It's been over four years since I noted that figuring out how to build the next web was The 64 Billion Question. Some thought it seemed like a huge stretch then. Even a year later when Mitch Kapor called virtual worlds a $100B opportunity, most folk were dismissive. Flash forward to last week at the Virtual Goods Summit 2010 in San Francisco, where Electronic Arts founder Trip Hawkins said he had no doubt about the size of the market and proceeded to do the math:
So, of course, we've seen a number of years go by and this expansion in virtual goods so there's just now really no questions about this enormous potential and the way I get it to 100 billion mathematically even though it was only a $1 billions last year in the US because it was $7 billion in China and, of course, over their in Asia they built the mobile web first that started with DOCOMO in Japan in 1999. The Koreans copied that. The Koreans invented the internet cafe, they got broadband into the home pretty fast. The Chinese started copying what was going on in Korea and here are these markets over in Asia where they are far more advanced in mobile web, microtransactions, virtual goods and in China it was a $7 billion market last year. Well, the Western world has about eight and half times more gross domestic product so if we had merely kept pace, we would already in the West have a $60 billion virtual goods market not a $1 billion market, again, we're talking last year and then you would have seven in China, then you'd have Japan, then you'd have Korea you add it all up and probably by this year the global total would be around $100 billion. We could already be there.
More conservative views are expecting 31% growth in the U.S. virtual goods market for 2011 which could add $250M to Facebook revenues. For a more detailed look see the excellent article 9 Reasons Why It Might Be Time For Marketers to Value Virtual Goods.
