Buying Nothing For Something? Not Likely

Everybody’s heard of FarmVille by now, whether you play it or not.  But did you know that Zynga, the company that makes it, is making money off of it even though it’s a free-to-play game?  No, they’re not selling advertising space any more than any other social media based game.  What they are doing is selling virtual goods in game to people who want to get an edge on how they’re progressing in it.

It’s similar to how you can buy all kinds of avatar items for Xbox Live, and it’s a simple principle.  You have a game or something similar on a computer (or gaming console) and you give a company money in exchange for some addition to your account that’s intangible outside of the context in which it’s being offered.  What you buy might be something to let you build things faster, heal from injury, or just provide a new look to a character you control.

Some people might get up in arms over it, saying how it’s ripping people off, but there’s really nothing wrong with it.  Sure, you aren’t getting anything but a few bits of data and a pretty arrangement of pixels, but what are you really getting when you buy a video game?  You get a disc or a cartridge (depending on what exactly you buy), but what you’re buying is the data on the disc more than the hardware.  The same thing’s true with a book – you have the paper it’s on in hand, but what you wanted is the stuff you’re reading.

At first, I considered it something of a rip off myself, because a lot of the games that are profitable markets for virtual goods are downright boring if you don’t spend the money on them.  But then I remembered that a lot of people find the games I love to be equally boring.  And that I opted for one of the Halo: Reach pre-buys specifically because it would give me access to armor components that would only be available through the pre-order process – virtual goods as much as that can of Energy-Zow in some of the games you can play through Facebook.

Aside from the fact of how prevalent it’s becoming as an online market, it’s also an appreciable part of social media.  No matter whether you play through Facebook or Xbox live, the forum that these games provide for players to connect with each other is every bit as real and employed as the larger systems through which they’re accessed.  Even more notably, a lot of the major social media centers like Facebook are also getting in on the act:  they have their own “credit” system where you can use the points you buy through them in any number of different apps.

The amazing thing, though, is how profitable it can be.  According to Zynga, less than 3% of its players ever buy anything from them, but that the money it does bring in through the purchase of virtual goods make up the bulk of its profitability – people are buying those digital goods in bulk quantities.  That’s something to think about the next time your FarmVille cows need to be fed:  keeping your online game functional and up to date does actually take work, and someone’s paying for it by buying virtual barns and other things so they can play more.

This is becoming a major part of business these days because of how fluidly it’s been integrated with social media.  I honestly wouldn’t be surprised if someone finds a way to use virtual goods to market their real products at some point, effectively completing the circle of its use in the digital world.  Lately, advertising has been a noticeable part of a lot of games (especially Madden football), so finding a way to make it proactive and effective may well become a part of what makes social media an effective place to promote one’s business.

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