In the Luciola Global Consumer Trends report one of the trends covered is Virtunity. What is Virtunity? It’s how digital technologies like the internet and mobile are enabling individuals to live and interact within virtual communities and in some ways allowing us to indulge and explore our alter ego.
Now another dimension is being added to Virtunity, something touched upon in the report, and that dimension is money. Currency is taking a whole new meaning as community members use virtual money in some very interesting ways. One of the pioneers of virtual currency is Second Life with their Linden Dollars. By the end of 2009 the value of SL’s virtual economy was as high as $567 million, a 65% growth over 2008. While the world grappled with a recession there was one economy that was certainly booming! Now it seems the rest of the world is catching up.
Facebook too has become a big player in the virtual goods business. Imagine this; people are paying $1 for a virtual gift which so far contributes about $30 million to Facebook, a good 10% of their total revenue. No wonder Facebook has recently moved to trademark its Virtual Currency Platform.
Another big contributor to the virtual goods economy is gaming. In this arena World of Warcraft has led the way. To progress in the game players need (virtual) gold. To facilitate players an entire industry had been setup in China to farm for this virtual gold and sell it for real cash! Estimates for this industry stand at anywhere between $200 million to $1 billion. So much so that the Chinese government has had to intervene and put on ban on trading of virtual goods!
According to a report by the European Network and Information Security Agency (ENISA), which is an EU agency the worldwide annual trade of real money for virtual goods amount to nearly 1.5 Billion Euros. In another report by an analyst from Wedbush Morgan Securities social gaming is expected to grow to a $4 billion by 2013, which today largely comprises of sale of virtual in-game items. It seems traditional banking has one more challenger to their age old system. With 4.6 billion mobile phones to 1.6 billion bank accounts, the ‘under-banked’ are already a big potential area for mobile network operators especially after the success of models like M-PESA and SMART Money. But from what we are seeing micro-transactions for virtual goods is also turning out to be a big business as well especially for targeting the younger population between the ages of 13-24.
So far gaming companies and social media networks seem to be the prime beneficiaries of this virtual economy. Is there an opportunity for mobile network operators here as well? Apparently so! Mobile payments companies like Zong, Boku, Paymo make it all look very easy! They are integrating with wireless operators and have a reach of over 1.5 billion customers worldwide. They simply enable a customer to pay for virtual goods using their mobile phones and get charged through their prepaid balance or mobile bill! Another player Mobile First has also entered the arena combining social gaming with their service. These are indications of how ease of use and mobility are being combined to make transactions in the virtual economy fast and simple.
Reposted from the Luciola Blog
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