Facebook’s digital goods revenue $50-60m sources say November 12, 2008
Posted by jeremyliew in digital goods, facebook, gifts, virtual goods.trackback
In September, I estimated that Facebook’s digital goods sales were on a $35m revenue run rate. Silicon Alley Insider quotes an anonymous insider to say:
Facebook’s revenue this year will be about $265 million, the source says, which is less than the $300 million expected. The source estimates that this is composed of about $180 million of ad revenue, $50-$60 million of virtual gifts, and some smaller revenue items.
I was in the ballpark!
Lightspeed Venture Partners Blog 
Question: How do you think the economic contraction will affect the virtual goods market?
I assume virtual goods fall under two types:
1. goods as part of a virtual game/world
2. virtual gifts
I would think personal spending on virtual goods will fall, as they typically come from a person’s discretionary account. I could see an argument that virtual goods (and the games/worlds they are a part of) are similar to movies, but movies tend to do well in recessions because they are an inferior substitute for more expensive family-time activities, while virtual worlds/gaming are typically solo activities.
For virtual gifts, do they become a low-cost replacement for more expensive, physical gifts? I would think no matter how many virtual teddy bears a boyfriend buys for his girlfriend, they don’t really come close to being a substitute for the actual item. Also virtual gifts have very low value and utility. So I would think people would be very price sensitive to purchasing virtual goods, and the market will also be negatively affected.
.
Jeremy :
Seems about 2x bigger than what I’ve heard bandied about.
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