10 years ago, Iron Realms (with me as its sole employee!) pioneered the “sale” of virtual assets in our first MMO - Achaea, Dreams of Divine Lands. I always say pioneered rather than invented because the nature of virtual items is fuzzy (money is effectively virtual…do mortgage companies essentially sell virtual items by giving out loans?) and because even in the context of virtual worlds I’m fairly sure that it had happened on an isolated basis here or there before Achaea did it. On the other hand we are, as far as I know, the first company to ever build a business model around it. We were also, I’m fairly sure, the first virtual world to offer an in-world currency exchange allowing players to trade gold (earned in-game) for credits (purchased with real money) and thus play a commercial game for free, forever.

Honestly, selling virtual items is not a particularly noteworthy thing to be a pioneer in from my perspective now. At the time, I was blown away at how well it worked but I now see demand for virtual stuff driven by exactly the same demands that drives physical object consumption. It’s a natural evolution and was inevitable. That we were first is cool but had we not done it someone else would have. When the practice took off in South Korea a couple years later, it wasn’t because they were copying us; they had ‘re-’invented’ it themselves.

I’ve been predicting for almost a decade now that virtual asset sales were going to take off in a huge way. That did happen in Korea but until Habbo Hotel (now just Habbo) introduced the practice (initially in Finland), the Western world really only had small companies like ours successfully engaging in it. Habbo how does over $60 million/year in sales of virtual furniture, or “furni” as it’s called in the Habbo culture.

Virtual good sales have spread well beyond the walls of virtual worlds too. Hotornot now garners 40% of its revenue from virtual asset sales, and the Chinese Tencent generated over $100 million in the first quarter of 2007, with 65% of their revenue coming from virtual goods.

Virtual goods are here to stay (though what they actually are…they’re not goods in the sense we normally think of goods….is a discussion for another time) and the market has embraced them to an extent far, far beyond my wildest dreams a decade ago.

Tomorrow I’ll be at the Virtual Goods Summit at Stanford, listening to some of the people who have embraced the virtual goods business model and taken it to extraordinary heights. It’s going to be a little weird for me. For years I felt like the sole voice in the virtual world/MMO conversation (in the West at least…developers in Asia and the West still don’t engage each other all that much) championing virtual goods as a revenue model, but interest in and the scale to which it is being engaged in have leap-frogged past me. I’m pretty on top of what most of the presenting companies are doing but it’ll be great to hear about their experiences first hand.

If anyone’s going and wants to hook up for a quick chat between sessions or at lunch, at me know. matt -at- ironrealms -dot- com. I turn 35 today so I’ll be the sleepy, hungover guy tomorrow.