What’s The Size Of The Virtual Object Market?
You might not be aware of this, but people spend real money on virtual objects. Virtual pets, virtual coins, virtual flowers etc. How much do they spend? The answer, according to Susan Wu of Charles River Ventures is $1.5B (USD) a year.
Many people find this hard to believe. Those people’s world-view is that, in extremis, it costs nothing to create a virtual object; and as a result, virtual objects have no value. However, that’s not the right way to look at it. Consider how people spend their hard-earned money on real objects. Very often, the price people pay has little to do with the manufactuing cost; and very often, when people pay a lot more for one object over another, it’s not because the object they buy is better than the cheaper one.
Here’s a classic example that people use when thinking about branding. A Rolex watch might cost thirty thousands of dollars. A Seiko watch might cost two hundred dollars. The Seiko watch is 150X cheaper than the Rolex. Now, which is the better watch? Are you sure about that?
My bet is that you’re not sure. Does the Rolex keep better time than the Seiko? I bet you don’t know. Is the Rolex better made than the Seiko? I bet you don’t know. And neither do the people that buy Rolex watches either for themselves, or as gifts for others. The point is, the value of a Rolex watch is nothing to do with practical matters such how good a watch it is. Rather, it’s everything to with gestures: gestures to the person you’re giving the watch to; gestures to yourself, and the world, when you wear the watch on your wrist. In other words, gestures have a lot of value to people. And, in principle, you can make a gesture with a virtual object in just the same way as you can a real object.
Now, I’ve just considered one aspect of how people buy real objects here. There are lots of others. The interesting thing is, the more you think about it, the more you realise that there are many cases where there isn’t a whole lot of difference between real objects and virtual objects.
The bottom line is this: as long as virtual objects provide real value to the buyer, there’s no reason why people won’t pay real money for them. A $1.5B global market for virtual objects? That’s just the tip of the iceberg…
Asam Bashir wrote:
Second life does seem to have hit a limit on uptake recently, not been hearing much excitement about them, wonder what’s up with that, too much control by Linden?
Posted 23 Jun 2007 at 3:21 pm ¶
Asam Bashir wrote:
http://secondlife.com/whatis/economy-market.php
Posted 23 Jun 2007 at 3:24 pm ¶
simon wrote:
I’m don’t feel qualified to give a good opinion on Second Life. I’ve never understood the appeal of those kind of massively networked social 3-D graphics virtual environments.
I first tried one of those in 1995/96. I thought it was totally lame. A decade later, I tried Second Life when it came out to see if things had improved since the days of 28.8K modems… to me, the answer was no. Still totally lame.
I know lots of people like this stuff. I just don’t get it though - it all seems so slow and clunky… and pointless!
Posted 23 Jun 2007 at 3:44 pm ¶
Marc wrote:
Virtual objects are something to purchased an enjoyed. Just like a CD full of music, the actual CD is worth pennies, its only when a microchip processes the digital information it becomes something to be enjoyed in an auditory way. Virtual objects are just a visual alternative.
Posted 23 Jun 2007 at 6:37 pm ¶
Asam Bashir wrote:
It’s a form of escapism with added spice that’s there are other real minds behind the characters, can be like a game, though there is a huge scene of real graphic art being done and presented there. Was quite surprised though myself looking at their numbers and the Linden economy, approaching 8 million odd worldwide users. There obviously is a market, limited, but enough with added bonus that it becomes more addictive. I’ve been avoiding it, though have been a few times to listen to friends DJ and VJ out there.
Posted 23 Jun 2007 at 9:43 pm ¶