Students lack preparation for virtual market

The day after Thanksgiving doesn’t only mean leftover turkey or tofu turkey sandwiches. It is Black Friday, the day that kicks off the holiday shopping season. Companies turn large profits on Black Friday with early opening times and bargains.

Since the advent of the first commercial online services provided by CompuServe and The Source in 1979, people have increasingly been taking advantage of the Internet to purchase various products conveniently and to create a new way to earn profit: virtual goods.

Most transactions on the Internet deal with tangible items. In recent years, however, more and more people have begun to focus on purchasing and possessing virtual goods, intangible items that can only be used in specific online services such as online games or communities.

USC’s Marshall School of Business, one the most well-known business schools in the United States, must realize the emerging importance of virtual goods and become part of this rising business by providing classes on virtual goods.

Zynga, a major company working with this emerging new branch of business, sells virtual goods to more than 200 million active users. These active users use virtual currency earned to purchase virtual goods in most of Zynga’s games, which invert the traditional pay-first model of online video games and provide free gaming experiences to a vast amount of users through platforms such as Facebook and Twitter.

Many people who wish to get their hands on virtual goods without sacrificing valuable time can exchange real money for virtual currency and immediately become rich in games.

The reasons people pay real dollars for something that is neither tangible nor valuable beyond the context of games are complex: Some want to enjoy the feeling of being rich that they cannot achieve in real life; some want to surpass their friends or foes in online games to gain a sense of superiority; some even think the possession of virtual goods represents a second life free from the limited reality.

In 2010, Zynga raked in $1 billion through this new business and it intends to enlarge its investments this year. There is no indication this new branch of business will stop its continued success as more and more consumers become active customers of virtual goods, further enlarging online communities and their social influence.

Classes on virtual goods should be more than just technical or factual knowledge of how to make profits in this new branch of business.

The underlying reasons for the rise of virtual products and the social impact on what people are willing to buy and how much they want to spend in the future should be another main topic of study in the business school.

Certainly, further observations and investigations are necessary before USC starts to invest a large amount of resources into this new area because the business of virtual goods is still fairly new and needs to stand the test of time. It is unclear whether increasing markets and profits will continue in the following years.

 

Beibo Zhao is a freshman majoring in biochemistry.