Announcing Inside Virtual Goods: Tracking the US Virtual Goods Market 2010 – 2011

With an up-to-$750 million acquisition of Playdom by Disney, an up-to-$400 million acquisition of Playfish by Electronic Arts, the acquisition of Tapulous by Disney, and hundreds of millions of dollars in venture investments, virtual goods are impacting businesses across the media landscape. Virtual goods, and the companies that create them, may be bringing the largest disruption entertainment, communication, and e-commerce infrastructure businesses have seen in years.

Inside Network is proud to announce a new original research report by Justin Smith and Charles Hudson that presents a comprehensive examination of the size and future of the virtual goods market in the United States, entitled Inside Virtual Goods: The US Virtual Goods Market 2010 – 2011. This is Inside Network’s second annual edition of the US Virtual Good Market report. It will be released on September 28, but is available for discount pre-order now.

Where will the virtual goods market go in 2011 and what are the biggest opportunities left unclaimed? How will existing players fare as Facebook continues to reshape the social gaming landscape, and larger and more sophisticated players enter the market? Inside Virtual Goods: The US Virtual Goods Market 2010 – 2011 provides deeper insight into monetization, development, and the key questions facing the space in 2011 than you’ll find anywhere else.

Get the Annual Membership
Get Annual Membership (Includes Report + 3 Additional Quarterly Issues): $2,495 $1,995 USD*
OR Buy Single Report: $995 $795 USD*
* Pre-order discount ends September 27, 2010. All pre-ordered reports will be delivered on September 28, 2010.

About the Report

Inside Virtual Goods is a new report researched and created specifically for entrepreneurs, investors, and analysts interested in the growth of this exciting new category of online commerce that is fueling the growth of games-as-a-service businesses. During a research phase spanning the last few months, co-authors Justin Smith and Charles Hudson have spoken with dozens of executives and entrepreneurs from all parts of the ecosystem in order to form what we believe are the most detailed estimates, analyses, and predictions for 2010 and 2011.

We focused and organized the report around the following areas:

  1. Social Networks, Applications, and Games – The explosion of the virtual goods market on social networks is one of the biggest stories of 2010. We delve deeply into the trends, stats, key players, opportunities, and challenges facing the space this year and next.
  2. Mobile Applications and Games – Mobile application developers that have been early adopters of the free-to-play model are now seeing significant growth in 2010. Our study breaks down the key opportunities and challenges facing this emerging space going into 2011.
  3. Casual MMOs and Virtual Worlds – Virtual worlds and casual MMOs continue to grow as a meaningful share of the virtual goods opportunity in the United States. Our study breaks down the key drivers for success in this segment, trends in monetization and engagement, and the prospects for the future.
  4. Hardcore MMOs and Free-to-Play Online Games – Developers in the MMO / MMORPG space have been among the earliest adopters of the free-to-play model. We explore why free-to-play MMOs are succeeding, revenue and user trends, and the key issues facing this space as we head into 2011.
  5. Emerging Areas: Console Games and Subscription MMOs – As the virtual goods business model becomes more well understood, it is beginning to show up in new and interesting areas of the games and entertainment landscape. We highlight a few of the more promising areas where virtual goods are emerging as a promising opportunity.

Each section contains:

  1. A brief history on the evolution and growth of this space in the US, including a description of key players.
  2. Estimates on the size of the US virtual goods market in 2010 in that area.
  3. A diagnosis of the key opportunities and issues facing the growth of that space, including our outlook and projections for 2011.

In addition, prior to delving more deeply into each market segment, we’ve provided an overview of the emerging payments ecosystem that is growing to serve these new businesses. Traditional e-commerce infrastructure providers only offer a partial solution, and the virtual goods payments layer is currently in a major state of flux. In the report, we describe the variety of solutions that have been brought to market to date, and the key challenges facing the industry from a payments perspective as a whole.

For more details, check out the full table of contents below.

The annual membership, which includes the report and three additional quarterly updates, is USD $2,495. Alternatively, you can obtain just this report for USD $995.

The annual subscription brings you a total of four comprehensive reports comprising months of original research. Recent reports have covered:

  1. The Future of Social Gaming. Social games make up over half of the US virtual goods market. This report provided detailed coverage of exactly how this industry has managed to thrive, who its most valuable players are, and deeper insight into monetization, development, and customer acquisition than you’ll find anywhere else..
  2. The Spending and Usage Patterns of the Social Gaming Audience. Who are the millions of users whose time, money, and engagement have made social games into household names and their developers into technology industry celebrities? This report presented the only independent, original research into user profiles, behaviors, and attitudes toward social games and virtual goods.

Although the report will not be released until Tuesday, September 28, we are offering a special pre-order discount for those who purchase now. The pre-order price of US $795 for this report or US $1,995 for a one-year subscription is now available until September 27.

We are looking forward to continuing to cover the evolution of the space over the coming year. We look forward to hearing from you!

