$408 Million Invested in 40 34 Virtual Goods-Related Businesses in 2008

update: only 34 companies received funding.  6 companies received funding multiple times.

Correction: This report originally listed a total of $585 million invested across 41 companies. $175 million in Q3, however, was raised by Shanda Interactive as a round of debt financing, as was $1 million in Q2 from Playfish. We have corrected the list below and the totals above.

February 2, 2009 - Austin, Texas -- Show Initiative, via its VirtualGoodsNews.com blog, released a report today announcing findings from a comprehensive study of publicly disclosed transactions which shows that venture capital and media firms have invested approximately $408 million in 40 34 companies that monetize at least in part through sales of virtual goods and currency in 2008.* This is the first year in which Show Initiative has issued an investment report specific to the investment performance of microtransaction-based models. For a detailed analysis of the numbers please visit http://www.virtualgoodsnews.com/2009/02/over-580-million-invested-in-41-virtual-goodsrelated-businesses-in-2008.html

With no prior years to compare the collected data with, trend analysis is still difficult. There are a few clear signals sent by the numbers, though. One, microtransaction-based businesses are growing at an explosive and sometimes unstable rate despite worldwide economic adversity. Two, venture capital investors worldwide are demonstrating confidence in profitability of the microtransaction-based business model despite adverse economic conditions.

Investments total a healthy $147.73 million in Q1 2008, and drop slightly to $100.7 million in Q2 2008. Q3 2008 saw $91.54 million invested even though this period marks the official beginning of an ongoing global economic downturn. The downturn shows its effects more in Q4, when investment dwindles to $69 million.*

Nearly $100 million of the 2008 grand total for virtual goods investments went to Chinese firms operating MMORPGs along the Eastern free-to-play, microtransaction-oriented model. This is not in any way unexpected, as the free-to-play model is well-established and has shown strong performance in Southeast Asian territories.

Additional details will be made available at the upcoming Engage! Expo March 10-11, 2009 in New York City. The Virtual Goods and Gifts will take center stage at the Engage!, with a dedicated track that includes expert speakers from social networks, games and virtual worlds to give you the knowledge you need to launch and manage your virtual goods strategy.