Continuing on the subject of in-app currencies and economies, having covered some philosophical elements, let’s look at some practical applications. Practical application, of course, depends upon your position in the market, your apps, their popularity and longevity, as well as your openness to explore new ideas. Newer developers will need to apply to different strategies than established ones.
Numerous companies have developed and more are developing gaming sites offering players access to a wide collection of games, some of which make use of the same “in-app currency” — call it “in-network currency”. The more games you can offer, the greater your appeal, the easier it becomes for you to work on developing economy of scale. The logical extension for developers is to examine where you might fit in with these kinds of game networks:
The arrangements for this third option are more complex, suffice that it allows for cross-promotions of multiple apps. more
The future of digital currencies is extremely speculative, so what is presented here are simply thoughts for consideration. Technology is overwhelming as it is. Technological advances are accelerating. Many would assert that humanity has a hard time adapting to what we already have, say nothing of what is to come.
Location based advertising coupled with facial recognition will change retail stores. Robotics are replacing many factory jobs and 3-D printers are building not just houses, but human organs. Kickstarter and other crowdfunding sites are making it possible to secure major financing outside conventional financial institutions. Sites like ODesk facilitate international outsourcing. Translation software is making it easy to get the gist of anything in any language. And then we have digital currencies – from MMO Gold Vendors to the disruptive influence of Bitcoin causing consternation in governments.
Add to this the volatility of financial markets, fluctuations of major world currencies, concerns over sovereign debt, the ongoing war on terror coupled with potential for money laundering… the list can go on and on. It pays to occasionally stop focusing on the now and consider where we are going – where the future will take us… or our individual and collective ability to influence the future. It’s logical and natural – as we’ve come accustomed to planting in the spring, harvesting in the fall and saving for the winter.
Of first concern, starting with the United States, there is an interest to tax virtual currencies. It’s not happening yet, it’s been discussed for years, but the basic trend is that more and more money is finding its way into non-standard currencies which can be traded for real money and real products. Online taxation was waived early on in the United States, but as more and more states are taxing online sales, the gap between physical and digital products narrows. Bitcoin, the most notable digital currency, has taken blows of varying degrees of severity from Russia, China, India, Thailand, Korea while the West (USA, Germany, and Switzerland) have started looking at ways to tax it.
The second area of interest relates to ubiquity – not so much of a single digital currency, but their proliferation and potential to be sold or traded for real products or real money. Real products – emphasized because we are talking about the ability to buy in-app or in-network software or even watch movies. Basically, the lines between real and virtual are becoming increasingly difficult to draw.
Numerous other areas of concern and interest apply from the growing reliance upon credit cards and alternative forms of payment; the challenge of many countries to confront their “shadow economies”; and the growing capability of governments to track all online and banking activity. This is not small stuff, nor particularly futuristic. Even religious leaders are weighing in, for different reasons, on the idea of changing monetary systems. Concurrently, at the top strategic level, one of the top issues governments and financial institutions are trying to address is the digital divide.
For the sake of amusement, the idea of digital tax collection spawns images of a gangs of “tax collectors” running around The Barrens in Blizzard’s World of Warcraft, like some government agencies are apparently already doing. Like everyone else, most governments are struggling to catch up with the pace of technology, so some of their efforts are going to be hit or miss. The logical extension of technology gives way to lots of great possibilities along with a lot of things that we may not like. Internet Anonymity is one thing likely to be lost in the process – if not to the government, then to corporations. I’m not saying this is a good thing or bad, or representing this in any other way than a personal view about the long-term consequences and capabilities of technology that already exists.
As local and regional economies become better integrated into the overall global economy, money and currency as we know it is likely to change radically. This may be a long way off, but the talk of a single global currency is not new. In many ways, it is logical. An evaluation of Eastern vs. Western GDP’s will show a gradual process of “evening out”. Singapore and Hong Kong are two very good examples – where a concerted effort can lead to a radical growth in average wages. In the 1970’s, average wages in Singapore were around $600 per year; today – nearly $62,000 considering purchasing power parity. The implications for the rest of the world are there and worthy of being considered as it relates to how the world achieves what we might call economic equality.
