What are virtual goods? And more importantly why would someone buy them?

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What are virtual goods? And more importantly why would someone buy them?

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Virtual goods are items that aren’t tangible/physical in the same sense as normal goods. The easiest way to think of it is in terms of Steam vs Walmart. You can go to Steam, buy a game, and immediately download it onto your computer to play (in theory, damn updates). If you go to Walmart, you’ll buy a CD or physical item that has the game on it that you can then take home to play.

Steam is virtual, while Walmart is physical. Steam is also a virtual store, while Walmart store is an actual location.

So, why someone would want something virtual is the convenience (probably more reasons, but I think this is the main one). Like I said, you can buy and download a game immediately on Steam, while you’d have to drive to Walmart to buy the game, or someone would have to deliver it to you.

Well, it’s a little context sensitive but let’s take a shot.

The easy one is equipment in a video game. Suppose there’s some weapon you want. Now suppose they offer to sell it to you for money. That’s buying a virtual good. You don’t get a real weapon, you only get a copy of the weapon in the video game. But that’s all you really wanted so you’re happy.

Similarly, sometimes it’s just cosmetic. Maybe you have a chat application where it shows a picture of a cartoon character that represents you. The program could maybe make a deal with Ray-Ban and offer to sell you licensed sunglasses for your character. If you think it looks cool, you pay for it and now you have a copy of those sunglasses.

There are two big reasons this is suddenly on the world’s mind: the metaverse and NFTs.

“The Metaverse” is just a fancy name for a multiplayer video game that tries to simulate “a world”. It might be realistic or it might be a fantasy world. Marketing people are trying to pretend this is a new thing, but everything from Club Penguin to VRChat to *Legend of the Red Dragon* to *Final Fantasy XIV* are metaverses. You hear a lot about it now because Facebook wants to build a Metaverse that everyone uses, so they’re paying a lot of money to get all media to teach you doing things online is cool, and not just for nerds.

Facebook also hopes to “decentralize” it, which is a redefinition of the word. Normally that would mean “anybody can run their own metaverse server and it will be part of Facebook’s metaverse”. What they actually mean is their metaverse will be centralized but they’ll let companies pay money to be connected to it. So part of how Facebook pitches the Metaverse is you and your friends can be hanging out online then decide you’d like to shop for car insurance, so you hop on over to Progressiveverse or State Farm’s Neighborhood and interact with virtual versions of Flo or Jake with the option to buy your very own company-branded outfits to wear and advertise to others! Truly the future is amazing. I bet you already have your wallet ready!

Less cynically, if people suddenly decide a glorified Club Penguin is a cool place for adults to hang out instead of a thing for nerds, those people are going to be just as likely to like the idea of buying NFL jerseys, designer clothes, and other branded junk for their online persona as they are in real life.

NFTs, similarly, are related to virtual goods. Without a lot of editorializing, they are receipts that prove you are the person who paid for something and that you paid a specific other person for it. That’s useful for “unique” virtual goods, but even a lot of people selling virtual goods don’t really understand what that means.

For example, Ubisoft is selling some items in a game where every item is the same except the one you buy has a unique serial number stamped on it and ONLY you get that serial number. So it’s like a real-life limited edition set, only applied to digital goods which normally are infinite because copies are free. The thing is… gamers don’t really care if a serial number is unique? They want unique properties, something they can rub in that other people don’t have. But Ubisoft doesn’t want to make overpowered equipment that only a few people in the game can have as that’ll piss off other gamers.

But imagine if like, in the metaverse Drake has a virtual concert. Instead of watching a livestream of Drake, what if people watch a virtual Drake perform? (I never said this was going to be easy for Facebook to sell.) Now imagine if “virtual Drake” sells the shirt he was wearing at that concert, and he’s only selling one. Let’s say you manage to buy it. Now you have a receipt that says “I specifically bought THIS virtual shirt from Drake”.

The weird thing is that’s very, VERY similar to saying you bought a shirt Drake wears. That shirt might only be worth a few hundred bucks at a store, but once Drake wears it people might pay thousands of dollars for it. If the Metaverse catches on and people like doing things online (instead of making fun of nerds for doing things online), then it follows that a situation like this could happen and owning Drake’s *specific* shirt from a *specific* concert could be a very sound investment. Other people can have a shirt that looks like it, but only you can say “I bought the one that Drake owned”.

It sounds stupid, but our brains are wired to overvalue stuff with a story attached. That’s why we have museums filled with random things like George Washington’s false teeth. Other really old dental artifacts exist, but only historians care about the stuff that belonged to randos.

not sure if already answered to satisfaction, so here is an other example:

a plate mail in the online game world of warcraft is a virtual good. it does not exist as physical object, it is just code that displays the image of a plate mail in-game. there is a rather profitable gray market for game assets, as often certain in-game items have to be obtained through in-game mechanics, but players may choose to exchange real money for such a virtual good instead of obtaining it through the games mechanics.