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Online Shopping: Financial Reality of The Virtual Economy

Online shopping economy graphic

Do you want your pet penguin to be the only one without a cool derby hat this winter? Is your barbarian warrior complete without a sword that also fires laser beams? What can you do? Go virtual shopping, of course.

What is Virtual Shopping?

If you are over the age of 40, or maybe 50, this all probably sounds like gibberish to you. Yet there is a thriving virtual economy out there that you may know little about.

Online networking games such as FarmVille, in which players try to stock and maintain an electronic farm in real time, are growing in popularity. And as these games, which include such online worlds as Club Penguin and MafiaVille, attract more players, these players are demanding upgrades and add-ons. This has developed into an entire industry to sell virtual weapons, vehicles, clothing and gifts for the avatars that populate these games.

That’s right: There are companies out there selling make-believe products to people playing make-believe games with make-believe characters. And that is the essence of the virtual economy.

Big Money in Make-Believe Worlds

Don’t be fooled, though, into think that the sale of virtual goods is kid stuff. There’s actually big money in this business. Don’t believe it? (Click on the infographic) You’ll see that the market for virtual goods in the United States is expected to soar to $2.1 billion in 2011. That’s up from $1.6 billion in 2010.

That’s a lot of money. And unlike the swords, race cars, space suits and polka-dotted couches that are sold in the virtual economy, it’s very real.

The biggest beneficiary of this virtual economy so far is a company called Zynga. Zynga was founded by tech-guru Mark Pincus in 2007. The company owns the most popular online social networking games out there, including the incredibly busy FarmVille.

How popular has FarmVille become? FarmVille boasts more than 52.6 million players. You can bet real farmers are shaking their heads at this: People are signing up for the fun raising crops, balancing budgets and maintaining a farm household?

The Zynga Revolution

Here’s the most surprising fact about the virtual economy and online social networking games: They’re becoming more popular than traditional point-and-shoot or adventure video games.

Zynga’s value recently surpassed the stock value of Electronic Arts, the nation’s largest maker of traditional video games. This is big news: Electronic Arts has long been the kingpin of the video gaming world. To see Zynga topple it? That’s a seismic shift.

Zynga is now worth $5.51 billion, according to research firm SharesPost, Inc. Meanwhile, Electronic Arts has been valued at $5.16 billion on the Nasdaq Stock Market.

This success isn’t shocking to anyone who has followed Zynga’s success. The company now makes six of the 10 most popular applications on Facebook, with FarmVille leading the way. Zynga also has big plans for the future. The company is now developing games and applications that have nothing to do with Facebook; this way, the company won’t be too reliant on that social-networking site.

What does all this mean? Well, if you prefer real-life social networking – you know, talking to people face to face – not much. But if you’re a fan of online networking games, it appears that the virtual economy is only set to grow.

Best of all, you’ll finally be able to buy your virtual pet cat that electronic scooter that it’s always wanted.

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