High prices can increase perception of value January 29, 2008
Posted by jeremyliew in digital goods, framing, signalling, virtual goods.7 comments
A recent study by Stanford and Caltech found that increasing the perceived price of a bottle of wine increased the ACTUAL and perceived enjoyment that tasters derived from drinking the wine:
According to researchers at the Stanford Graduate School of Business and the California Institute of Technology, if a person is told he or she is tasting two different wines—and that one costs $5 and the other $45 when they are, in fact, the same wine—the part of the brain that experiences pleasure will become more active when the drinker thinks he or she is enjoying the more expensive vintage…
The study
The researchers recruited 11 male Caltech graduate students who said they liked and occasionally drank red wine. The subjects were told that they would be trying five different Cabernet Sauvignons, identified by price, to study the effect of sampling time on flavor. In fact, only three wines were used—two were given twice. The first wine was identified by its real bottle price of $5 and by a fake $45 price tag. The second wine was marked with its actual $90 price and by a fictitious $10 tag. The third wine, which was used to distract the participants, was marked with its correct $35 price. A tasteless water was also given in between wine samples to rinse the subjects’ mouths. The wines were given in random order, and the students were asked to focus on flavor and how much they enjoyed each sample.
Results
The participants said they could taste five different wines, even though there were only three, and added that the wines identified as more expensive tasted better. The researchers found that an increase in the perceived price of a wine did lead to increased activity in the mOFC because of an associated increase in taste expectation.
The ability of “framing” to impact perceived value is consistent with the signalling function of digital virtual goods in the gifting use case.
Facebook digital gifts worth around $15m/year January 23, 2008
Posted by jeremyliew in 3423228, digital goods, facebook, gifts, virtual goods.28 comments
Although Facebook has primarily focused its monetization efforts on advertising, it has also experimented with digital goods. There are three typical use cases for digital goods; (i) increased functionality (ii) self expression and (iii) communication. Facebook’s Gifts fall into the third category, whereby a particular communication is emphasized because a gift has a price associated with it, thereby creating some scarcity value.
Facebook creates a certain fixed number of each type of gift. When the number remaining for any particular gift drops below 100,000, Facebook displays the number left. The most common size runs are 100,000 and 1,000,000 but they range as high as 10,000,000 and as low as 15,000.
We noted the number of available gifts of each type over a seven week period to be able to better understand the sales rate of digital gifts. Excluding free gifts, we found that the average number of sales per week for a gift was 846. Since there were 322 gifts available for sale when we completed our last survey (Jan 8th), that implies that Facebook is selling just over 270k digital gifts per week. At $1 per gift, that implies an annual run rate of just under $15m. Facebook sometimes allows users to pre pay for gifts at a discount if you buy multiple gifts, so this number may be slightly lower.
The top four fastest selling gifts were the only four free gifts, all sponsored by an advertiser. On average these gifts were given at a rate of over 150k/week. This is a rate almost 200x faster than the regular Facebook gifts and speaks to the penny gap.
Holiday themed gifts (e.g. Santa hat, eggnog, Happy New Year!) dominated the list of top selling paid gifts, averaging 4,755 sales per week. Romantic gifts (e.g. “Be Mine” cookie, chocolates in a box) also sell better than average. This reinforces the use case of communication as these gifts all have a clear communication overtone, relative to gifts without a clear message (e.g. an espresso bean, a beach ball or a lemon).
WordPress doesn’t let me upload excel spreadsheets, so a .pdf is available below.
I suspect that as we see more social games emerge on Facebook we will see digital goods that take advantage of the other two use cases, increased functionality and self expression.
NOTE: I updated this estimate in September 2008 and concluded that Facebook was on a run rate to sell $35M in digital gifts.