This requires a lot of head space – these are all topics being explored by some of the world’s most prestigious think tanks, like Chatham House, and economic leaders like at Davos.
Relevance to mobile apps and online gaming? Imagine if you would being a customer – you have a thousand different games that you might want to try or that you’ve only been playing one game and have a lot invested in it, but get tired of it. What if… What if the money you spent on one game or the value that you have in it could be transferred to… any other game? It matters little if there is just one universal game currency or if there are exchange rates.
That’s just a what if.
Many games have nodes of “digital raw materials” where people can refine them and produce “finished digital goods” – which can be sold for “real money”…. and which game developers ARE selling for real money already. What is the difference? Well, for starters, the designer of the game typically holds all of the rights to everything in the game, can change the dynamics of the game, and alter the value of any given item and so forth. There are games like EVE Online that explore this in much greater depth – where at least the game time can be legally purchased and sold with its in game currency. Then there’s this story…
This topic is deeply philosophical, and all of this may well exceed the specific purpose and function of our blog. Friday though, we will use this as a basis to explore some real, practical applications of at least some of these concepts for mobile app developers.
First, a Happy Valentine’s Day to everyone! This is going to be a long article… fair warning, grab a cup of coffee, a pen and some paper… and some dice. Then roll Initiative! We’re gonna have fun!
With in-game currency being such a vital component of the freemium model, considerable effort is deserved on structuring a game’s economy. An otherwise great game can fall apart if an economy is all out of whack. A lot goes into creating an MMORPG, for example, character creation and customization, environment and graphics, combat and movement dynamics – those can all be fantastic, but a broken economy diminishes player enjoyment if rewards are too great or too little.
There’s nothing new here – but the topic is VAST and there is an equally VAST body of guidance on game economies which harken back to the days of Dungeons and Dragons (now a property of Wizards of the Coast). It needs to be pointed out that Dungeons and Dragons as developed by the late, great Gary Gygax emerged from table top miniatures, medieval wargaming (i.e. Chainmail). It also led to games like Top Secret (think James Bond), Gamma World (post apocalypse), BootHill (American Wild West), spawning countless other games by different publishers. Most of the fundamental game dynamics were virtually the same, but customized (unique) to the setting.
The topic of “game economy” was a regular ongoing topic in Dragon Magazine with guidelines gradually codified over the various iterations of what we call D&D – whether 1st, 2nd, 3rd, 3.5, 4th or Next editions, numerous computer games, DDO Unlimited by Turbine, etc. The original columns by Gary Gygax covered “Monty Haul Campaigns” – where in the vernacular, characters would be flying around with ancient gold dragons, +6 Holy Avengers, Rings of Multiple Wishes, millions of gold, and an Armor Class of -10. Those were the days…
As relevant to our discussion, giving out too much loot that is uber-cool frequently leads to the game master (which is you as the game designer) having problems keeping players interested — because you have to keep topping everything else you’ve given. Conversely, a number of modules and game worlds were developed that never really caught on because they engaged to keep the game economy “too frugal”.
Game economies can be simple or extremely complex, but the basic dynamics still apply – namely,
Freemium, at the most basic level, considers a “game currency” and a “real currency” – spend $5.00 and get 1,000 “gems” – if you like. No need to explain that further, as the main question is to what extent “real currency” is needed to play your game – whether designed for single players or as an MMO?
There is no single answer to this as each economy needs to factor in numerous elements such as:
This list is not comprehensive, but it provides a lot of things to think about — that really need to be measured, quantified and in some cases, qualified through a combination of defining the parameters of each tier of game play and playtesting.
Together, these components can help establish a target “lifetime customer value” where the single most important element you will ever have is your number of active players. For games that have them, auction houses provide a good glimpse into the relative health of a game and its economy. If you start a new character, go to the auction house and find virtually nothing available – in the majority of cases, that is an indication that the game does not have many players. There are exceptions to this, particularly following changes in rule sets or the adding of new game or crafting components.
Non-MMO environments have a much easier task, they don’t need to reflect the total number of users – they just need to appeal to the one player who starts playing it. Players like to have options – the ability to make decisions that impact their game play.
