About 12 billion dollars – that’s not a state’s gross national product but the size of the worldwide virtual goods market. The sale of virtual goods is rapidly becoming the most important business model in the games industry and is expected to account for more than half of all revenue in the coming years. Virtual branded goods are becoming increasingly popular in a great number of social, online and mobile games. So, how did this market develop?

There is a very simple explanation:  You could say that reality has made its way into the virtual world. We buy clothes and food from our favourite brands, we support our favourite sports teams and buy their merchandise – now, this is also happening in the virtual world. People spend an increasing amount of currency (both virtual and real) on branded virtual items. Why? Because they have an emotional connection with the brand and the value that it provides can often be translated into a virtual item.

More and more games companies are looking at ways to integrate premium virtual items into their games. Following are a few key factors to keep in mind if you are considering introducing brands or licensed IP into your game.

Barcelona C.F. Themed Talking Tom

The most important aspect is to provide the player with a benefit. Each branded item needs to have a purpose and a value within the game. For example, we introduced a famous stadium as an optional replacement for the generic stadium in an online football management game. The branded stadium had a higher capacity which earned the user more gate takings and experience points in the game compared to the default option. Players recognized that this gave them a competitive advantage so they were willing to make the extra investment to purchase the item.

The second-most important condition a brand has to fulfill is to suit the game; it needs to fit into the game experience and enhance it. Adding a brand that has no relation to the game simply will not work. Consider the target audience of both game and brand and the relevancy for the audience based on demographics. A good example is Shaun the Sheep in the casual browser game Farmerama. Introducing a popular sheep character into a farming simulation was a perfect match because the brand integrated into the game seamlessly and at the same time, added extra value for players to enhance the game experience.

"Shaun the Sheep" in Farmerama

We like to collect stuff. In many games players have the ability to collect items. When introducing branded virtual merchandise we ensure players can collect multiple items from brands they like. A player who buys one item is far more likely to buy other items from the same range than a player who did not make an initial purchase. Differentiating the price point for items of different levels of perceived value also increases monetization and encourages players to complete their ‘set’.

Summing up, branded virtual items offer three key values to IP holders and game developers.
These are:

• Increased monetization, because (as in the real world) people pay more for a branded goods than non-branded
• Increased engagement, because users spend more time in a game with brands they recognise and feel attached to
• Enhanced marketing value: including brands in your marketing can increase customer acquisition by 30 to70 percent and provide access to significant new markets

About the Author
Ze’ev Rozov is CEO at Iconicfuture. The Company facilitates the creation of branded virtual items in social games, virtual worlds and mobile applications