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Virtual Goods Market will reach $2.9 Billion by 2012

The United States market for virtual goods will make around $2.9 billion next year based on a report released by the Inside Virtual Goods. This is an increase from 2011’s $2.2 billion and 2010’s $1.6 billion.

It is noted that it has been almost a decade since selling virtual goods in games have been in business but the boom only started when social games for Facebook were developed in 2007. This became a fast growing online business since then. However, in the latest report, social games for Facebook may be maturing. Although for mobile virtual goods, a leap forward is expected.

In 2010 virtual goods on Facebook have gains worth $835 million and grew this year to $1.2 billion. For next year it will be $1.6 billion. Therefore, there is around $400 million profit growth annually with percentage range from 50 down to 35 percent. This is particularly favorable for Zynga which dominates Facebook with around 75 percent of the site’s virtual goods market. In Zynga’s pre-IPO filings, over $300 million was profited last quarter.

On the part of Facebook, the company’s revenue from virtual goods sales is expected to be around $500 million next year since this July’s implementation of the 30 percent cut from developers’ gains.

Another notable growth for virtual goods is that more and more revenue now come from niche games with hardcore gamers. Kingdoms of Camelot from Kabam is an example of this. Such games may not match the number of users of CityVille by Zynga but in terms of revenue per user, more money is made out of such games.

As for virtual goods in mobile, the report reveals that it has particularly grown this past 18 months. There is an estimated $350 million revenue for mobile game virtual goods in 2011. A growth of $500 million gains for next year is projected.

The report presented key factors that may contribute to the boom in mobile game goods. One is the proliferation of Android and iOS devices that are tied with in-app purchases. Another is that developers are shifting towards creating for mobile. The shift to mobile can be attributed to the growing retention and growth issues with Facebook as well as the existence of domineering competitors like Zynga.

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