Mobile sales of ‘virtual goods’ increase by 400%

A report published today by premium rate regulator PhonepayPlus has found that we spent over 400% more in 2010 on virtual goods bought on our smartphones and other mobile phones than in 2009, an increase in spending of more than £6 million.

According to the regulator, the market for virtual goods bought via premium rate micropayments – whereby, rather than needing a credit or debit card for small purchases, the cost of the item is added to your mobile phone bill – leapt to £8.1 million last year.

Virtual goods purchased include virtual currency to spend in games on social networking sites, ‘virtual gifts’ such as virtual birthday cakes, and virtual charity badges with a donation going towards your chosen charity.

Social networking spurred growth in virtual purchases

In its report, PhonepayPlus links the huge growth in mobile purchases of virtual goods to the increased popularity of social networks, such as Facebook. Noteable facts and figures include:

• 8.5% of consumers have bought a social networking virtual gift or object which was paid for via their mobile phone
• 19.4% of 25-34 year olds and 16.5% of 18-24 year olds have bought a virtual gift using premium rate services (PRS) in the last six months
• 97% of premium rate service users aged 16-17 use social networking sites

Protection for consumers vital

PhonepayPlus Director of Strategy and Communications Bradley Brady says: ‘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.’

The rise in the purchase of virtual goods shows the potential of modern mobile phones to run up huge bills, particularly if your phone is stolen. Don’t let a thief take advantage – keep your mobile safe with Which?’s tips on mobile phone security.