Alan O'Dea

Original Article: http://ow.ly/2Wl8v

The virtual goods market is delivering big business! Here at Social Gold we have been tracking the spending habits of users who play online games. Our research found that users across the global Social Gold network are spending big bucks, with the average lifetime value (LTV) of paying users in games globally totaling $55. This data was first released on Mashable on June 18. Check out the image below that summarizes our findings on monetization by user segment:

Online games are home to several different types of players, including the “free player,” who sticks to the basic free service and never makes a single purchase, ranging all the way up to the “hard-core purchasers” who are highly engaged, repeat-spenders. Our study group consists of a 2-month cohort of users who started making purchases through the Social Gold system in November and December 2009. We compared users’ spending behavior over a 4 month period and broke down users into 5 distinct groups:

•    Peasants: These users didn’t make any purchasers over a period of 4 months after their first initial purchase

•    Commoners: These users only made one purchase after their first initial purchase

•    Knights: These users made repeat purchases only during their first month in a game, or, for less than a 1 month time frame

•    Lords: These loyal users continually made repeat purchases for at least 4 months

•    Kings: These hard-core purchasers spent like royalty and dropped over $1,000, regardless of how long they took to make their purchases.

We found that the Lifetime Value of each user varies and increases over time as players evolve into repeat purchasers and loyal customers. The LTV of Peasants is $0 since they never buy a single virtual good. The LTV of Commoners is $12. The Knights, who make multiple payments during their first month playing a game, reach a LTV of $46. Lords are loyal customers who ring the virtual goods register at an average LTV of $247! Ultimately, the King tops all other classes shelling out $1,000 or higher in purchases!

While many fall in the Peasant category, never spending a dime during gameplay, our research found that once players complete a transaction they come back for more. 7% of users continue to make virtual goods purchases for 4 months or longer after making their initial purchase. In fact, the best performing games achieved a 41% average of users who continue to spend after their first transaction! Not so surprisingly, paying gamers who spend more time playing games online spend more money on virtual goods. It is important to create an engaging user experience in order to keep players coming back to the game over time.

Interested in more social gaming stats? To see our data on top spenders in social games, check out this article from Inside Social Games. If you’re interested in the impact of holidays on virtual goods sales, you can learn more on our blog here.