Virtual Good


Virtual goods are non-physical objects purchased for use in online communities or online games. ‘Digital goods,’ on the other hand, may be a broader category including digital books, music, and movies.

Virtual goods have no intrinsic value and are intangible by definition. Including digital gifts and digital clothing for avatars, virtual goods may be classified as services instead of goods and are usually sold by companies that operate social networks, community sites, or online games. Sales of virtual goods are sometimes referred to as microtransactions, and the games that utilize this model are usually referred to as ‘freemium’ (free + premium) games. 

A large majority of recent sales have been in Asia. The first virtual goods to be sold were items for use in Multi-User Dungeons (MUDs, early, text-only online games). This practice continued with the advent of massively multiplayer online role playing games (MMORPGs). Players sell virtual goods, such as swords, coins, potions, and avatars, to each other in the informal sector. While this practice is forbidden in most blockbuster online games, such as ‘World of Warcraft,’ many online games now derive revenue from the sale of virtual goods.

When Iron Realms Entertainment began auctioning items to players of its MUD, ‘Achaea, Dreams of Divine Lands,’ in 1998, it became the first company to profit from the sale of virtual goods. But it wasn’t until the mid-2000s, with companies like the Korean Cyworld leading the way, that virtual good sales became instituted as a legitimate revenue-making scheme. In 2009, games played on social networks such as Facebook that primarily derive revenue from the sale of virtual goods, brought in 1 billion USD. Worldwide, 7.3 billion USD was made from virtual goods that year. In 2010 a virtual space station in the game ‘Entropia Universe’ sold for $330,000. In online games, virtual goods could be lost due to some unexpected reasons. This brings problems for service providers as well as purchaser. Encryption techniques primarily used for other purposes may, here too, provide functionality.

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