400% increase in virtual goods on mobiles, new report show

Virtual goods include virtual currency to spend in games on social networking sites, ‘virtual gifts’ such as virtual birthday cakes and, more recently, virtual charity badges with a donation going towards the consumer’s good cause of choice.

The Current and Emerging Trends in the UK Premium Rate Services report, published today by the UK premium rate telephone services (PRS) regulator, PhonepayPlus, links the massive growth in virtual goods paid for by PRS to the rise of social networking. The report by Analysys Mason states:

“The rapid rise in the adoption of virtual goods and gifts by consumers suggests that there is value associated with inexpensive virtual objects, particularly when they are gifts to other people. The idea is relatively simple and taps into the core of social networks: the relationships that exist between members… Social networks are the most important players in the virtual gifts markets.”

The link between the rise of virtual goods and social networking is reflected in the report’s statistics:

• 8.5% of consumers have bought a virtual gift or object related to a social networking site using a phone-paid mechanism
• 19.4% of 25-34 year olds and 16.5% of 18-24 year olds have bought a virtual gift using PRS in the last six months
• 97% of PRS users aged 16-17 use social networking sites
• The average micropayment per transaction for virtual goods is £2.41

While virtual goods are enjoyed by consumers and present a welcome emerging market for the technology and telecoms industries, consumer confidence in this market is not guaranteed, as PhonepayPlus’ Director of Strategy and Communications, Bradley Brady, explains:

“Virtual goods are undoubtedly fun for consumers and represent a real opportunity for industry to innovate new services and products. However, we cannot be complacent. How services and virtual goods – whether using PRS or other micropayment methods – are promoted on social networking sites is fast-moving and complex and presents challenges to consumers, the regulator and industry. For example, our report shows that out of the very small number of consumers (5.8%) who said they were put off using PRS by bad publicity, most cited virtual goods bought on social networking sites as the cause of this concern.

“We are working with industry to look at sensible guidance for the use of PRS on social networking sites, to make sure consumers are fully protected and that a fun, innovative and emerging market retains consumer confidence.”

Please click here to view the Current and Emerging Trends in the UK Premium Rate Services Market report.

NOTES TO EDITORS

1. PhonepayPlus is the organisation (previously known as ICSTIS) that regulates premium rate services – the goods and services that you can buy by charging the cost to your phone bill and mobile pre-pay account. Further details of its work can be found at www.phonepayplus.org.uk.
2. This research was primarily conducted between October and December 2010, and comprised an online consumer survey (14,062 respondents aged 11 upwards) and 17 in-depth telephone interviews with industry stakeholders from across the in telecoms value chain. In addition, desk research, data from PhonepayPlus and data from Analysys Mason contributed to the market analysis.
3. For more information, contact the PhonepayPlus Press Office on (020) 7940 7440 or email pressoffice@phonepayplus.org.uk