Measuring the sales of virtual goods
Virtual goods may be the savior of online gaming, but understanding the metrics and measurements will be key to consistent revenue streams.
New data from PlaySpan, a provider of payment and monetization solutions for online games and virtual worlds, shows that digital and virtual goods purchases are going global, and that revenues can be tracked to better ascertain the size of the market.
It's estimated that virtual goods will generate $1.6 billion in the U.S. in 2010. Some predict that sales of digital goods will account for 20 percent of gaming revenue by 2011.
As part of analyzing which players and geographies drive the most revenue, PlaySpan has settled on a metric of average revenue per paying user (ARPPU), similar to how mobile phone companies measure customer value.
According to the data, Australian gamers generate the highest ARPPU at $24.38. United States gamers place a close second with an ARPPU of $22.76. The Netherlands rounds out the top three with an ARPPU of $22.03. Of the top 20 countries, Chile places last with at $2.43.
Despite its reach, PlaySpan doesn't appear to have much presence in Asia, which definitely skews these statistics. Both China and South Korea have robust virtual goods economies, with Chinese companies poised to generate more than $5 billion in revenue by 2012. Odds are we'd see both countries dramatically beating out the U.S. and Germany in terms of both revenue and number of customers.
The Top 5 countries by revenue percentage:
- United States - 42 percent
- Germany - 23 percent
- Italy - 4 percent
- Canada - 4 percent
- Portugal - 3 percent
The Top 5 countries by customer percentage:
- Germany - 29 percent
- United States - 22 percent
- Italy - 9 percent
- Brazil - 4 percent
- Spain - 4 percent
Virtual goods continue to generate significant revenue streams. Standard metrics and analytics need to be applied in order for companies like PlaySpan and Zynga to accurately predict revenues--especially if they intend to eventually go public.