VGMarket and PlaySpan, released their 2010 Digital Goods Report on Wednesday. The report reveals consumer behavior patterns among existing customers of third-party and first-party online game marketplaces.

The median spent on digital goods in 2009 was:

• $50 per year for Social Networks
• $40 per year for MMOs
• $40 per year for Casual Games
• $40 per year for Free to Play Games
• $37 per year for PC Games with Online Play
• $20 per year for Console Games with Online Play

Other key points include:

• 32% of respondents made purchases within social networks
• Males are playing significantly more games and are the primary drivers of total digital goods sales
• North American women 25 and older are spending disproportionately large sums of money on digital goods
• The average female spent $55 dollars on Social Network games compared to $30 for males

New Magid Report Finds U.S. 2010 Market for Mobile Virtual Goods to be Estimated at $168M

BURLINGAME, CA & NEW YORK, NY – Jun 22, 2010 – Virtual goods purchased on smartphones are a new emerging market in the United States. Who is actually buying them and how much they’re spending, however, has not been completely understood. Today, Frank N. Magid Associates and mobile social gaming network OpenFeint are shedding some light on the subject by providing the first-ever estimate on how much Americans are currently spending on virtual goods.

According to the study, Magid Media Futures 2010 Wireless and Consumers, Americans spent $168 million on mobile virtual goods in the last year. Magid estimates that over 70 million Americans now own smartphones – that’s 23 percent of the population. With 45 percent of those smartphone owners playing mobile games and 16 percent of those spending an average of $41 per year on in-game virtual goods, the market has already exceeded $168 million.

“The market for virtual goods has already exploded in web-based games like Zynga’s Farmville, and we’re just now starting to see this trend in the mobile space,” said Steve Lin, VP Operations of Aurora Feint. “In just the last few months we’ve seen amazing interest from our game developers in building mobile social games with virtual goods. Our internal numbers reflect the study in that free-to-play models will be the dominant pricing structure in the future.”

With 55 percent of smartphone gamers interested in buying virtual goods, the market is poised for strong growth as more virtual goods-based games enter the market. The study also shed more light on who is likely to play games on smartphones. Compared to the general population, smartphone gamers skew male and are between 18 and 34 years of age.

Smartphone gamers are active consumers of multiple games, downloading 14 games on average per year. Of these games, recipients paid money for 4 games and obtained 10 for free meaning that consumer pay for mobile games at a 2:5 ratio vs. downloading free games. As expected, Americans are most likely to review application store rankings to find games, but are also likely to rely on word of mouth and the suggestions of their friends.

“Everybody knows free-to-play social gaming models on PC platforms have been making a killing but mobile virtual goods aren’t as well understood,” said Mike Vorhaus, President, Magid Advisors. “With almost 20 percent of smartphone gamers already making purchases, there’s a lot of room for the market to keep taking off as smartphones continue to increase in popularity.”

This is the first half of a two-part study that will be released this Summer.

For more information on the mobile virtual goods industry or Aurora Feint, please contact Ken Johnston at ken@vscconsulting.com. Aurora Feint partnered with Frank N. Magid Associates, Inc. www.magid.com to conduct and analyze the mobile virtual goods studies.

About Aurora Feint, Inc.
Aurora Feint, Inc.’s software development kit, OpenFeint, allows game publishers to implement services which enable mobile social gaming. With over 25 million registered users and a presence in over 2,000 games, OpenFeint is the first and largest social gaming platform for the iPhone. Aurora Feint is backed by DeNA Inc.

There’s a new eMarketer  report Social Gaming: Virtual Crops Yield Real Profits that talks about the size of the growing social games market. It’s estimated that in the U.S. that the market will be worth $2.183 Billion in 2012:

• Direct paying users generated $340 Million in 2009, which is estimated to grow to $1.191 Billion in 2012
• Offers generated $324 Million in 2009, which is estimated to grow to $868 Million in 2012
• Advertising to players of social games generated $62 Million in 2009, which is estimated to grow to $124 Million in 2012

comScore and Offerpal recently released the results of a study on social gamers:

According to the study:

• 53.3% of respondents reported they would be “very likely” to complete a marketing action such as filling out a survey, watching a video, shopping at online retailers or signing up for a subscription in order to get points for the games they play on leading social networks
• 22.8% of respondents reported they would be willing and are able to buy points using cash payment methods such as credit cards, PayPal, bank transfers or mobile billing.
• 29.7% of social gamers do not have the ability or the means to pay for virtual currency with cash options
• Among those who do have the ability and means to pay, 34.9%  are “very unlikely” to part with their money in order to purchase points
• 75% of consumers who viewed a video ad in exchange for virtual currency had never before completed any type of offer nor made a direct payment
• ~10% of those users went on to complete at least one or more transactions-often incremental cash purchases-in just the first week after watching a video
• Of users whose first “payment” of virtual currency was by earning it through Offerpal’s shopping rewards program, 21% went on to make a second transaction through the Offerpal system within one week
• Gamers in the 25-34 age range are most likely (70.9 % “very likely”) to be willing to earn virtual currency through marketing actions
• 54.5% of gamers report playing games online at least once a day
• 26.7% of gamers report playing games online several times a week
• 11.5% play about once a week
• 7.3% play two to three times a month

When asked what kinds of games they play on a regular basis:

• 58.4% of the respondents said they regularly play virtual world/simulation games
• 40.3% arcade games
• 33.5% role-playing games
• 29.7% action games
• 26.9% board games
• 25.6% card games
• 23.4% word games
• Of those who say they are “very likely” to buy points with a cash payment method, a majority of the users are men (53.4%) and a plurality in the 25-34 age range (42.8%)
• 85.4% of the users who say they are “very likely” to buy points with cash are also “very likely” to earn points through marketing actions

The study was conducted between February 12th and February 15th, 2010, and includes detailed responses from 799 comScore panelists. Respondents were filtered to only include users who play games on the leading social network at least once a month.

