$580 Million Invested in 41 Virtual Goods-Related Businesses in 2008

by Sarah Hu on February 6, 2009

Trade media firm Show Initiative, LLC, via its www.VirtualGoodsNews.com blog, today released the VirtualGoodsNews.com 2008 Investment Report, announcing findings from a comprehensive study of publicly disclosed transactions which shows that venture capital and media firms have invested approximately $585 million in 41 companies that monetize and derive revenue at least in part through microtransactions, including sales of virtual goods, gifts and currency in 2008.

The report covers investment data for games, virtual worlds and web-based platforms that are confirmed as monetizing or intending to monetize, at least in part, though sales of virtual goods, gifts or currency. This is the first year in which Show Initiative has issued an investment report specific to the investment of microtransaction-based businesses. The report comes just prior to the Engage! Expo taking place March 10-11 in New York City. Engage will include a conference track dedicated to implementing virtual goods and gift solutions into online media properties.

“Nearly $275 million of the $580 million virtual goods investments in 2008 for went Chinese firms operating massively multiplayer online roll playing games (MMORPGs) along the Eastern free-to-play, microtransaction-oriented model,” Joey Seiler, Editor of VirtualGoodsNews.com. “This is not in any way unexpected, as the free-to-play model is well-established and has shown strong performance in Southeast Asian territories. Microtransaction-based businesses are growing worldwide at an explosive and sometimes unstable rate despite worldwide economic adversity.”

“It seems likely that growth for virtual goods businesses will continue throughout 2009,” said Christopher Sherman, President of Show Initiative and publisher of VirtualGoodsNews.com. “It is very likely that growth of virtual goods in 2009 is going to parallel a predicted downturn in advertising spending, and as such, the stability of a microtransaction-based revenue stream is likely to be attractive to potential investors.”

The report annotates whenever possible which microtransaction revenue streams individual companies are using as part of their business: Virtual Goods Sales, Virtual Currency Sales and Ad Offers Details. The amount invested, list of investors, revenue focus and more can be found online at http://www.virtualworldsmanagement.com/2008/vgoods2008.html .

VirtualGoodsNews.com 2008 Investment Report

Fast Facts:

$147.73 million invested in virtual goods-related businesses in Q1 2008
$101.7 million invested in virtual goods-related businesses in Q2 2008.
$266.54 million invested in virtual goods-related businesses in Q2 2008.
$69 million invested in virtual goods-related businesses in Q2 2008.

$580 Million Invested in 41 Virtual Goods-Related Businesses in 2008

Top Three 2008 Investments:

1  Chinese firm Shanda Online received $175 million
2. Chinese firm 9you received $100 million.
3. $40 million went to American MMORPG publisher Turbine, which is just now getting starting to implement microtransactions.

Report Highlights:

* Nearly $275 million of the 2008 grand total for virtual goods investments went to Chinese firms operating MMORPGs along the Eastern free-to-play, microtransaction-oriented model.

* MMORPGs received the lion?s share of this year?s virtual goods-related investments, with nine companies receiving a total of $383.6 million.

* $83.2 million in venture capital was invested in companies developing social games

* $35.3 million went to third-party payment providers that help users spend on virtual goods across a variety of platforms

* $55.67 million went to youth-oriented virtual worlds like Gaia Online that monetize through sales of virtual goods

* 34 businesses covered by the report encouraged users to spend real money in order to obtain virtual currency for use in the game.

* 30 businesses covered by the report encourage users to purchase virtual goods from an official store

All of Show Initiative’s market research focusing on virtual goods and virtual worlds can be found at http://www.virtualworldsmanagement.com/research/

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