Software In News

Virtual Currency Is The Next Big Platform

22.05.12

My youth was spent jumping turtles, killing 16-bit Nazis, connecting kickflips with manuals and nube tubing. Haaaaadouken! Like most boys and young men during the ’80s and early ’90s, I loved video games. Our passion for games and our willingness to pay $49.99 to purchase the latest Zelda or Mortal Kombat fueled the industry’s growth.

For two decades, selling hard and soft copies of games proved to be a very lucrative business. However, this model is ultimately flawed because the revenue potential per player is capped. In 1998, a game studio by the name of Iron Realms Entertainment became the first to sell virtual goods in their games. A decade later everyone is building virtual economies into their games. Zynga, which recently went public and has a market value of around $10 billion, makes the majority of their revenue by selling items like virtual strawberries.

Virtual goods are purchased with virtual currency, a digital medium of exchange similar to dollars and cents. Virtual currency is in a very nascent stage. Most people think of Scamville , but really that was a misguided start to what will ultimately become one of the more powerful platforms we’ve seen. Similar to the offline world, virtual currency will be the underlying glue, allowing for a tremendous amount of value creation. Facebook knows this and is doubling down on its FB Credits system. Imagine a day when there are billions of casual gamers looking to buy a virtual good or to unlock a feature. They will need virtual currency and thus have an incentive to interact with a myriad of options placed in front of them to earn that currency. This will become even more prevalent in countries where there are fewer payment methods. Virtual currency will be a very unique platform—one with a built-in incentive mechanism and a large captive user base.

Source: TechCrunch