Virtual Goods Booming in Asia (25X Bigger than American Market?)

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By Christopher Mack Comments

tencentWhile virtual goods-based business models are gaining popularity in Western countries, the market remains much larger in Asia. How much larger?

According to an update from +8* | Plus Eight Star, Asia’s total annual virtual goods economy might be worth more than $5 billion, which is 25 times larger than the recently estimated $200 million in the US.

Asia’s tremendous numbers are led by China. Pearl Research estimated that online gaming revenues in China hovers around $2.8 billion total, with 70 percent of that being generated through virtual goods. TenCent, Changyou, The9, Netease, Shanda, and Giant have earned more than $200 million, respectively, in revenue with gross margins of about 50%. TenCent specifically tallied $1 billion in revenue for 2008, with 90 percent coming from virtual goods. Nearly 300 million people are now online in China.

Numbers are comparatively smaller in Japan, according to the report, but two social networks from that country, Gree and Mobile Game Town, are posting revenues of $60 million and $250 million respectively, with 80 percent of their revenue stemming from virtual goods. Korean companies earned about $1 billion.

As a side note, the report also provided an interesting breakdown of the most popular online games’ peak concurrent users. These numbers are truly impressive:

  1. Netease’s Fantasy Westward Journey – 1.8 million
  2. Giant’s Zhengtu Online – 1.5 million
  3. TenCent’s Dungeon and Fighter – 1.2 million
  4. Blizzard’s World of Warcraft – 1 million