Economics 101: Supply, Demand, and Usefulness

It is the actions of players that define the economic conditions of a virtual world.  Therefore, limited or hard to obtain supply of virtual items lead to an increased demand for those items, ultimately stimulating the virtual economy and its respective currency.   In game-play, the "usefulness" of the virtual item is also factored into the value of the currency.

There is certainly a tremdous demand for dressing up avatars, obtaining a sword, getting to the next level, dressing up my furry friend...I am always fascinated at how the game industry has been able to successfully create and grow its own economy which, I must say, at this point, seems to be growing at a more robust, valuable, and healthier rate than our own US economy. 

Recent data estimates the market size for virtual goods in the US by 2013 to be $2.5 billion.  

$2.5bn market size estimated for virtual goods in the US by 2013 August 30, 2009

Posted by jeremyliew in virtual goods. 
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Last month Piper Jaffray published a research report titled “Pay to Play: Paid Internet Services”, which included their analysis of the paid social networking, virtual goods, online dating, domain registration and paid online content (primarily video and music) industries. Included was the following market size estimates for virtual goods in the US and for the rest of the world (encompassing games, virtual gifts on social networks, and potential virtual goods on portals such as Yahoo.)

http://lsvp.wordpress.com/2009/08/30/2-5bn-market-size-estimated-for-virtual-goods-in-the-us-by-2013/

Mickey Now Owns Spidey! Truly the Happiest Place On Earth...

Disney To Acquire Marvel Entertainment For $4 Billion

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by Robin Wauters on August 31, 2009

The Walt Disney Company has agreed to acquire Marvel Entertainment in a stock and cash transaction, the companies announced this morning. Under the terms of the agreement and based on last week’s closing price of Disney, Marvel shareholders would receive a total of $30 per share in cash plus approximately 0.745 Disney shares for each Marvel share they own.

Based on the closing price of Disney stock on Friday, August 28, the total transaction value is $50 per Marvel share or approximately $4 billion.

Under the deal, which has been approved by the boards of both companies, Disney will acquire ownership of Marvel including its portfolio of over 5,000 Marvel characters. That portfolio includes many familiar names like Iron Man, Spider-Man, X-Men, Captain America, Fantastic Four and Thor.

Says Disney CEO Robert A. Iger in a statement: “We believe that adding Marvel to Disney’s unique portfolio of brands provides significant opportunities for long-term growth and value creation.”

Ike Perlmutter, Marvel’s CEO, added: “Disney is the perfect home for Marvel’s fantastic library of characters given its proven ability to expand content creation and licensing businesses. This is an unparalleled opportunity for Marvel to build upon its vibrant brand and character properties by accessing Disney’s tremendous global organization and infrastructure around the world.”

Mr. Perlmutter will oversee the Marvel properties, and will work directly with Disney’s global lines of business to build and further integrate Marvel’s properties.

Marvel stock is surging following the news, up 10+ points at the time of writing (+27%), whileDisney’s is down a little (-0,5%).

Peanut Labs Signs Exclusive Agreement with Frogster

Runes of Magic offers surveys for diamonds

by Colin Brennan  Aug 4th 2009 at 3:00PM

Filed under: At a glance, Fantasy, Business models, Culture, News items, Free-to-play, Runes of Magic

Frogster America has recently partnered with Peanut Labs Media to bring Runes of Magic players a new way to earn diamonds without paying money -- surveys! Yes, yes, we know, everyone hates surveys. Yet, you have to admit, everyone hates paying real money for virtual currency more.  The surveys that Runes of Magic will be implementing are going to take between 5 to 10 minutes, will keep the user's identity completely anonymous, will reward diamonds on completion, and will be completely optional. Both sides are working to seamlessly integrate the survey option into the game experience without it becoming a barrier to gameplay or becoming hard to use. As long as this option remains simple to use and non-intrusive, it looks like a nice alternative for players who are looking to pick up some diamonds without having to commit their cash.

King.com partners with Lifetime to reach out to its large female audience

King.com and Lifetime team up on games

August 4, 2009 | Dean Takahashi

Women’s TV network Lifetime is teaming up with King.com, which will become the exclusive provider of skill-based games on Lifetime’s online site, myLifetime.com, VentureBeat has learned.

The deal is another sign of the convergence of media companies with games. The recession and changing consumer habits have taken a toll on traditional entertainment business models. Everyone from music labels to TV networks is diving into games as a haven. A couple of weeks ago, casual game site Big Fish Games said it would provide original games to Time Warner’s People.com web site.

The match between King.com and Lifetime Digital is a good one because the majority of King.com’s 17.5 million monthly unique visitors are women. Right now, about 3.6 million women visit Lifetime’s online properties, which include myLifetime.com, DressUpChallenge.com, LMN.tv, LifetimeMoms.com and MothersClick.com.

“This deal helps the TV networks do a better job of retaining the audience as it shifts online,” said Robert Norton, managing direct of King.com North America.

The deal will also bring a lot of attention to King.com’s games. That’s important because its chief rival,Worldwinner, also has an alliance with a TV show network, GSN, a big cable network built around TV game shows.

Lifetime Networks, which is owned by Disney and Hearst Corp., already has hundreds of downloadable and online games for women. Real Networks provides the downloadable games on an exclusive basis. Lifetime Digital ranks among the top 25 online casual game destinations already. One of Lifetime’s game properties is Roiworld.com, a fashion site that combines social networking and games.

But partnering with King.com is a step up. London-based King.com was founded in 2004 and now serves more than 400 million games a month. It is a provider of skill-based games, where players can play in tournaments for prizes or money. It’s not gambling, however, because the games are not defined as games of chance. King.com has more than 150 different skill and social games.

King.com’s game portals include King.com and MyGame.com. King.com’s games are also available on sites such as Yahoo, MSN, AOL, Real Networks and a number of other media sites. Some of its big titles include TV-show-based games such as Who Wants to Be a Millionaire and The Biggest Loser.

Lifetime Digital hopes the skill-based games will add deeper engagement for its online fans, said Clayton Rose, senior vice president of digital properties at Lifetime Digital. King.com has 86 employees and has raised money from Index Ventures and Apax Partners. King.com recently expanded to make iPhone and Facebook games.