Many people ask me why I have such a passion for virtual worlds. Well, it is simple, it is an extension of real life and allows people to do things in a virtual environment that they may or may not be able to do in real life. There is the social aspect of virtual worlds, immersive 3D environments and then there is the money. People can make money in a virtual world just like they can in the real world. The virtual world essentially, is an extension of the real world where people can play, interact and work, just like they can in the real world.
I started my pursuit of virtual worlds when I was in my early 20s. I recognized the opportunities. But back then, I lacked experience and resources and basically let life happen. Today, the industry has grown by leaps and bounds and has created even greater opportunities (but still unrecognized by conventional business and thinking). In 2008, I read an article about two high school kids that were making $8000 USD a month working virtual part-time jobs selling virtual goods such as clothes, weapons and armor. Where were they doing this? In the virtual world.
One was selling clothes in Second Life, the longest-running and most successful virtual world in existence. The other was selling weapons and armor in a sci-fi-based MMO-styled virtual world game called Entropia Universe.
Virtual goods and property have been of interest within the gaming community for some time. It has been more prevalent in casual games and virtual worlds more than anywhere else. This is because in these types of entertainment environments, players can purchase items for their characters or avatars to make their skills better or to make their virtual lives better. This all generates profits from thousands to millions in real dollars.
Statistics from a report I recently did (just to wet your appetite):
- Average Growth of F2P Virtual Worlds and Games through 2016 is $38%
- Projected revenue of Free to Play (F2P) and virtual world games : $97.5 billion
- MMO Style/Virtual World Games are projected to generate in excess of $13.6 Billion a year by 2016
When I started Planet Postmoderna, it was due to the article I read in the Wall Street Journal. I started research for presentations to potential investors for the Entropia Universe Planet Partner Program. Entropia Universe had opened up the opportunity to investors and studios to build their own planets. I saw this and a chance to leverage and existing platform to build my virtual world concept for my story, The Advent. During that time I looked into record virtual world sales.
Initially, I found a couple that intrigued me. An island in Entropia Universe called Treasure Island had sold in auction for $24,500 USD in 2004. I also found out that in Second Life, the first millionaire in virtual world history was made. Anshe Chung became the first to make that claim (Bloomberg Business Week) as she made a million dollars in real money from selling virtual real estate property inside Second Life. Her company still buys, sells and rents land to Second Life Residents.
In Entropia Universe, in 2005, the Virtual Asteroid Space Resort, Club Neverdie, sold in Entropia Universe Auction for $100,000 USD. Crystal Palace Space Station sold in 2009 for $330,000 USD. In 2010, Club Neverdie sold again on auction for $635,000 and a Moon was sold to a group of Entropia Universe players in early March of 2013 for $150,000 USD. Finally, during the period between 2012 and 2013, Mindark, the owners of Planet Calypso and Entropia Universe paid out $6 Million USD to owners of Entropia Universe virtual land deeds. There is real money being made in a virtual universe.
The US dollar value of Linden dollars (the currency in Second Life) held by Residents increased for the third consecutive quarter of 2011 to $23.9 Million USD. If you think that is amazing, a look-back at the last 10 years of Second Life is even more revealing.
Now, if virtual worlds are generating so much revenue why aren’t more people playing them? There still is a lot of money generated in Pay to Play Games P2P. But the numbers for players and revenues for Free to Play (F2P) and virtual worlds continues to climb. Although monthly subscription numbers continue to be a bulk of the revenue for large-scale MMO games. In 2010, MMOs represented about $6 billion of the $50 billion pot of the game industry (Game Industry and NewZoo).
Half of that comes from monthly subscriptions (WoW-style games) while 10% come from annual subscriptions (Xbox-live ?, etc ). The remaining bulk of the market is tied up in Casual Games such as those on Facebook Games, Club Penguin, etc.
Virtual World Transaction and Account Landmarks (Real Money Made in a Virtual World)
Total signups (residents) now stands at 33,326,134 for Second Life and as many know there is far less than that in-world at any one time. Since December 2012 the daily Second Life sign ups are around 12, 000 – 16, 000 per day. Revenues average $75-100 Million a year.
Although Mindark will not share its actual player numbers, the data I have from a presentation I made to Peak Venture Group in 2011 shows player account numbers in excess of 650,000. The actual active numbers today (acquired through blog articles, media relaeases, etc) show only about 2000 active players on at any time. However, the money transacted by this small group is mind-boggling.
Revenue sharing (audited by Price Waterhouse) for the primary planet, Planet Calypso, shows that the return to Calypso Land Deed holders totaled $684,935.00 for the period. This is the excess amount paid to land deed holders for the first and second quarters of 2013 only.
Records for last 10 years:
Virtual property sales have a tradition in Entropia Universe:
- Treasure Island sold for $26,500 USD in 2004
- The Asteroid Space Resort “Club NEVERDIE” sold for $100,000 USD in 2005
- Crystal Palace Station sells for $330,000 USD in 2009
- Club Neverdie sells a second time in auction for $635,000 USD in 2010
- Calypso Land Deed sales total $6,000,000 USD between 2011/2012
- The 2010 player turnover of Entropia Universe topped $422,000,000 U.S.
So with that all said, you can see at least the monetary reasons for my interest in virtual worlds. What I have to add is that virtual worlds represent dynamic social and collaborative opportunities as well. Educational and Corporate entities can use them for presentations, business presence (still an untapped resource in spite of efforts by corporations to tap into markets in Second Life in the past) and branding. The social aspect of virtual worlds bridge the physical geographic gaps between people allowing them to meet in a way that would otherwise not be possible. Facebook and other social media platforms have nothing on virtual worlds like Second Life. This might be why Facebook bought Oculus Rift. Why would you just post statuses and chat with friends when you can be with them in a virtual sense–socializing with them as avatars? Dancing, shopping, exploring, etc. I think the argument is in favor of virtual worlds. Social Media some day will go by the wayside and be replaced by the virtual “final frontier.” This is something I have thought for decades and the basis of my book The Advent. This is a market with huge growth potential.