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The estimated market in the U.S. for virtual goods in 2009 is expected to double from last year, reaching $1 billion this year, according to a recent study (Mediapost, Inside Virtual Goods).  Social networking sites, online gaming sites and apps continue rapid growth in the sale of virtual goods, thereby influencing an expanding market for consumer payment options.  This influx in sales and the implementation of new ways to pay could lead to greater opportunities for apps developers.

Zong, an up-and-coming payment option for online gaming and social networking, allows its users to charge virtual goods purchases to their phone bills by typing in their 10-digit mobile numbers.  Big gaming websites such as Gaia Online have already seen an increase in buyers due to an added ease in the process thanks to Zong.  Soon Zong will add to this convenience and allow users to link their phone numbers to their credit or debit cards.  This will make in-game purchases, for example, easier for the user, who will just enter their phone number and confirm a security transaction code they receive via text message.

Other companies such as Obopay and Boku have already implemented or soon will be implementing similar features.

All three companies are competiting with one another in online gaming and therefore need the best, most efficient payment options available.  The goal is to increase sales and gaming, which is why making the transactions as painless as possible is so vital.

Furthermore, companyies such as Zong are also utilized by apps on social networking websites such as Facebook and gaming websites including Gaia Online.  By allowing users to avoid high fees that carriers charge customers for payments billed to phone accounts and the limits they place on the total amount that can be added to mobile phone bills, Zong expects its new payment option to increase the conversion of shoppers to buyers.

One of the first social networking websites to take advantage of Zong’s new service, titled Zong+, is hi5.  Mediapost quotes the hi5 director of business development, Rajat Kongovi, as saying :

“The ability for our customers to bill purchases to either their mobile bills or their payment card of choice will be essential for driving transaction completion.”

This would enable a site like hi5 to offer a larger selection of virtual goods at differing prices.

New payment methods like Zong+ will probably reach other sites like Facebook, but the service will challenge Facebook Credits, the network’s virtual currency that is being tested as a payment option for apps. Those companies could change the consumers view, use, and pay for apps on mobile phones and devices, online gaming, and social networking sites.  In turn, the increasing payment options are creating greater opportunities for apps developers.


Joel B. Rothman represents clients in intellectual property infringement litigation involving patents, trademarks, copyrights, trade secrets, defamation, trade libel, unfair competition, unfair and deceptive trade practices, and commercial matters. Joel’s litigation practice also includes significant focus on electronic discovery issues such as e-discovery management and motion practice relating to e-discovery.