Can virtual luxury goods bring real profits?

Virtual goods have been around in Asia for some time, mostly for fantasy gaming sites, but the movement has become mainstream - spending real cash on imaginary toys.

While it may sound odd to buy virtual merchandise - whether it be buying a few outfits, shoes, jewelry or getting your nails done – these are among a plethora virtual merchandise that one will never hold in their hand.  To proponents, the beauty of such low cost purchases is that they are inexpensive entertainment, and work the same magic as a $30 game, a movie or a salon treatment.

Gifts, such as flowers and champagnes are also popular virtual goods, make the online social game even more social. A $1 bouquet of flowers stays on someone’s profile page indefinitely, making it more socially visible than flowers in the real world.

According to the New York Times, it’s an industry that is projected to reach $5 billion worldwide this year and more importantly, its recession proof. For providers, it’s low to no cost.

The marketing possibilities for luxury goods providers are intriguing and relatively untapped. Would virtual luxury goods catch on, providing consumers with that that same buzz and cachet as the real thing? Is there a market for Cristal vs. generic champagne for virtual gifts? Interesting to ponder.