In context, some developers decide to keep game and real currency completely separate. With effort, you can get all the game currency you want. To get the paid currency, you have to buy it. Most of the successful games that I’ve seen, and well I’ve seen a LOT of games but nowhere near “all of them” — suffice that those that are most profitable tend to give away some “free paid currency”. That’s critical for MMO’s as it helps to boost the total number of players – which is important for everything from grouping to keeping the auction house active.
Who is more likely to spend $1.00?
Player One has to pay for all of their “real currency” with “real cash” regardless how much they play.
Player Two through a bit of effort earns 20 gems which is halfway to a meaningful “real cash” upgrade/item.
A lot of retail stores have already answered that question for us — with coupons, discounts and sales. Take this in conjunction with Teasers and Tempation to develop a loss leader strategy. Again though, as we are dealing with digital products, in some cases simple pixels, your cost, your loss is negligible. You can afford then to generate multiple loss leaders. The overall idea is to structure all of these things in a coherent manner that neither gives too much or too little, but that consistently exceeds your player’s expectations — teasers and sampler products.
Or, in short – Consumables, which have been shown to have a very high conversion rate across multiple game platforms. Those, and vanity items – particularly in competitive, multi-player environments.
Long and this can go much longer. It’s not my intention to tell you as a developer what to do – only to provide some food for thought on what you can do, how you might go about it, and from the perspective of having been a player, a gamer, a grognard — and a “Dungeon Master” since the first edition rule set of one of the games that pretty much set all of this into motion.
It might be said that as game developers, we always have the danger of falling into a rut where game mechanics are the most important part of the game. They are important, but when it comes to selling our games, perhaps we need to be focused more on the entertainment side of the equation. We need to entertain – make our players happy, but always wanting more and ever curious about what is going to happen next.
This article follows on Monday’s post regarding Pricing your in-app currency, which left off on the matter of Teasing and Temptation.
Your goal in everything is to leave your customers satisfied, but always wanting more. Good teasers of movies and games are made to get us to want to see them, to play them, ultimately to buy them. Most importantly, teasers always leave them wanting more. For a game, that means more loot, better gear, better stats, stronger abilities, new abilities, new options, adventures and challenges.
The more your customers play your game, the more they are willing to invest in it. And this is where your challenge as the developer comes in with in app currency – taking the user from free to play to pay to play. If in app currency is going to be your primary method of monetizing your app, structuring your “in game economy” is very important. It is the difference between freemium, premium and “pay to win”.
The Tease – Your first goal is simply to get each user to make a single purchase AND to be happy with it. Much easier said than done. When a player is just starting out, they don’t know how long they will play your app/game. A Teaser product attempts to engage your newest players with a low cost/high value item, whatever it may be – depending heavily upon the app/game.
If you can accomplish this, you’re halfway to doing something even more important than monetizing your app. You are halfway to establishing a very basic level of trust with your customer. The second half of this depends upon their satisfaction with your purchase – that it works as described and intended.
The real trick is setting and then exceeding customer expectations. One way to do that is to add in something a “little extra”. If in an adventure game, for example, a customer spends real money to buy 6 potions of healing, throw in an extra “sampler” – maybe a strength potion to let them see if that’s something they might find useful (and purchase later). That strength potion? That’s an advertisement that your non-mage customers are likely to appreciate.
Point is – the vast majority of what you are likely to sell in your in app store with in app currency is in app “virtual stuff” — and you can make an unlimited amount of it for free. What you can’t make an infinite amount of is your customer’s game time and real money.
And the Temptation
AGAIN – The more your customers play your game, the more they are willing to invest in it.
The longer you have someone playing your game, the more you have them considering the options available in your in app store. Whatever it is… you don’t need to sell it “now” just as long as you keep your players happy with your game. Equally, your pricing strategy need not be to sell large ticket items. Frankly, you would probably do better to keep your most expensive items segregated from the hottest areas in your store.
If something is commonly displayed and commonly available, ready for the asking – its relative value tends to decrease. The harder it is to obtain (not simply a measure of the pricetag), the greater its relative value. That is, players may have to achieve certain things in game or log in a certain number of times to simply unlock the ability to buy something.
