Why do people buy virtual goods? Answers from three angles March 03 2012

What makes someone buy a virtual good? This is something I get asked a lot, and it's also a topic I did a lot of research on in the past. This post is inteded to serve as a brief summary for those who haven't bothered with this question before, or are perhaps just getting into the virtual goods business.

You can approach the answer to the virtual goods purchases question from three angles:

  1. Unique needs of different user segments. For example, your male twentysomething wants to attract the attention of an online crush (so he buys a virtual bottle of gift champagne), while your pre-teen male wants to feel like a big boy (so he buys a virtual samurai sword).
  2. Game mechanics. For example, if players get hooked on a Tamagochi-style virtual pet that needs to be fed regularly, then soon enough you will have players buying virtual pet food. Likewise a limited energy bar tends to create demand for recharges. More complex mechanics are also common.
  3. Attributes of virtual goods. Here the focus is on what's unique about a particular virtual good that makes it desirable. Why does one virtual samurai sword sell while the other doesn't? What different factors distinguish one item from another and how do you create a good lineup?
Standard consumer research provides answers from the first angle. But to maximize your virtual goods sales you also need to understand the other two.

Concerning the second angle, one resource that you might find helpful is a paper I co-authored with Juho Hamari on the intersection of game mechanics and sales/marketing a few years ago: Game Design as Marketing: How Game Mechanics Create Demand for Virtual Goods. The same topic is today also sometimes examined under the rubric of "gamification".

As for the third angle, a resource that you might find helpful is another fairly popular paper I wrote a few years ago, titled Virtual Item Sales as a Revenue Model: Identifying Attributes that Drive Purchase Decisions. I also gave a presentation on the topic at the GDC 2010 Social & Online Games Summit. The presentation slides are embedded below.