898 These are really some interesting facts. Im a part of MMO gaming myself (for a couple of years) and was totally clueless about such developments.<br>If possible, some estimates on Runescape MMO (by Jagex. Ltd)? These are really some interesting facts. Im a part of MMO gaming myself (for a couple of years) and was totally clueless about such developments.
If possible, some estimates on Runescape MMO (by Jagex. Ltd)?

]]> By: Is This Thing On? : Selling Virtual Goods: Get Your ARPU In Gear! http://www.charleshudson.net/my-best-estimate-for-the-size-of-the-virtual-goods-market-in-the-united-states/comment-page-1#comment-54751 Is This Thing On? : Selling Virtual Goods: Get Your ARPU In Gear! Tue, 17 Mar 2009 21:54:58 +0000 http://www.charleshudson.net/?p=512#comment-54751 [...] http://www.charleshudson.net/my-best-estimate-for-the-size-of-the-virtual-goods-market-in-the-united... [...] [...] http://www.charleshudson.net/my-best-estimate-for-the-size-of-the-virtual-goods-market-in-the-united... [...]

]]> By: Charles Hudson’s Weblog » Blog Archive » Thoughts on Free Powered Business Models and Why Time Beats Features http://www.charleshudson.net/my-best-estimate-for-the-size-of-the-virtual-goods-market-in-the-united-states/comment-page-1#comment-54691 Charles Hudson’s Weblog » Blog Archive » Thoughts on Free Powered Business Models and Why Time Beats Features Thu, 12 Feb 2009 06:12:52 +0000 http://www.charleshudson.net/?p=512#comment-54691 [...] upgrade option work pretty well in the free-to-play gaming space (you can see my earlier post on virtual goods in the United States as a reference). As a basic rule, I think freemium can work really well for products in which the [...] [...] upgrade option work pretty well in the free-to-play gaming space (you can see my earlier post on virtual goods in the United States as a reference). As a basic rule, I think freemium can work really well for products in which the [...]

]]> By: WhatsYourPlace » Blog Archive » Virtual Goods is NOT about buying pixels http://www.charleshudson.net/my-best-estimate-for-the-size-of-the-virtual-goods-market-in-the-united-states/comment-page-1#comment-54671 WhatsYourPlace » Blog Archive » Virtual Goods is NOT about buying pixels Fri, 06 Feb 2009 14:49:32 +0000 http://www.charleshudson.net/?p=512#comment-54671 [...] market size, see Charles Hudsons estimate and the equally great resource on Virtual World News. — In the past this blog was written in [...] [...] market size, see Charles Hudsons estimate and the equally great resource on Virtual World News. — In the past this blog was written in [...]

]]> By: chudson http://www.charleshudson.net/my-best-estimate-for-the-size-of-the-virtual-goods-market-in-the-united-states/comment-page-1#comment-54514 chudson Fri, 05 Dec 2008 22:02:24 +0000 http://www.charleshudson.net/?p=512#comment-54514 Hi Matt,<br><br>Thanks for the comment. I have no problem believing the global figure being 10x what we see here in the United States. The U.S. is still getting its feet wet with virtual goods and there are companies in Asia doing hundreds of millions of dollars in virtual goods as standalone entities - I have a hard time seeing the global market at anything less than $1-2 billion. <br><br>My $200 million estimate is very conservative. It assigns no revenue to the spaces where I have no insight (subscription MMOs and console games, music-oriented ones in particular). <br><br>Jeremy's estimate is for Facebook's global virtual goods revenue, a portion of which must be non-US given their traffic. Given what I know from Serious Business and what I've heard from you, I applied some conservative estimates to the social nets piece. Given what I know about one large company in particular, there is a lot of money globally in this space. I just didn't know how much of the incentivized offer and virtual goods revenues to US folks so I kept the guesstimate low relative to the total. Hi Matt,

Thanks for the comment. I have no problem believing the global figure being 10x what we see here in the United States. The U.S. is still getting its feet wet with virtual goods and there are companies in Asia doing hundreds of millions of dollars in virtual goods as standalone entities – I have a hard time seeing the global market at anything less than $1-2 billion.

My $200 million estimate is very conservative. It assigns no revenue to the spaces where I have no insight (subscription MMOs and console games, music-oriented ones in particular).

Jeremy's estimate is for Facebook's global virtual goods revenue, a portion of which must be non-US given their traffic. Given what I know from Serious Business and what I've heard from you, I applied some conservative estimates to the social nets piece. Given what I know about one large company in particular, there is a lot of money globally in this space. I just didn't know how much of the incentivized offer and virtual goods revenues to US folks so I kept the guesstimate low relative to the total.