Women Are Gaming

A study from Q Interactive and Social Media World Forum of more than 2,000 women in November of 2009 found them actively engaging with brands as they partake in social media gaming. The report also states:

50% of U.S. women play online games according to Pew Internet

The online social-gaming market is expected to at least double from $720 million to over $1 billion by 2010 according to Think Equity

The study also establishes a picture of the typical woman engaged in social media games and applications:

• 85% of those surveyed use five or less games and/or apps regularly, indicating an inclination to be loyal to a handful of favorites; approximately 15% regularly invest in six or more games/apps at a time
• 57% are earning/spending virtual currency daily
• 74% got involved in a game or app due to a recommendation by family or friend or because they noticed a friend or family member’s score
• 95% utilize virtual currency primarily to gift and/or advance games
• In interacting with games and apps, 57% feel virtual gifting – for example, giving a bag of virtual makeup from Sephora – is as meaningful as real life gifting
• 97% of women prefer to earn virtual currency through either winning more or accepting a branded offer – versus paying for it with “real” money
• Only one in ten women have actually used “real” money to purchase virtual currency; of that, 85% have spent under $100 in their gaming and aping activities – ever
• Of women who have signed up for branded offers to get more virtual currency, 67% found the offer useful
• 37% of those women chose the branded offers based on “content”; 17% went for offers with free products or services

A follow up study in February, 2010  Q Interactive and Engage! Expo  revealed insight into the psychology of women who play social media games, the largest demographic of social media users. The study of over 700 women, about 54% of which play daily and 30% weekly, investigates a range of viewpoints around salient social media gaming topics. This is the company’s third recent proprietary research study from its “Women’s Channel.”

Of those surveyed, 42% consider themselves gamers and 7% deem themselves obsessed:

• For 67%, one to five hours per week is socially acceptable
• 26% feel six or more hours per week is socially acceptable.
• Nearly 45% of those surveyed have friends they consider obsessed with social media gaming.
• Approximately 16% of those surveyed hide or sometimes hide their gaming habits.

Over two-thirds of those surveyed believe there are stigmas associated with gaming. For those women, the leading stigmas are:

• Games are addictive (24%)
• Play makes you neglectful of other areas of your life (21%)
• Gaming is a waste of time (17%)
• Play at work is basically off limits: 93% of those surveyed share they primarily play at home versus work.

More than half of women surveyed, 54%, fear more games will make gamers pay in the future:

• If forced to pay, 77% would give up the game, while:
• 10% would prefer a monthly subscription or fee
• 10% would prefer a pay-as-I-go system
• 2% would prefer a separate payment scenario for each game played

Chris Sherman Founder of the Engage! Expo said, “…  moms and kids are both wired into social media gaming… however, mom… is actively supervising the time her kids play and what they spend”

• Overall kids (children under 18 years old) are connected: 16% of moms say their children have a smart phone.
• According to mom, 40% of kids are allowed to play daily, 37% weekly, and 10% monthly.
• Generally speaking, kids are banned from the wallet: 80% are not allowed to pay for social media gaming.

The February study is available here, and the November study is here.

Our friends over at VentureBeat have sent over a code that will save you $50 off of registration to the event. We were at last year’s GamesBeat and it was definitely worthwhile. I would recommend it to anyone looking at the business behind virtual worlds, online games, venture capital for game companies, or funding in general. It pulls a good mix of game industry/Silicon Valley.

GamesBeat@GDC 2010 will be held on March 10th in San Francisco and will feature the theme Disruption 2.0.  The one-day executive conference will explore the future of gaming and the effects of the iPhone, iPad, social media, digital distribution, and online gaming on the industry.  Leading speakers will include:

• Steve Perlman, CEO of On-live
• John Schappert, COO of EA
• Bryan Reynolds, Chief Designer of Zynga
• Klass Kersting, CEO of Gameforge
• Neil Young, CEO ngmoco
• Gareth Davis, Platform Manager of  FaceBook
• Bart Decrem, CEO Tapulous

An others. Join 400 other gaming industry leaders for a day of panels, keynote and networking. Register here to receive $50 off your GamesBeat@GDC registration using the following code:  GBEATSP.

Engage Digital Media compiled a list of venture capital investments in the Virtual Goods industry in 2009. The report details $1,380,822,000 invested in 87 virtual goods-related companies.

Dean Takahashi at GamesBeat has some data on virtual goods from a research study commissioned by PlaySpan today:

• 31% of the people who have bought virtual goods have also sold them.
• In-game virtual currency is the most frequently traded virtual good between players
• Sellers of virtual currency have earned a median of $22 in the past year
• 49% of social network gamers who have bought virtual goods also made a sale (median earning $50)
• 25% of virtual goods buyers also made a sale (median earning $98)
• 69% of buyers of virtual goods have not sold virtual goods, however 30% were interested in doing so
• Sellers had a median age of 21, an annual household income of $30K and 89% were male

Our friend Dean Takahashi over at VentureBeat wrote a story today about the virtual goods market, citing the Inside Social report on the industry.

• The U.S. virtual goods market is on target to exceed $1 billion in revenues in 2009
• This is more than double 2008 revenues
• In 2010, revenues are estimated to hit $1.6 billion