“Changyou is Making a Fortune Selling Items in a Virtual World”

As The Economist magazine reported this week, the first company this year to list on NASDAQ is a Chinese company selling “items that do not exist.” Changyou is an online-gaming business, with revenues of $202M and profits of $108M. The company “provides free access to its games, collecting revenue from the 10% or so of players who are prepared to pay for in-game extras, such as weapons, medicine, and shields.” Popular Chinese games feature elves, dwarves, and ancient Chinese characters. You can get the full Economist story here.

This is not a new business model in China. Here’s an article about how a social site is doing it: “How One Social Net In China is Making a Lot of Money“. In this story, only 10% of the site’s revenue is from advertising. Meanwhile, it sells $750M/year in virtual goods.

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