Inside Social Games

Although it’s a huge and mature space in China, the virtual goods movement has solidified a foothold in the American gaming industry as a highly viable business means for online games. However, there is no easy task involved in the creation of a virtual goods infrastructure, and this difficulty creates a void that must be bridged before it becomes more prominent.

Knowing that a need exists, companies like Twofish seek to fulfill that need. The company has secured $4.5 million in funding which was recently announced at The Virtual Goods Summit in San Francisco.

Twofish has dubbed itself a “digital resource planning solution.” Usage of the Twofish infrastructure will allow developers to easily run virtual banks, track inventory, set up an e-commerce system as they see fit, and allow player transactions in real time.

For game developers, the purpose of outsourcing is to focus more on the virtual worlds and games which they are creating, as opposed to spending time on the more tedious back end development. Furthermore, the inclusion of Twofish features can not only allow for virtual goods’ based profits, but also provide users with greater customer security, and fraud prevention.

Lee Crawford, chief executive at Twofish, also points out that the technology gives real-time data back to the developers, allowing them to track what virtual goods are being sold as well as how much revenue is being generated through the various microtransactions being made ($.25 here, $.50 there). However, it is also worth noting that a virtual goods system is not right for everyone.

Based on a blog post on VentureBeat, chief executive of Outspark (an online games company), states that you would need to make at least $200,000 in revenue before you could consider adding any market system (be it primary or secondary markets of virtual goods). Nonetheless, the idea behind Twofish still seems to hold significant merit to the folks at as Triplepoint Capital, Rustic Canyon Ventures, and Venrock.