ADOTAS – In my first week heading up Adotas, I was dumbfounded when I read an InsideFacebook report suggesting that sales of virtual goods would top $1 billion in 2009. The naive Gavin of yesteryear couldn’t believe people were really paying hard cash for fake plants and animals in Farmville.
But that Gavin is gone, replaced by a hard cynical shell that doesn’t blink an eye when hearing that, despite the offer-marketing scandal that hit the arena late last year, virtual goods revenue will hit $1.6 billion this year and $2.1 billion, according to the Inside Network.
Tin, heartless Gavin does raise an eyebrow in Spock-fashion at mobile app recommender Flurry’s findings that 80% of revenue from iOS apps during September came from mobile virtual goods via in-app sales. Yes, virtual goods made four times as much revenue (around $9 per user) for iOS developers than advertising ($1).
And this isn’t a new trend — apparently January was last month ad revenue came in higher than virtual goods revenue. Check out the chart below:
The data comes from a sample of major iOS social networking and gaming applications with a combined daily reach of 2.2 million active users. The study only covers Apple’s iOS because Google’s Android doesn’t currently enable in-app purchasing on its platform. Developers like Android more long term, but the lack of in-app buying would seem to be a huge strike against the platform.
Flurry proposes a major reason for the low advertising revenue is agency skepticism surrounding social games and social mobile media as viable advertising channels.
“With these agencies representing and guiding the biggest brands, they appear to be missing a meaningful opportunity to reach a mass market of consumers who have adopted new platforms and forms of content,” writes Peter Farago, Flurry’s VP of Marketing. “As social games continue to expand their consumer reach, demonstrating their ability to attract an audience beyond teenagers using iPod touches, their relevance will increase.”
The Inside Network does have one prediction I’m finding hard to swallow: virtual good revenue exceeding $4 billion in 2013. I’d imagine the novelty of virtual goods would eventually wain and the growth curve would become less steep. Then again, virtual goods don’t have any novelty for me (Luddite I am, I’ve never played Angry Birds either, though it sounds like fun).
Do you guys think virtual goods revenue will keep skyrocketing or start to plateau in the near future?