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U.S. Mobile Virtual Gaming Market Worth $168M in 2010 & Poised To Explode [Study]

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U.S. consumers' spending on in-game mobile virtual goods this year is set to exceed $168 million, according to a joint study by research firm Magid Associates and software developer Aurora Feint. The mobile virtual goods market is still nascent and holds great promises for marketers for the future. Here's why.

The study finds that 70 million Americans own smartphones, representing 23% of the overall population. Some 45% of those device owners play games on their smartphones, and out of that chunk (are you still with me?), 55% are interested in buying virtual goods. At the moment, only 16% spend an average $41 a year on in-game virtual goods but, the study says, it's already enough to surpass $168 million...

Small Market?
Surely, not. But look back a little. Just a year ago, AllThingsDigital was questioning its worth with a self-explanatory headline: "Virtual Goods + Mobile Payments = Small Market Worth Fighting For?" Today, as the Magid/Aurora Feint study shows, smartphone gamers download an average 14 games per year. That's a lot. And there's still plenty of room for expansion.

A Market Poised For Major Expansion
There are a few reasons why the market is poised for growth. First, the virtual gaming market in itself has great potential. Just think. The virtual economy as a whole is valued at $10 billion this year. If that were not enough, virtual gaming has become a powerful advertising channel in itself, thanks to stronger user engagement through virtual currency. The role of Zynga on Facebook's platform is best proof.

Second, smartphone gamers are mostly men aged 18 to 34 years old. The earlier the uptake, the better. Pretty straight forward. Third, if you consider that only 23% of the overall U.S. population owns smartphones, imagine the scope of the market when the number of users grows to its full potential. "There's a lot of room for the market to keep taking off as smartphones continue to increase in popularity," said Mike Vorhaus, President, Magid Advisors. Finally, fourth point, the study does not include "standard" mobile phones with browser access that also allow gamers to take part in the fun. Do you see what that means?

Market Players
Two companies are already quite known in the industry as they were early investors when no one would have bet on what is now becoming an industry: Boku and Zong. Both companies boast easy, seamless mobile purchases and work with gaming platforms. Although Zong has clinched a deal with Facebook earlier this year and secured $15 million in investment, Boku's market positioning towards virtual gaming is much clearer.

Here's their demo:

What Would Be The Next Step?
FastCompany may have an answer for us - Virtual Goods in Location-Aware Mobile Games: The Future of Product Placement. But that's a whole different story altogether. I suggest we keep it for later.

SEW's view:* What's Search Got to Do with It?
Steve Jobs has claimed, "Search is not happening on phones; people are using apps", and whilst at SEW we only somewhat agree with this statement, we do concur that 'content discovery' has changed with the maturity of mobile social networking. Content and product distribution via in-app purchasing platforms could prove more effective than searching app stores. Consumer propensity to buy virtual goods within social networks and mobile games suggests such a future is both likely and viable. It's plausible that gaming platforms may be the future portals of content discovery for mobile/social savvy audiences.

* Full post researched and written by Liva Judic; Last paragraph, 'SEW's view' was written by Jonathan Allen


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