In their New York Times article, “Virtual Goods Start Bringing Paydays”, Claire Cain Miller and Brad Stone discuss an increasingly popular method for Internet-based companies to make profit. Social networking sites are promoting computer games which possess the tempting option to charge real money for products that physically do not exist. These efforts boast incredible profits for companies because the cost of producing the purchased content is practically free. Designing new clothes for avatars simply costs companies a few hours of work by a computer programmer and an artist, thus, the marginal cost for every one item sold is zero, yielding 100 percent margins. Virtual good selling is an extremely profitable business as it is estimated that they could bring in around $5 billion worldwide within the next year. As a consumer, one probably wouldn’t expect that these companies benefit so much from that cute virtual shirt we purchased for $1 the other day.
But why is the public consuming such commodities? After all, these products are purely virtual; they are just pixels on the computer screen! With the migration of many of these casual games to social networking sites such as Facebook and mobile phones like the iPhone, people find themselves just killing time and merely having fun in the process. Accordingly, their free membership and easy accessibility makes them attractive entertainment. While studies show that individuals tend to share purchased content with others, “most of the momentum in the virtual goods market comes not from gifts but from social games, where people buy items to improve their performance in the game or just to build up a collection that will impress friends.” On a side note, I thought that Sara Merrill rose an interesting point in her interview with the New York Times, stating that buying $20 worth of virtual goods for her two young sons “is still cheaper than taking them to Target where they will ask for a toy.” Could this be a new outlet for kids to explore their creativity? Will physical toys eventually become an idea of the past, and will the computer dominate their imaginative inspiration?
For the first time in my life, I began playing a social network game this past weekend. The game was Frontierville, a simulation, role-playing video game created by Zynga in June of 2010. My initial thoughts of the game were actually rather positive. The game was simple, and I enjoyed leveling up my pioneer. Accomplishing various goals such as gathering money, clearing land, raising livestock and creating items such as furniture and buildings proved quite addictive. Within one of the menus was an option to convert real money to the game’s currency (horseshoes). (This option is also available on Farmville except with farm cash). I was absolutely appalled to witness the exchange rate. $100 can get somebody 1000 horseshoes. Perhaps it’s because I’m just a broke college student, but I think this is a rather steep price. I suppose if players were addicted enough, this option would be admirable since it would speed up the pace of the game and help them succeed. While playing Frontierville, I also noticed a fair amount of advertisements to promote the game. Every couple of minutes, a pop-up box would appear, asking me if I wanted to invite my Facebook friends to join the game. For nearly every completed event (quest or killing a varmint), that pop-up box comes up again, except it asks if I want to share my accomplishments with friends. This amount of self-promotion is very bothersome for me as it becomes annoying rather quickly. It is distracting to the game play. However, in order to advance faster in the game, one needs to play with more people (up to 30).
Please comment on your experience playing one of Zynga’s social games (Farmville or Frontierville). While much of the game revolves around playing with others, do you feel that the amount of self-promotion is overly distractive and ruins the experience for you? In addition, have you or do you see yourself exchanging real money for virtual currency? What would be your motivation in doing so?
If you are further interested in the growth of virtual goods, you may find the following link a fascinating resource.
I feel like it does ruin the experience because 1. it breaks the flow of the game by constantly asking you if you want to post it to your profile, and 2. I feel like you're missing out on a lot of the game by not posting things to your profile. It's a trade off of annoying your friends and in game perks. I don't see myself exchanging money for virtual currency because I don't think the games are fun enough to spend money on.
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