Virtual Items Remain Key Revenue Source for Social Games, But Ads Are Gaining

It is always incredible to see a breakdown of the numbers supporting virtual items, but this recent report featured on paidContent.org shows the incredible business model it has become.  I won’t rehash all the numbers here, but there are a few worth mentioning:

Last year, social gaming revenues were about $856 million. It’s predicted to top $1.3 billion by 2012. In terms of the shifting share, virtual goods will barely move, retaining a nearly 60 percent share of the social gaming revenue pie with $792 million next year. Advertising will grow from a 14.1 percent share of the market with $120 million spent in 2010, to 20.5 percent share with $271 million in 2012.

Not too shabby considering that right now, total U.S. online advertising spending is around $25 billion.  While it is important that social games and other platforms find viable revenue models, it is important to keep their customers in mind.  Most designers would likely be thrilled to get any kind of ad support to boost their bottom line, but there are plenty of shady advertisers out there.  Don’t know what I mean?  Maybe talk about Facebook’s current third largest advertiser being a scammer will raise some eyebrows.  Others might need to be concerned with making sure the ads, which usually can’t be as tightly controlled as virtual items that the provider’s programmers create in-house, don’t offend users or install spyware!

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About Justin Kwong

An attorney in the Twin Cities and adjunct professor at William Mitchell College of Law where I teach a seminar on the law of virtual worlds.
This entry was posted in Virtual Currency, Virtual Items / Virtual Goods, Virtual Stuff..., Virtual Worlds and tagged , , , , , , . Bookmark the permalink.

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