The goal of temptation is to indulge players, not merely tease them. Where your teasers might be like a small slice of chocolate cake, temptation is giving them the whole cake. Instead of potions of healing, it might be an amulet of healing with five charges per day (or login). In a racing game, it is a complete car upgrade.
There is an endless range of examples out there in the market. For whatever reason though, there are also apps that appear to ignore a lot of common sense marketing that try to be something they aren’t. To be blunt, there are pay to play apps masquerading as free to play.
There are simply too many subscription model games out there that have switched to “free to play” and made more money to ignore. This is largely a function of developing a solid basis for the game economy – and we’ll probably cover that on Friday.
Market reach counts – advertising on Opera Mobile Store can get your app in front of millions of end-users you are not likely to reach otherwise. Contact our sales team today!
If you are looking for different ways to monetize your app, you may find the following articles of interest to you:
A fun topic and one that warrants discussion – how to price your in-app currency? And related topics. A lot of really good online MMO’s have gone Free to Play with in game stores to buy everything from potions to mounts to extra content like character classes and adventure packages / add-ons. In consequence, some games have come to be termed truly “Free to Play” and others “Pay to Win”.
Long before computer games were readily accessible, there were Arcades – with… gasp… Arcade Games – like Space Invaders, PacMan, Galaga… and before them – Pinball Machines. One game was a Quarter ($ .25). A game would last according to how good you were — and if you were good, you would get an extra play, sometimes several. When you lost your last life, it was “GAME OVER!”.
Computer games with a retail box typically run $29 – $79 on first release, gradually decreasing in price over time to where they get into the bargain bin for $9.99 or less – though it may take a year or three to get there. Full game downloads typically run about $10 less than boxed copies – no Shipping & Handling involved.
Many MMO’s frequently involve a purchase of software (slightly reduced in price) because the publisher intends to make the majority of their money from subscriptions which run $9.99 to $14.99 per month – with savings plans for customers subscribing 3, 6 or 12 months in advance. Where the boxed software or download runs $40 – $50, the subscriptions raise $120 – $180 over the course of a year…
Nowadays, “GAME OVER” has far less to do with a player’s skill as it does the developer’s skill. Everyone gets to respawn – as many times as they want, sometimes with a small delay, maybe a small penalty… sometimes you might actually lose a lot of valuable in-game stuff. Worse comes to worse, you get to re-roll. “Game Over” is now what happens when a player decides not to play a game again… for whatever reason.
There are lots of games out there. Competition over a player’s time is immense. So, when it comes to introducing “in app currency” to your app – pricing it is very important.
One of the main factors that distinguishes an MMO from most regular computer games is that it involves “massive numbers of players” – in a semi-perpetual, semi-to-ultra competitive environment. There is ONE THING more than any other that helps to increase the value of a game and its “economy” relative to the end user. It is called Vanity. It is the idea that a player’s character is, in some way, better than the average — exceptional by “virtue” of character stats, equipment, hard to get trophies, rare mounts, an innovative build, accomplishments out the yin-yang, faction scores, or even the uber hardcore PVP arenas.
Within a competitive multiplayer environment — all of these things can stand as a testament to “I’ve played the game and have a lot to show for it” which can be very important when it comes to getting into elite raids. In many cases, it is what gets you into elite raids, unless you happen to be in a very good guild – with lots of other players able to organize these kinds of “multi-player events” on a regular basis.
Vanity and Pride — these do have a dollar value. At one point, and probably still, the kind of epic gear needed to compete against top tier arena teams for one popular MMO (through various “gold vendors”) cost more than one could purchase a real T-72 tank. I always look at that with a sort of amazement and fascination…
But when your app or game is simply a one-player affair, or occasionally gives way to a few multi-player possibilities, your Vanity Value drops too much to use Vanity as the main selling point for in-app currency. There, you have to rely upon the “real fun/excitement/suspense” — what if and what next — kind of elements inherent in your game. If players know that they can expect lots of grinding regardless how much they spend… that grinding better be a lot of fun. It better be a lot more fun than other games that the player could be playing.
The objective of in-app currency is to make your game more profitable — not to set the “threshold for serious play” beyond the scope of most players. This is not to say that you need not aim for “vanity value” – only that you need to structure it accordingly using… Teasers & Temptation. We’ll cover that Wednesday.