Viximo and Virtual Greats today issued the first major industry report on branded virtual goods, calling for this segment of the market to be worth $150 million by 2013, an annual growth rate of 113%. The report estimates the value of the current branded virtual goods market at $16 million, about 2.5% of the total market. The report expects that market to grow at a faster rate than the general virtual goods market and comprise 5% of the total market by 2015.
The report also forecasts that in five years, 1 out of every 25 virtual goods sold will be branded. The report says this growth will be driven by the entry of more "super brands" like Disney, Nike, and the NBA into the branded goods market as well as growth in location-based social games like Gowalla, Foursquare, and MyTown. The report concedes that not all social games will be suitable contexts in which to sell branded virtual goods.
The report defines a branded virtual good as some virtual good that "displays an insignia, copyright protected mark, logo or derivative image of a known brand, and by virtue of being 'branded,' command[s] a higher social and monetary value among end users." The difference between branded and generic virtual goods is described as analogous to the difference between branded and generic products in the real world, with brand items typically selling more units for higher prices.
Brands are defined in the report as including popular consumer brands as well as the images of celebrities, sports teams, colleges, movies, and television shows. The brand creates a point of differentiation in a consumer's mind, creating an opportunity for monetization that does not exist in generic goods. The report goes on to examine several case studies involving sales of virtual goods that used a particular brand.
Branded Virtual Sales
The most detailed case study looks at the Snopp Dogg line of branded virtual goods available in WeeWorld, Zwinky, Gaia Online, and through Viximo's social network partners. The branded virtual goods are compared to Snoop Dogg's numerous brand endorsements in the real world, for products as diverse as cognac, sportswear, youth football, and GPS navigation skins. Through sales of these branded virtual goods, Snoop Dogg has earned nearly $250,000.
WeeWorld reports that unit sales of Snoop Dogg goods are 2.5 times than sales of analogous generic goods. Sales of the Snoop Double Doggs virtual pet are five times higher than sales of the highest-selling generic WeeWorld virtual pet. All Snoop Dogg items in WeeWorld are "vanity" items that do not give buyers any special in-game functionality. It is Snoop Dogg's likeness and brand images alone that drive sales of these goods.
The report goes on to find that context is extremely important to branded virtual goods sales. In more immersive environments, branded virtual goods convert at a rate that's much higher than in less detailed environments. So in an MMO game featuring involving gameplay and 3D graphics, branded goods will convert at a rate that's much higher than what might be observed in a simple text RPG. This leads to the report identifying MMOs, graphically rich social games, and virtual worlds as the best contexts for selling branded virtual goods.
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