Users Fork Over $1 Billion in Real Money For Fake Stuff

While the real world may have experienced a recession this year, the economy in which we all purchase make-believe products is booming. A recent report by Inside Network says the total US market size for virtual goods is expected to soar to $1 billion by the end of the year. By 2010, that figure could climb as high as $1.6 billion.

“While virtual goods have been driving revenues in Asia and Europe for years, 2009 will be remembered as the year virtual goods-based businesses began to scale in the United States,” says Inside Network founder Justin Smith.

The report is the first of its kind, designed for entrepreneurs, investors, and analysts who might be interested in this category of online commerce. While it does analyze virtual item purchases on social networking sites—such as Facebook—it also focuses on MMOs and virtual worlds, including Second Life, Gaia Online, Free Realms, and Puzzle Pirates.

Some of these games rake in a lot of cash every month. Second Life regularly publishes user-spending on its web site, and September’s numbers sure aren’t pocket change. Over 1050 users spent more 1 million Linden Dollars or more, which translates to about $4000 USD and up. Just under 60 per cent of the 475,000 Second Life players spent at least $2 in September, and the total supply of Linden Dollars is equal to over $26 million USD.

Last June, Three Rings CEO Daniel James reported that his MMO, Puzzle Pirates, brings in about $50 monthly on average from each paying user, totalling about $230,000. Figures like these, combined with the enormous amount of money thrown into virtual gifts on Facebook go a long way to illustrating how willing consumers are to part with real-world money in exchange for imaginary goods.