Is 2010 going to be the year of the virtual goods?
I had to read and re-read this a number of times before it sunk in.
“Zynga Was the Number-Two PayPal Merchant in 2009″.
Unless you lived on another planet in 2009 you would have heard about Farmville and Mafia War’s but the figures being mentioned around Zynga now are really quite incredible.
Russia’s Digital Sky Technologies an investor in Facebook has just recently completed an investment in Zynga purchasing $180 million of stock and allowing staff to take a “liquidity moment” and with stellar investors Kleiner Perkins Caufield & Byers, Union Square Ventures, Foundry Group and Avalon Ventures remaining on alongside DST the future looks bright here.
I suppose the strange thing here is that the goods do not exist, they cost zero to manufacture but take on a life of their own inside the Zynga platform, now Zynga have made an incredible move into Prepaid with Game cards for FarmVille, Mafia Wars and YoVille now available at 7-Eleven, GameStop, Best Buy and Target you are going to see a whole new movement in this virtual market with the obvious target group here being under 16′s who previously didnt have the ability to purchase the virtual upgrades online.
With no cost here beside distribution and retailer margin this market could really explode and turn into a very nice second revenue line for the company.
Definitely one to watch for this year.
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I’ve bought virtual goods – spent about $20 in Farmville – they also allow you to pay with Amazon which is interesting.
I’ve also bought virtual pets for World of Warcraft http://us.blizzard.com/store/details.xml?rhtml=y&id=1100000763
While they cost nothing to manufacture you do still have to pay artists, developers, scriptwriters etc. to create them and to craft stories and games around them that make people want to buy them.
Speaking of virtual goods – you can now pay to go on a virtual playdate (from flirty to dirty!) http://gamecrush.presslift.com/gamecrush-spices-up-online-gaming-with-new-site
Apparently 10,000 signups in 10 minutes broke their server.
I don’t have a problem with virtual goods but I do have a problem with Zygna. They’ve done “every horrible thing in the book to, just to get revenues right away” and those are the words of the Zygna CEO, not paraphrased. Simple stuff like bundling malware toolbars with Zygna offers. Now, they’ve cleaned up their act a bit (http://techcrunch.com/2009/11/06/zynga-scamville-mark-pinkus-faceboo/) but they used the scams to get over the initial hump of success. They’d do it again needs be.
This isn’t business I want to learn from.
Sorry to harp on but here is some more good info on the less than savoury aspects to Zygna; http://www.designer-notes.com/?p=195
I think the point is to create a virtual goods market that doesn’t implode under scandal someday.
Aren’t Zynga widely reported to be locating some activities here? http://socialmedia.net/node/80
Zynga sure are an enterprising bunch but when you read the article below, you think that it’s not the first time it’s happened.
http://www.guardian.co.uk/money/2010/apr/07/farmville-user-debt-facebook
Blizzard made millions yesterday selling an in-game item which probably took only a few weeks to create: http://kotaku.com/5518416/world-of-warcraft-pet-sales-made-millions-for-blizzard-today (I bought two)
People were queing for up to 7 hours to buy a digital download – crazy or what?