One of the fastest growing parts of online business today is Virtual Goods. They are defined as non-physical objects purchased for use in online games or online communities. Since developers started building these games on Facebook's developer platform in 2007 the market has grown explosively. The overall market in the US in 2011 was $2.2 Billion and is expected to hit $2.9 Billion in 2012, according to a report from Inside Virtual Goods. Facebook encompasses more than half of the virtual goods market.
But why has buying seemingly fake items in a virtual world been so successful? Based on a study on happiness there are 4 key reasons people are buying virtual goods in games and other sites:
1) The experience the good provides matters, not the good itself.
2) The purchase, or idea of buying something, creates it's own positive emotion
3) Small, frequent purchases often provide more happiness than infrequent large purchases which are more common in the real world
4) Virtual goods are readily available at your fingertips for extremely low prices in real terms
All in all consumers want to buy an experience with engaging content. Virtual goods offer both sides of this.