Virtual Goods Give Web Firms New Revenue

The Internet made shopping without checkout lines a no-brainer. Now, some Web companies are betting that people are ready to forsake another shopping tradition: tangible products according to a Reuter’s story.

Often available for a $1 or less, virtual goods range from video game accessories like extra weapons for shooting games, to electronic birthday cards and flowers for friends on Facebook or dating sites like Zoosk and

Virtual goods have been popular for several years in other parts of the world, particularly Asia, but are only now starting to catch on in the United States.

For many Web start-ups, digital merchandise is an important source of revenue to replace scarce advertising dollars. And a series of big-ticket deals suggests that virtual goods are emerging as more than just a quirky fad.

The rush to offer virtual goods comes as advertising sales, the traditional underpinning of free websites, erodes. U.S. Internet ad revenue fell 5.3 percent to $10.9 billion in the first six months of 2009 compared to the same period a year earlier, according to the Internet Advertising Bureau.

For many Web entrepreneurs, virtual goods are a better fit than advertising.

“People don’t want to click on an ad while playing a game. They don’t want to be thrown out of the application (to view the ad),” said Netanel Jacobsson, a former Facebook executive who now advises the online social gaming firm Crowdstar.

Photo by

Leave a Comment

Your email address will not be published. Required fields are marked *