Parks Associates report shows microtransactions and virtual items altering gaming economy

Nearly one-fifth of active gamers in the U.S. spend money on virtual items

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The gaming business is undergoing a major shift away from subscription models as virtual items become a larger part of its economy, reaching almost $6 billion worldwide in microtransaction revenues by 2015, according to international research firm Parks Associates.

"Gamers are investing real money in virtual items in Farmville, World of Warcraft, and other online games, to the point they are filing lawsuits to establish 'ownership' of these virtual goods," said Pietro Macchiarella, research analyst, Parks Associates. "The enormous player base, availability on multiple devices, and the introduction of instruments such as Facebook Credits contribute to growing revenues."

The firm's new report Online Gaming: Global Outlook finds 19% of active gamers in the U.S. spend money on in-game virtual items. In contrast, subscribers to premium online game services decreased from 35% in 2008 to 28% in 2010. Publishers of social games, like Zynga, have seen revenues explode as larger percentages of their customers opt to pay for virtual items. The same trend is visible for massively multiplayer online games, where companies such as Nexon America have managed to reach millions of dollars in revenues from microtransactions.

"It is becoming increasingly difficult to justify subscription fees," Macchiarella said. "Thanks to social games and free-to-play MMOs, both casual and hardcore players have the option of playing quality games online for free. The virtual-items model that has proven so successful in Asia is finally generating significant revenues in North America."

Macchiarella predicts that social games in particular will generate higher ARPUs as payment methods and monetization business models are perfected.

Parks Associates' Online Gaming: Global Outlook focuses on several key growth areas in the online gaming space, including online console games, casual games, subscription and microtransaction-based massively multiplayer online games (MMOGs), and Gaming 2.0, a new online gaming category which includes cloud-based gaming, user-generated content, gamer social networks, social gaming, and single-player games requiring online connectivity to play. For more information, visit www.parksassociates.com or contact sales@parksassociates.com, 972-490-1113.
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