Firm Projects $2B U.S. Virtual Goods Market In 2011

A new report from San Francisco-based market research firm Inside Network forecast that the U.S. market for virtual goods -- including those in social and free-to-play games -- will reach $2.1 billion in 2011, up from $1.6 billion in 2010. The forecast for 2011 is nearly double the value of the U.S. virtual good market in 2009, when the sector hit $1.1 billion, according to the firm. The rise in virtual item sales coincides with a rise in social network and free-to-play persistent online games, two segments that let online players start a game for free and supplement the experience through virtual item buys. "If 2010 was the year that virtual goods made a splash in western markets, 2011 will be the year that these markets begin to mature as the collective opportunity across social games, online games, virtual worlds, consoles, and mobile games reaches the $2 billion dollar mark," said Inside Network founder Justin Smith in a press statement for the study. Venture capital activity in the social and online game market continues at a steady pace, as noted by the report's authors. High-dollar acquisitions in the space include the 2009 $400 million purchase of social game maker Playfish (Pet Society) by Electronic Arts, and Disney's $750 million acquisition of Playdom (Sorority Life) earlier this year. Charles Hudson, the former VP of business development at Serious Business who worked with Smith on the study, said that "virtual goods are seriously impacting businesses across all types of media."