Why do users spend virtual currency or real cash to buy virtual goods in social networks? How can you generate virtual goods revenue in your social network?
Yesterday, my niece Jennifer offered mea “banana tree” in the online game Farmville, played on Facebook. This tree is a virtual good. She also asked me to give her a virtual gift in return. Now why would I do this, I ask myself?
If I accept her offer of the banana tree, Farmville also wants access to my profile and friends, presumably to share this breaking news with my friends.
This post is the second in a four-part series on virtual currency and virtual goods. See also an earlier post on definitions, of and revenue potential from, virtual money and virtual goods. And check also those on virtual goods business models and examples of social networks using virtual goods and virtual currencies.
Motivations To Purchase Virtual Goods
In his excellent video on the topic, Tom Hale of Second Life describes three primary motivations:
Self Expression. Virtual goods like clothing or avatars allow the user to customize and personalize his or her online profile.
Increased Capability. In the gaming world, purchase of additional “objects” such as a sword give the user increased powers in the game.
Further Relationships. Gifts like Jennifer’s banana tree and other stylized messages to friends are used to deepen and enhance relationships. In The Future of Social Media Monetization, Ro Choy explains that social interaction is behind many such successful games: “It’s no surprise that many of the top social games have been specific genres (farming, restaurants, community chat) that focus on nurturing and growing a product or business through social interactions with friends…”
The dating site HotOrNot.com is another example of how virtual goods can be used to further relationships. Admirers can sent a women virtual flowers (flower stickers for her profile) as a gift, such as the roses Renate received, below. These reportedly cost from $2 to $10.
Susan Wu has another take on virtual goods in Virtual Goods: The Next Big Business Model. She claims that they aren’t goods, but services; that these create real value for users; and that the cost of buying them is cheaper than earning them. (Some sites offer users the option to fill out surveys, watch ads, or subscribe to earn virtual currency with which to buy virtual goods.)
I have not yet accepted the banana tree from Jennifer in return for giving the game application access to my friends. I decided to write this series of posts to learn more before I wrap up my virtual Christmas gift for her.
Would You Pay For a Virtual Good?
Please leave me a comment and tell me if you would buy your niece a virtual good. How about for Renate?