If you have been on Facebook for any period of time at all, you've seen this.
"John (or Jane) Doe sent a request using Farmville." John or Jane sends you a cow or a tree, and courtesy suggests that you send them one back.
I confess that I am not the best 'Farmville neighbor', and really don't play.
Who knew it was such big business?
The latest issue of Smart Money magazine includes an article by Dyan Machan - "Virtual Goods, Real Profits".
Ms. Machan tells us that "this nascent industry is sucking in staggering amounts of capital. In one 30-day span, Playfish, creator of Pet Society, sold for $400 Million. Playdom, with its game Sorority Life, raised $43 Million in financing; and sector leader Zynga raised $180 Million."
(I kind of feel like Dr. Evil with his pinky finger - "$180 Miiiilllllllion Dollars".)
These virtual games don't have to fight for shelf space. They are passed along through Facebook from friend to friend and market themselves. "If the game is a hit, revenue expands exponentially, but not costs." she says.
Ironically, the bulk of social-gaming revenue comes from selling stuff that doesn't really exist - virtual goods.
Playfish claims in the article that it sells 60 million items per day. These items are for players to reach new levels and get more from their games. The game itself is free, but to do well, you need to buy things. Aaaahhhh!!
I guess I'm not really a "social gamer". Numbers like these do make you wonder though.
In case you are curious, Playfish was aquired by Electronic Arts on Nov 9, 2009 for $275 Million. "EA" as it is known, produces a smorgasboard of games for Playstation and X-Box.
Their stock symbol is ERTS and trades on NASDAQ.
Zynga, the "leader" in social media games with Farmville, Cafe World, and Mafia Wars, is not yet publicly traded. Digital Sky Corporation, based in Moscow, Russia purchased its stake in Zynga in December, 2009 for $180 Million.
Keep trading virtual "cows" and "apple trees". It may be keeping the economy going!
You can contact me through my website, http://www.helpmy401k.us. You can also follow me on Twitter at http://www.twitter.com/deanvoelker. I host a weekly internet radio program also, "Improving Your Financial Health" at http://www.blogtalkradio.com/401kcoach.