While many large communities continue to chase ad revenue and subscription models, I can't help thinking the real money is in virtual currency and goods. Yesterday we featured an article about Beijing and the fact that TenCent (one of the country's most successful social networks) makes 90% of its revenue from virtual goods. With China alone representing a $4 billion dollar market, many are looking to gaming and virtual goods as the next emerging space.
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Few investors know the gaming space as well as Benchmark Capital's General Partner Mitch Lasky. In addition to sitting on the board of Riot Games, Lasky's firm invested in both Gaia and Linden Lab. Linden in particular has built an incredibly lucrative economy. The company's in-world currency trades at about $250 Lindens to the US dollar with 2009's revenue estimated to be $100 million dollars. With last Spring's rumors that Facebook was considering a virtual currency, we asked Lasky to imagine what a Facebook dollar would do to casual gaming.
He explains, "I actually think Facebook could be good for Zynga and other casual gaming groups. Having the Facebook brand behind this type of monetization could help dispel any Scamville-related issues and create some certification of quality. There would likely be some attacks, but rallying behind a central currency could definitely be beneficial."
While a Facebook dollar feels like a far off dream, how can startups profit from the emergence of new virtual economies? Let us know your ideas in the comments below.
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