Why do teens spend real money in virtual worlds? A consumption values and developmental psychology perspective on virtual consumption

• Spending real money on virtual goods and services is common among the young.
• We elucidate the customer value of virtual purchases in a social virtual world.
• We reflect the value against the developmental issues of adolescence.
• Premium user account, decoration, status, and boosted enjoyment motivate purchasing.

Monetizing the users base is a major business challenge in social media, online social networking and online entertainment. Many of these services employ the freemium business model i.e. offer a free access to the service and try to generate revenue from selling premium user accounts with exclusive features or selling virtual items. However, the value users create by virtual purchasing is not well understood. Furthermore, young people constitute an important user segment for online social networking services that has not received proportionate attention in the literature. This study draws on Theory of Consumption Values and developmental psychology to elucidate the value teenage users create by spending money in a social virtual world (SVW) that employs the freemium business model in parallel with selling virtual items. The benefits of the premium user account, decoration, status, and boosted enjoyment of the user experience were the most common reasons for teenagers’ purchasing within an SVW. From teenagers’ developmental standpoint, virtual purchasing facilitates identity experiments and membership of peer groups. The results also reveal social hierarchies and discrimination among the users.