Why do people buy virtual goods?

Habbo record playerThat question has been a driving force in much of my PhD research, which is finally beginning to reach its conclusion. During this year, I will hopefully have four journal articles published or accepted for publication. I will blog about them here as they come out. Academic publishing can be slow, so some of the stuff that comes out now will have been written two years ago. Fortunately I think all of it is still relevant.

The first article I thought I would blog about is titled Virtual item sales as a revenue model: identifying attributes that drive purchase decisions. It’s due to appear in Electronic Commerce Research 9(1-2). A pre-print version (essentially the same content with a less pleasant layout) of the paper can be downloaded here.

The paper addresses the question of why people buy virtual goods by focusing on what features and attributes of virtual items users are attracted to. Using a qualitative study, a total of nine virtual item attributes are identified and discussed:

Functional attributes:

  • Performance (e.g. speed, hitpoints)
  • Functionality (e.g. teleporting)

Hedonic attributes:

  • Visual appearance and sounds (aesthetic pleasure)
  • Background fiction (what role does the item have in the story?)
  • Provenance (e.g. did a famous user own this item in the past?)
  • Customisability (the ability to personalise the item)

Social attributes:

  • Cultural references (references to outside culture, e.g. Xmas decorations, national flags)
  • Branding (virtual goods branded by real-world companies)
  • Rarity

This will by no means be the final word on the subject of why people by virtual items, but I think it’s an improvement over the “useful vs. decorative” model of thinking. It codifies what I have learned from users, developers and other scholars over the recent years. Methodologically, the paper is not a shining exemplar of social science, but it’s been useful to me as a basis for generating hypotheses for quantitative research. I hope developers could also find it handy as a checklist on what things to consider when creating a compelling line-up of virtual goods.

Feedback, as always, is very welcome — especially the most valuable kind, criticism.

Virtual item sales as a revenue model: identifying attributes that drive purchase decisions

Vili Lehdonvirta, Helsinki Institute for Information Technology

Abstract: The global market for virtual items, characters and currencies was estimated to exceed 2.1 Billion USD in 2007. Selling virtual goods for real money is an increasingly common revenue model not only for online games and virtual worlds, but for social networking sites and other mainstream online services as well. What drives consumer spending on virtual items is an increasingly relevant question, but little research has been devoted to the topic so far. Previous literature suggests that demand for virtual items is based on the items’ ability to confer gameplay advantages on one hand, and on the items’ decorative value on the other hand. In this paper, I adopt a perspective from the sociology of consumption and analyse examples from 14 virtual asset platforms to suggest a more detailed set of item attributes that drive virtual item purchase decisions, consisting of functional, hedonic and social attributes.

Keywords: consumer behavior, online communities, business model, purchase drivers, virtual consumption, RMT

Forthcoming (2009) in Electronic Commerce Research 9(1-2), Springer

Download preprint version

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5 thoughts on “Why do people buy virtual goods?

  1. Thank you for a wonderful article and contribution to research.

    However, I miss one essential and key element in the attributes – which is pure and simple FUN or defined as interactive and/or collaborative and creative engagement with a virtual object. The experimental nature of ‘playing with a virtual object and enjoying its functionality’ is not captured, unless I miss it in the abstract.

    Well done! This was much needed….

    ~Alanagh Recreant~

  2. Alanagh, thanks for your kind words.

    Regarding fun, I have two responses to your comment:

    1) “Fun” by itself is a very ambiguous concept — if you decide to make a “fun” product, you will probably need to analyse it a bit further and consider what kind of fun you are thinking about, or what is the source of fun in your product. For some analyses of the different types of pleasure people derive from games, see e.g. “3. Typologies of play” in this paper.

    2) You of course recognize this ambiguity and go on to define fun in this case as “interactive and/or collaborative and creative engagement with a virtual object”. I agree that this kind of creative play with objects is an important source of fun in virtual environments. But some objects support it better than others: functionality and customisability are more important features than provenance and rarity if you are looking for an object to play with.

    The typology presented in this paper focuses on item attributes; users’ actual practice and ways of using virtual goods is the topic of the next paper I plan to blog about.

  3. Great paper, helpful to have an academic study reinforcing gut-feel about user motivations for virtual good in VWs, especially for those of us who are trying to design attractive VW environments.

    Agree with Vili comment about fun being a byproduct of how you use it.. eg – being creative as a byproduct of its customization capabilities, or fun winning PvP as a result of an items functional attributes.

    Nice work, please keep them coming…

    Simon Newstead

  4. Good luck with the publications.

    Taking a global view, why do people play virtual worlds.

    In my case, when I paid for Runescape membership for me and my 2 sons, for 1 year, it was to help them in the game they loved playing(at that time). The intention being to make them armour and weapons they could not make themselves (being lower level than me), give them Runescape “gold”, etc.

    I was under threat of unemployment, possibly divorce, I am near to getting my free bus pass (so an old man), and immersion in this game took my mind of the scary and depressing nature of the way my life was turning out.

    Objects that helped me to complete “Quests” so getting me to a higher level, were welcome, and that aspect of an item comes under the “functionality” part of your definition I guess.

    I mention this in case someone you know is looking around for a PhD thesis subject, the reasons why people play these games in the first place may be as interesting as why they want to buy items for real money having made the decision to play the game.

    I have now moved on (still married, still got a job with the Bank that tried to get rid of me) and I no longer play Runescape, nor pay for membership to give me the extra items that a Member gets.

    In the end the very thing that was useful as an escape from reality (the mind numbing and pointless repetitious acts needed to raise the character up through the levels) was the thing that killed my interest after a year, once I no longer needed to hide from reality.

    Since I did not socialise on Runescape (ever) it had no point.

    Perhaps the social aspect is one reason to play, therefore one reason to buy virtual goods, due to the “preening” effect of wanting to look good or indeed, better than one’s contemporaries.

  5. WoW! Thanks a lot for sharing the information. I been looking at articles to do up my cases and the information that you have written and provided is wonderful!

    Btw, how about consumption of virtual items on mobile? any good advice? Can i adopt the same model?

    Cheers!

    Robin

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