It’s not a surprise that “virtual goods” are big business. They’re generally cheap to produce, have high margins and are simple to purchase. The most recent data indicates that the virtual goods market will be roughly $1.5 billion this year. Most of that market is made up of social games like Poker Rovals, Mafia Wars and the like. The whole Farmville craze was the tipping point or lightening rod that really demonstrated to society at large, people have no problem paying for something that they only virtually own.
The other day I was meandering through a Target in Omaha, NE and was shocked to see this massive display when I first walked through the door:
Granted, the idea of giftcards isn’t new. Target and other retailers have been selling iTunes giftcards for years. However, seeing a retailer selling “real” giftcards that simply redeem virtual dollars (I know Facebook calls it points) that are then used to purchase virtual goods, was a first for me. While it surprised me, it really shouldn’t have. For years, I’ve been beating the drum that etailers and web based companies needed to leverage existing retail space and point of sale to grow. As big as Facebook is, as big as Farmville is and as big as the Microsoft XBOX Live market is, they need traditional channels to grow and flourish. It’s the reason the folks at Zynga, makers of Farmville, secured a retail partnership with 7-11.
Just like we saw in the post dot-com bubble burst, people still want to touch, feel and experience products before they buy them. Yes, E-Toys, I’m talking to you. We’re going to see more examples of companies figuring out how to leverage traditional retail channels to fuel the growth of their virtual goods marketplaces. Have you seen any other examples of virtual and real worlds blurring?