Table of Contents

1. Introduction

  • How We Got Here: A Brief History of Virtual Goods Worldwide
  • Defining Terms
    • Registered users
    • Active users
    • Average revenue per user (ARPU)
    • Average revenue per paying user (ARPPU)
    • How do different developers manage their businesses?
  • Growing Virtual Goods Markets in the US
    • Social Networks, Applications, and Games
    • Casual MMOs and Virtual Worlds
    • Hardcore MMOs and Free to Play Games
    • Mobile Applications and Games
    • Emerging Areas: Consoles, Subscription MMOs
  • Methodology

2. The Virtual Goods Payments Ecosystem: An Overview

  • Large Payment Platforms
  • Mobile Payment Providers
  • Offer Providers
  • Direct Payments vs Offers
  • Pre-paid Cards
  • The Arrival of Facebook Credits
  • New Payment Providers
  • Managing Fraud
  • Related Companies

3. Social Networks, Applications, and Games

  • Introduction
    • The Global Rise of Facebook
    • The Virtual Currency Payment Ecosystem Explosion – and Migration to Facebook Credits
    • Increased Optimization for Virtual Goods
  • Social Networking Platforms Today
    • Facebook
    • MySpace
    • Twitter
    • Google
    • Others
  • Significant Changes to Facebook Platform Dynamics in 2010
    • Distribution & Engagement
    • Monetization
  • Social Application and Game Genres: How Do They Perform?
    • Role Playing Games and “Hardcore” Mini-MMOs
    • Simulation and City Building Games
    • Pet Games
    • Poker Games
    • Gifting Apps
    • Arcade Games
  • Who’s Buying Virtual Goods?
    • Gender Breakdown
    • Age Breakdown
    • Geographic Breakdown
  • How Are They Spending Money?
    • Item Type Breakdown
    • Payment Method Breakdown
  • Market Size Estimate
    • Total Number of Monthly Paying Users
    • Total ARPPU Per Month
    • Total US Virtual Goods Revenues from Social Networks in 2010
    • A Quick Look at Revenues for Top Social Game Developers
  • 2011 Outlook
    • Growth Rate
    • Major Risks that Could Hamper Growth
  • Leading Companies

4. Casual MMOs and Virtual Worlds

  • Introduction
  • Demographic Breakdown
    • Gender
    • Age
  • Payments
  • Analyzing the Market Opportunity
    • ARPU
    • ARPPU
    • Market Size Estimate
  • 2011 Outlook
    • Growth Rate
    • Key Challenges
  • Leading Companies

5. Free to Play MMOs / Hardcore Games

  • Introduction
    • History of free to play MMOs
    • Emergence of the free to play MMO market opportunity in the US
    • Major genres for free-to-play MMOs and hardcore games
  • Analyzing the Market Opportunity
    • Total Player Base
    • ARPU
    • ARPPU
    • Payment methods
  • 2011 Outlook
  • Leading Companies

6. Mobile Applications and Games

  • Introduction
    • History of virtual goods model in US
    • Major genres for free-to-play iPhone apps and games
  • Analyzing the Market Opportunity
    • Total Player Base
    • ARPU
    • ARPPU
    • Payment methods
  • 2011 Outlook
  • Leading Companies

7. Emerging Areas

  • Console Games
  • Subscription MMOs

8. Conclusion

  • Overview: 2010 Market Estimates
  • Looking Ahead: 2011

9. Appendix: Company Index

About the Authors

charles-hudson-headshotCharles Hudson

Former VP Business Development, Serious Business & Host, Virtual Goods Summit

Charles Hudson is the former VP of Business Development for Serious Business, a leading social games developer on the Facebook platform. In addition to his work at Serious Business, Charles Hudson organizes two of the leading conferences in the social gaming and free-to-play games industries, the Social Gaming Summit and Virtual Goods Summit.

Prior to Serious Business, he was formerly the Sr. Director for Business Development at Gaia Interactive, a leading online hangout for teens. Prior to Gaia, Charles worked in New Business Development at Google and focused on new partnership opportunities for early-stage products in the advertising, mobile, and e-commerce markets. Prior to joining Google, he was a Product Manager for IronPort Systems, a leading provider of anti-spam hardware appliances that was acquired by Cisco Systems for $830 million in 2007. Charles holds an MBA and BA from Stanford University.

justin-smith-headshotJustin Smith

Founder, Inside Network

Justin Smith is the founder of Inside Network, the first company dedicated to providing news and market research to the Facebook platform and social gaming ecosystem. Justin leads Inside Network’s Inside Virtual Goods and AppData research and data services, and serves as co-editor of Inside Facebook and Inside Social Games.

Prior to Inside Network, he was formerly Head of Product at Watercooler, one of the leading application and game developers on the Facebook Platform. Prior to Watercooler, Justin was an early employee at Xfire, the largest social utility for gamers, which was sold to Viacom in 2006. Justin holds a degree in Computer Systems Engineering from Stanford University.

Get the Annual Membership

The annual membership, which includes the report and three additional quarterly updates, is USD $2,495. Alternatively, you can just download this report for USD $995. Although the report will not be released until Tuesday, September 28, we are offering a special pre-order discount for those who purchase now. The pre-order price of US $795 for this report or US $1,995 for a one-year subscription is now available until September 27.

Get Annual Membership (Includes Report + 3 Additional Quarterly Issues): $2,495 $1,995 USD*
OR Buy Single Report: $995 $795 USD*

* Pre-order discount ends September 27, 2010. All pre-ordered reports will be delivered on September 28, 2010.