Wednesday, September 10, 2008

Vbeat: Facebook’s virtual economy may be making up to $100 million this year

"ould the sale of virtual flowers really generate $30-$40 million dollars a year? If you’re Facebook, the answer appears to be a resounding “Yes”.

Of course, you can choose from more than just images of flowers.

There are currently 378 different images for sale in Facebook’s Gifts application, such as mojitos, ninja shaped gingerbread cookies, Venus fly traps, and many more. They are just digital images, pieces of clip art, but Facebook users are willing to pay $1 per gift they send to their friends. And now it’s been estimated that sales of these digital images are on pace to earn Facebook $30-$40 million annually.

In a thorough analysis, Jeremy Liew of Lightspeed Venture Partners (LVP) has estimated the number of Facebook Gifts sold. Facebook creates an artificial limit of how many of each image can be sold (usually 100,000 or 1,000,000) and also lists the number remaining for each gift. Using this information, Liew projected the rate of sales for Facebook gifts, taking into account seasonality and the fact that gifts on the first page account for the majority of purchases. Applying a 25% uncertainty level to their analysis, LVP forecasts a range of 28,500,000 to 43,500,000 gift sales annually at $1 each, creating an average of $34,500,000 in revenue."

4 comments:

Anonymous said...

Great analysis by Jeremy Liew. He is quite insightful in all the mtgs I've had with him. Great investor.

Anonymous said...

pls add link techstartups if possible


: )

Anonymous said...

What is Facebook exit strategy?

Tech Startups said...

http://venturebeat.com/2008/09/09/facebooks-virtual-economy-may-be-making-up-to-100-million-this-year/