Last week I attended the First Virtual Goods Summit at Stanford University, organized by CRV's Susan Wu and Charles Hudson
and reported about it here. On the panel "Are virtual goods the next big business model?" I realized that I this really might be the case.
Accel's, Kevin Efrussy who invested in Facebook, got a lot of question about Facebook's introduction of virtual gifts. Kevin said that if he who is a pretty boring non-cool person with pictures of his kids on his profile got gifts that people have paid $ for - then imagine what people (read attractive girls) who are cool & in receives!
Susan Wu also reported that prior to the panel she got a virtual pizza thrown in here face by somebody she didn't even knew. And this person paid for that. How weird is that? Although virtual goods is extremely popular in Asia and a huge revenue generator the uptake in the US and Europe has been very slow. Enter Facbook. Min Kim from Nexon, added that Facebooks introduction of virtual goods is paving the way for a general acceptance of virtual goods outside of China, and in particular in the US. Judging from the popularity of virtual goods on Facebook - he just might be right.
But why on earth are people buying bikini's to their girlfriends avatar or virtual flowers that dies after two weeks?
According to Doppelganger's Tim Steven, its a real expression of affection, identity and emotion. People really feel just as proud wearing a pair of branded jeans in a virtual world as in real life walking across the school yard. It's the expression of the same thing. Moderating the panel Susan Wu, clearly stated that she would invest in a company selling virtual goods on Facebook! We have just got used to all the applications being launched on Facebook by companies hoping to gain distribution like a Trojan horse, now be prepared for the same companies getting ready to sell virtual bikinis, pizzas and why on iPhones to make some money too.
So are virtual goods the next big business model? Probably. If Habbo hotel make 90% of their revenues on virtual goods, they sell more furniture than IKEA and girls in Korea spends more money on their virtual haircut than on their real - there must be something in it...