IndustryGamers - Informing the Games Industry

Report: $1.38 Billion Invested in Virtual Goods in 2009

Posted January 21, 2010 by David Radd

Engage Digital Media today released the 2009 Virtual Goods Investment Report, which claims that $1.38 billion was invested in 87 virtual goods companies in the past year. This represents nearly a three-fold increase from the $408 million invested in 2008 and more than doubling of the number of companies from 34.

"Virtual goods was the hot story of 2009, driving investment that crossed over into game development, virtual currency, payment services, and social networks," said Christopher Sherman, CEO of Engage Digital Media. "In the fourth quarter alone companies raised an astounding $944 million, more than double the amount raised in all four quarters of 2008. Also noteworthy was the number of acquisitions in the space - 18 of the course of the year - with half of those taking place in the 4th quarter."

Digital Sky Technologies was the largest investor in 2009, putting $200 million into Facebook and $180 million towards social game publisher Zynga. Electronic Arts gave the single largest amount at $300 million to Playfish in November. Other notable investments were KongZhong’s $80 million acquisition of Dacheng, Softbank putting $50 million into RockYou and $43 million for social games maker Playdom.

"Another major trend that emerges in 2009 is a wave of investments in start-ups designed not to sell virtual goods directly, but either to help users pay for them or to help developers with transaction processing and economy management," said Alicia Ashby, reporter for VirtualGoodsNews.com. "Roughly $100 million of this year’s investment funds, excluding the giant Facebook investment, went toward companies that either primarily or in part generate revenue by providing platform and payment services to social game developers."

David Radd has worked as a gaming journalist since 2004 at sites such as GamerFeed, Gigex and GameDaily Biz.