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Virtual goods networks could rival ads

October 10, 2008 11:06pm
by Chris Nuttall

Virtual goodsIf online advertising is under pressure, perhaps branding virtual goods can help make up a greater proportion of revenues.

At least that is one idea being propounded at the Virtual Goods Summit in San Francisco today.

Viximo, a conference sponsor which emerged from stealth mode this week, sees itself as providing a virtual goods network in the same way that online ad networks distribute and place ads.

Its strategy is to create a community of virtual-goods developers to supplement its in-house digital items and share revenues with the creators.

For publishers, such as social networks, Viximo will provide a complete solution - a storefront, goods and payment processing.

For brands, it will leverage the sites it has signed up to create a network for them to place their branded goods most effectively.

But is there a big enough demand for virtual goods and are there enough sites in need of them for the Boston-based start-up to build a sustainable business.

Rob Frasca, chief executive, quoted me statistics on Facebook making $35m a year on members sending virtual gifts back and forth. Gaia Online and IMVU were selling $1m a month of virtual goods from puppy dogs to lightning bolts, he said.

Beyond Facebook and MySpace, there are several thousand social networks for Viximo to target, according to Frasca. In fact, anywhere where there is social interaction - gaming and dating sites, email and chat clients - virtual goods can be exchanged. Different platforms can also be explored, with Viximo expanding onto the iPhone soon.

Virtual goods are seen as having more impact than ads on “Millennials” - the 13-26 age group who largely populate social networking sites and will respond more to receiving Godiva chocolates or Nike Air shoes, even if they are not the real thing.

The summit was told that virtual goods are becoming a $1.5bn market. That’s real money in anyone’s world.

October 10, 2008 11:06pm in Digital media, Games, Internet, Mobile | Comment

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