]]> By: Matt McAllister http://www.charleshudson.net/my-best-estimate-for-the-size-of-the-virtual-goods-market-in-the-united-states/comment-page-1#comment-54513 Matt McAllister Fri, 05 Dec 2008 21:13:02 +0000 http://www.charleshudson.net/?p=512#comment-54513 Wow, thanks for sharing all this, Charles! Definitely the most thoughtful and thorough analysis I've seen yet. I'm curious -- a lot of people at the Virtual Goods Summit were estimating the global market at somewhere between $1.5 - 2 billion. Does that seem right to you? And if so, doesn't $200 million for the U.S. seem a bit low? I realize that other countries, in Asia in particular, are probably farther ahead than we are in virtual goods ubiquity, but maybe not THAT far ahead? Specifically, I'd argue that your $50 - $75 million estimate for social networks and social applications is particularly low. For starters, Jeremy Liew did a more recent post where he put Facebook's revenue from virtual goods at $50 - $60 million all by itself (<a href="http://lsvp.wordpress.com/2008/11/12/facebooks-digital-goods-revenue-50-60m-sources-say/" rel="nofollow">http://lsvp.wordpress.com/2008/11/12/facebooks-...</a>), and I can say from our experience at Offerpal that the revenues from social applications are definitely greater than the $20 - $30 you've posited. Also, don't forget about MySpace, which isn't far behind Facebook. Still, you're analysis is extremely strong and valid. I wonder when the big research firms are going to start paying more attention? Wow, thanks for sharing all this, Charles! Definitely the most thoughtful and thorough analysis I've seen yet. I'm curious — a lot of people at the Virtual Goods Summit were estimating the global market at somewhere between $1.5 – 2 billion. Does that seem right to you? And if so, doesn't $200 million for the U.S. seem a bit low? I realize that other countries, in Asia in particular, are probably farther ahead than we are in virtual goods ubiquity, but maybe not THAT far ahead? Specifically, I'd argue that your $50 – $75 million estimate for social networks and social applications is particularly low. For starters, Jeremy Liew did a more recent post where he put Facebook's revenue from virtual goods at $50 – $60 million all by itself (http://lsvp.wordpress.com/2008/11/12/facebooks-...), and I can say from our experience at Offerpal that the revenues from social applications are definitely greater than the $20 – $30 you've posited. Also, don't forget about MySpace, which isn't far behind Facebook. Still, you're analysis is extremely strong and valid. I wonder when the big research firms are going to start paying more attention?

]]> By: chudson http://www.charleshudson.net/my-best-estimate-for-the-size-of-the-virtual-goods-market-in-the-united-states/comment-page-1#comment-54512 chudson Fri, 05 Dec 2008 20:57:11 +0000 http://www.charleshudson.net/?p=512#comment-54512 Fae,<br><br>Your numbers line up with what I've heard about the international reach for Second Life - I've chosen to focus on the US piece and I've attributed a relatively most contribution based on what I've heard about the distribution of their active users. You do raise a lot of good points here and it sounds like you know a lot about the SL community. Fae,

Your numbers line up with what I've heard about the international reach for Second Life – I've chosen to focus on the US piece and I've attributed a relatively most contribution based on what I've heard about the distribution of their active users. You do raise a lot of good points here and it sounds like you know a lot about the SL community.

]]> By: chudson http://www.charleshudson.net/my-best-estimate-for-the-size-of-the-virtual-goods-market-in-the-united-states/comment-page-1#comment-54511 chudson Fri, 05 Dec 2008 20:55:43 +0000 http://www.charleshudson.net/?p=512#comment-54511 Robert,<br><br>Yes, I agree that there is a ton of activity among SL users. From what I have seen, a lot of this economic activity that you reference doesn't involve U.S. users and is more common among the international audience. <br><br>You do bring up a really good point. It is worthwhile to try to distinguish between user-to-user trade and true secondary markets. Lots of worlds allow user-to-user trade but only in in-world currency. I excluded secondary markets as they're more about resale in many cases - I'll noodle on how to include the SL data in future estimates. Robert,

Yes, I agree that there is a ton of activity among SL users. From what I have seen, a lot of this economic activity that you reference doesn't involve U.S. users and is more common among the international audience.

You do bring up a really good point. It is worthwhile to try to distinguish between user-to-user trade and true secondary markets. Lots of worlds allow user-to-user trade but only in in-world currency. I excluded secondary markets as they're more about resale in many cases – I'll noodle on how to include the SL data in future estimates.

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