While last week’s Virtual Goods Summit in San Francisco had a wide range of facts, figures, details, and knowledge shared, the standout from this conference was +8 CEO Benjamin Joffe’s presentation on the Asian virtual goods market, and how it’s achieved a massive $7 billion valuation.
According to Joffe’s research, the nine largest publically traded online gaming companies have a valuation of $52 million. Conversely, the top four North American and European companies in the same group come in $30 million less, at $22 million.
Not only looking at just the numbers, Joffe went on to put a bit of history and development behind the figured. As duly noted, the virtual goods market and business model had it’s beginnings in Asia, primarily as a way to ward off game piracy. Recognizing the potential in the market, South Korea’s Nexon was one of the very first on the scene with virtual goods sales. 92 million registered users later, Nexon’s MapleStory is still generating revenues through virtual goods sales. Just a bit further to the north China’s Tencent is looking at $1.5 – $2 billion in sales from it’s popular QQ chat service which features a heavy online gaming influence. The bulk of these revenues are derived from virtual goods sales. According to Joffe, China’s total market could top $5 billion in revenue this year alone. Likewise, the lesser heard of Japanese virtual goods market shouldn’t be underestimated. Raking in over $1 billion a year, Japan’s top three social networks monetize manly through mobile games and their associated services. Perhaps one of the more extreme examples in the Japanese virtual goods marketplace, due to their rarity, Joffe reports that some virtual items have a real world market value of over $1,000, however, again, this is in extremely rare cases.
Joffe’s 127 slide powerpoint presentation from the Virtual Goods Summit:
