PayPal: over 12 million monthly users pay for virtual goods (updated)

More than 12 million users pay for game transactions using PayPal in the US. The global number is even bigger, but it's not clear by how much.
Written by Emil Protalinski, Contributor

Update: PayPal contacted me to say that the 12 million number is not related to Facebook after all. It is thus still unknown what percentage of the website's 750 million users are actually paying to play games.

PayPal doesn't just manage transactions for physical goods: the service is also used to pay for virtual goods, such as those found in Facebook games. 12 million unique users pay for games each month on Facebook in the US, according to data released for the first time today by the digital payments vendor according to research by Inside Network dated from mid-2010.

Carey Kolaja, senior director of emerging opportunities at PayPal, told VentureBeat that the social game sector has (unsurprisingly) been growing dramatically for the past couple of years. More and more are willing to pay for virtual goods, and they're also willing to spend more as well.

"The growth of PayPal in games was organic, and now there are more and more ways to pay for goods online," said Kolaja. "In massively multiplayer online games, the number of paying gamers keeps going up. The perception about digital goods is that they lead to micro transactions, which are small. But the average purchase for a paying user is in the mid-20s (in dollars). It is on a positive trajectory."

In MMOs, about 19 percent of purchases of virtual currency are under $10, about 54 percent are for $10 to $50, and 27 percent are for $50 and up. In social games, 33 percent of purchases are under $10, 58 percent are $10 to $50, and 9 percent are $50 and up. In casual website games, 29 percent of purchases are under $10, about 49 percent are $10 to $50, and 22 percent are for $50 and up.

In terms of hours played per week, MMO players play for 22 hours a week and 40 percent play daily, social gamers play 16 hours a week and 56 percent play daily, while casual gamers player for 8 hours a week and 34 percent play daily. The top games played by PayPal customers are World of WarCraft, Final Fantasy, Bejeweled, and FarmVille.

Last month we learned that Facebook will generate an estimated $1 billion in revenue from social gaming this year, the majority of which will come from advertising, but some will also come from Facebook Credits. Zynga, the dominant developer of social games on Facebook, also last month filed for an IPO, with a coincidental number of $1 billion. It's clear that only a small portion of users have to pay for content to create a huge new industry (in this case social gaming).

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