The Hot New Business Of Virtual Goods

As we’ve noted frequently over the past couple of months, virtual goods sales in the US are finally starting to take off. 

This has been a big business in Asia for years, and we see no reason why it won’t soon be an even bigger one here.  It’s also an extremely profitable business, with margins near 90%.

And don’t laugh at all the fools buying imaginary stuff until you understand why they’re doing it.

One of our favourite examples?  FooPets.  Click on our friend “Bengal” here and see if you don’t see the appeal of having a virtual cat.  And then ask yourself whether, once you’ve adopted him, you really want to starve him to death by not buying virtual food.

The NYT provides a quick overview of the business today.  And we’ve added another couple of interesting links below.

Claire Cain Miller and Brad Stone, NYT: Analysts estimate that virtual goods could bring in a billion dollars in the United States and around $5 billion worldwide this year — all for things that, aside from perhaps a few hours of work by an artist and a programmer, cost nothing to produce.

“It’s a fantastic business,” said Jeremy Liew of Lightspeed Venture Partners, a venture capital firm that has invested $10 million in several virtual goods companies. “Because it’s digital, the marginal cost for every one you sell is zero, so you have 100 per cent margins.”

Read the whole thing >

See Also:
Casual Gaming Is A Spectacular Business, With Margins Near 90%
US Virtual Goods Revenue Ready To Explode

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