Virtual Goods Summit 2009: Keeping Up with the Joneses in a Virtual World

vgsummit09logo1The success of a virtual goods market relies greatly on people’s insecurities and capitalizes on an individual’s desire to be distinguished in a vast virtual world. Nobody wants to feel inferior or lost among a crowd, including in the online realm.  VGS 2009 had a stellar turnout as social media professionals and enthusiasts flocked to San Francisco to learn from the experts in the emerging industry. Guest speakers shared their insights on the virtual goods marketplace and tried to pinpoint what exactly compels users to purchase. Virtual goods flourish in the context of games or online spaces that allow for social comparison and, well, let’s be honest–bragging rights.

Consumers are attempting to be the best on their virtual block by gaining status or recognition from other users. Brian Balfour, Co-founder and VP of Product Marketing at Viximo, noted that the context of the game is especially important. He explained that winning, status, and socializing are three important motivators for buying virtual goods. This is why virtual goods can be successful on dating sites. Suitors try to woo their crushes and send virtual flowers or other quirky gifts to flirt with potential mates and stand out from the competition.

Lee Clancy, of IMVU, also agreed that “community is key.” IMVU is an avatar-based online social network that offers over 3 million virtual items and where $175k worth of virtual items are purchased daily. The success of virtual goods relies heavily on the social context in which goods are sold. IMVU allows users to design their own products and so they have become an integral part of the user experience. Users can customize their products or design original creations. Since users are constantly interacting and socializing, there is incentive to distinguish oneself. The IMVU virtual economy is thriving as users become more engaged and continuously innovate, hoping to gain attention or respect within the community.

blog post VGS picWithin a social context, scarcity of goods also drives users to purchase virtual goods. Bill Grosso, from Live Gamer, noted that virtual goods offer potential for great profit because there is complete control over how many items they release into the market. He explained that rare items become especially valuable in a social setting. Farmville, the phenomenally popular Facebook game, released a hot air balloon for 10 coins for a limited amount of time this past September. Fans that snagged the balloon can now smile smugly when new farmer friends ask how they got the balloon and explain, “it’s no longer available.” Due to its scarcity, the balloon has become a precious item. The balloon serves no real purpose—it’s just for fun. However, without other farmers to admire the prized possession, it loses its entertainment value.

When building a game that offers virtual goods, it is crucial to take into account the user experience and social context of the game. All the VGS speakers seemed to agree that engaging users is essential before attempting to monetize a virtual goods economy. Players need to be hooked into the community. Once engaged, however, users may be driven to buy new items to establish their rank on the virtual social ladder and to “keep up with the Joneses.”