The Free Zone: Virtual Goods Sales 2009 and ChinaJoy 2010

US lagging behind UK in virtual goods uptake

A few days ago, I saw some rather interesting information on virtual goods sales in the United Kingdom last year. According to a report of apparently unknown origin that was published by Asian News International, the market size in 2009 topped 500 million pounds, which is around $800 million US. What's especially intriguing is that the US, with roughly five times the population, totaled only about $1 billion.

On a per capita basis, this means the average UK resident spent about four times as much on virtual goods as his or her American counterpart. What's missing in terms of a more complete picture is data as to what proportion of the respective populations bought anything at all. I'd also be very curious to know how they stack up beside purchasers in China and Korea. Unfortunately, I've yet to find data that would enable making such comparisons with a decent level of confidence.

I was quite surprised to see that Zynga's social game, FarmVille, apparently led the way by racking up sales of more than $145 million. Naturally, I'm curious to know what the figure was on this side of the Atlantic. Unfortunately, no other game-specific numbers were stated.

In unrelated news, Zynga and some 300,000 members of its game communities managed to raise over $1.5 million for Haiti relief through the creation, sale and purchase of various special limited edition items. And all of this in less than a week. Kudos to one and all.

Over $1.38 billion invested in virtual goods companies

According to the 2009 Virtual Goods Investment Report compiled by VirtualGoodsNews.com, investors put just over $1.38 into virtual goods-related companies, approximately tripling the total in 2008. Although impressive, the figure is still understated, perhaps by quite a bit. This is because 29 of the transactions were private, which meant the dollar amounts involved weren't disclosed.

Of 87 deals, up from 34 the previous year, the largest was EA's purchase of a social game company, Playfish, for $300 million. The aforementioned Zynga wasn't left out in the cold either; it took in a $180 million investment, then another for $15 million. Among the others that received investments last year, some of the more recognizable names include Second Life creator Linden Lab (an undisclosed amount), F2P publisher Outspark ($8.3 million), Turbine (6.6 million), Nival Network ($5 million), leading Russian F2P publisher and developer Astrum Nival (acquired for an undisclosed amount), and GoPets (acquired by Zynga for an undisclosed amount).

Overall, the biggest player in the space wasn't EA, but rather Russian-based Digital Sky Technologies. It was the source of Zynga's $180 million and also invested $200 million in the main platform for many of its games, Facebook. The company was also a seller in 2009; it was the largest shareholder in Astrum Nival, now part of Mail.Ru, which is controlled by a South African media conglomerate, Naspers.

ChinaJoy 2010: a mixed outlook

Due to the economic climate, the past couple of years haven't been particularly good ones for the leading US game industry trade shows. So, it's rather interesting that the organizers of ChinaJoy have announced new initiatives for their upcoming 2010 version, which will take place in Shanghai in July. Encompassing both trade and consumers, the event is already pretty substantial; the announced attendance figure for 2009 was 150,000, with almost 200 exhibitors and thousands of media.

On the trade side, last year's introduction of the China Game Business Conference was apparently successful. Accordingly, there will be five new forum tracks. One of these is a summit that is presumably aimed at high-level executives, while the others will focus on investment and financing, web games, SNS and social games, and mobile.

At the same time, it seems something of a cloud has formed over ChinaJoy. As of last fall, its organizers, Howell International Trade Fair Ltd. and the China Game Publishers Association, are apparently embroiled in a legal dispute with United Business Media LLC, the parent of Think Services, which operates the Game Developers Conferences in San Francisco and Austin, and is also active in other markets, including Europe, Canada and China. What impact this will have on ChinaJoy, CGBC or the Howell-run China Game Developers Conference that takes place concurrently remains to be seen. ChinaJoy has yet to garner much media or gamer attention in the west, and I tend to doubt this will change more than a little in 2010. However, I'll certainly be watching for further news over the coming months to help stay aware of what's happening in the entire global MMOG space.