Lloyd Pickering's Blog

In the last post I spoke about how game economies are generally setup and how they need to be managed in order to ensure the health of the economy. I will go into much more detail in later posts about what exactly should be taken account of in managing game economies, but for now wanted to expand further on the sale of virtual goods.

In social games, and now in some MMOs, the game owners make money from selling virtual goods, but what exactly are they?

When internet based games were run in the western world there was often a subscription fee to pay – for games like Everquest or the popular World of Warcraft it was/is usually in the region of $15/month. This covered the cost of running the servers and updating the game with bugfix patches etc and gave the company a recurring amount of revenue. Expansion packs and the initial game software were sold as either digital downloads or boxed software in stores alongside other games.

In the east, particularly China a different model sprung up where the game was free to play, but you used real world money to buy advantages in game. This might take the form of an awesome sword, or an item which lets you level up faster – essentially it was an item which gave you an advantage over other players who hadn’t bought the item. These sort of goods often trade real world money for time where the player can do more in a limited time at the cost of real world cash which they presumably earn in the time they aren’t playing the game.

But – there are other types of virtual goods. Generally virtual goods can be loosely categorised as 3 types:

1. Goods which give the player extra functionality

2. Goods which allow the player to customise their appearance

3. Goods which grant the player social status (This includes the ability to gift other players items)

Essentially these boil down to – do more stuff, make you feel good about yourself and make others feel good about you.

When you buy that tractor in Farmville you are buying into type 1, and when you put down decorative items to customise your farm you are either buying types 2 or 3 (depending on whether you are doing it for yourself or to show off your awesome farm to friends).

Gifting in particular can be very tricky in a social sense for a player. When someone gifts you an item in game, you feel obliged to return the favour. This is where the social nature of social games can be leveraged to maximise profit (for good or bad!)