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IDG News Service - Social networking and multiplayer online games are fueling dramatic growth in hard cash earned from goods that exist only in the world of online make-believe, according to companies in that market gathered at the Consumer Electronics Show in Las Vegas.

For mainstream consumer electronics vendors, last year may have been "a year none of us would wish to repeat," as Consumer Electronics Association President and CEO Gary Shapiro put it in a speech opening CES Thursday. Industry revenue dropped 7% in 2009, he said.

But for the group assembled Wednesday at a CES panel discussion on the business of virtual goods and online gaming, 2009 was a very good year indeed. Some vendors estimate that U.S. revenue grew from a negligible base in 2008 to $1.2 billion in 2009, with projections to at least double in 2010. (The worldwide market, led by Asia, is estimated at about $6 billion.)

"The concept of virtual goods is exploding beyond virtual worlds," said Cary Rosenzweig, president and CEO of IMVU, a social network and 3D virtual world. Like the other panelists, he credits social networking with convincing more people to buy virtual goods.

The hugely popular Farmville game on Facebook may be the killer app opening up the virtual goods market to a new and more adult demographic, the members of social networking communities. Farmville lets players tend virtual agricultural holdings, work cooperatively with other "farmers" and purchase goods with virtual currency.

"Twelve months ago we weren't even thinking of that demographic," said David Laux, global executive for games and interactive entertainment at IBM. Farmville has shown that "Midwestern housewives are willing to spend" on virtual goods, he added.

Indeed, in the fourth quarter of 2009 the percentage of Americans who had purchased a virtual good or service doubled to 20%, according to a survey by Playspan, which provides a digital goods commerce and micropayment platform.

People purchase virtual goods for essentially the same reasons that they buy real goods, according to Karl Mehta, Playspan's co-founder and CEO. Items may give them a performance edge, whether they are the latest skis in the real world or a powerful weapon in an online game. Vanity -- the desire to impress with a real Rolex watch or dress an avatar in a standout virtual outfit -- also plays a role. And finally, people buy virtual goods online as social gestures just as they buy tangible gifts for friends and family.

More people may be participating -- and spending money in -- games on social networking platforms because there they are playing with people they know, said Andrew Schneider, co-founder and president of Live Gamer.