Porn only 6% of search terms January 22, 2008
Posted by jeremyliew in Search.6 comments
Rich Skrenta shows an analysis of AOL Search terms broken down by category:
Entertainment 12.60%
Shopping 10.21%
Porn 7.19%
URL 6.78%
Research 6.77%
Misspellings 6.53%
Places 6.13%
Business 6.07%
Health 5.99%
News&Society 5.85%
Computing 5.38%
Orgs&Inst 4.46%
Home&Garden 3.82%
Autos 3.46%
Sports 3.30%
Travel 3.09%
Games 2.38%
Personal Fin 1.63%
Holidays 1.63%
Other 15.69%
Interestingly enough, both Shopping and Entertainment show significantly more search volume than porn. I guess we want our ipods and Britney gossip more often than dirty pictures.
The numbers add up to 118.96%, presumably because some search terms fall into more than one category. Representing each category on a percentile basis out of 118.96%, and organizing them into broader groups, we see that a little over a quarter of searches have some commercial component (in red below), a little under a quarter are entertainment (blue) or information (pink) related, with navigation and other making up the rest.
EA launches free to play MMO for Western users January 21, 2008
Posted by jeremyliew in business models, digital goods, games, games 2.0, gaming.add a comment
Although EA has experimented with free to play MMOs in Korea before, Battlefield Heroes, being launched this summer, is its first free to play MMO aimed at a western market. They will be employing a digital goods model to monetize. With EA now joining Sony and other big western game publishers to employ this model, it is starting to look pretty mainstream. Battlefied Heroes will be more casual than previous incarnations in the franchise. NY Times notes about EA’s Korean launch, FIFA:
E.A.’s most recent experiment with free online games began two years ago in South Korea, the world’s most fervent gaming culture. In 2006, the company introduced a free version of its FIFA soccer game there, and Gerhard Florin, E.A.’s executive vice president for publishing in the Americas and Europe, said it has signed up more than five million Korean users and generates more than $1 million in monthly in-game sales.
Players can pay not only for decorative items like shoes and jerseys but also for boosts in their players’ speed, agility and accuracy. Mr. Florin said that while most users do not buy anything, a sizable minority ends up spending $15 to $20 a month.
17 internet games design principles January 17, 2008
Posted by jeremyliew in game design, game mechanics, games, games 2.0, gaming.3 comments
Recently I posted XEO Design’s thoughts on what makes games fun. Also useful from them are some thoughts on internet game design principles:
1. Easy to Learn, Lifetime to Master
2. Simple obvious controls and rules that are easy to master
3. Allow players to discover controls and goals through simple exploration.
4. Provide clear, immediate, and meaningful feedback.
5. Offer clear and obvious short term and long term goals.
6. Players should be able to succeed in the first 10 minutes or earlier.
7. Support short session times of 10-15 minutes as well as longer.
8. Offer consistent controls and labels.
9. Vary the type of challenges so play does not become routine.
10. Support multiple player styles such as Bartle’s 4 types: Achievers, Explorers, Socializers, and Player Killers.
11. Offer more than a high score as a reward, make gameplay intrinsically rewarding.
12. Offer community/social features such as high score boards, in-game chat, and message boards.
13. Use audio feedback and sound effects to increase excitement and make interaction more real.
14. Include the option to turn audio off, so games can be played anywhere.
15. Test all aspects of the Player’s experience with real users.
16. Adjust spacing between play and reward to keep players motivated and to imply progress.
17. Remember a player’s high score at least between consecutive games, allow them to save it, or otherwise show player progress between games
A great laundry list to keep in mind for people building social games on the Facebook platform and elsewhere.
Game Design Fundamentals January 16, 2008
Posted by jeremyliew in game design, game mechanics, games, gaming.4 comments
Raph Koster has a couple of posts on game Design Fundamentals on the Metaplace blog.
The first post notes:
The first thing to understand is that games are made out of games. A large game is actually composed of minigames. Even a small game is built out of very simple small games. The smallest games are ones that are so simple and stupid, you can’t lose. You can think of this as “game atoms,” if you like.
and gives three pieces of advice (summarized here – far more detail in the original post):
Advice #1: Design one game at a time (with each game having 4 components: input; model; feedback and mastery)
Advice #2: make sure the controls match up well to what the player is attempting to do.
Advice #3: make sure the player can actually learn from the feedback you give them.
The second post notes:
The fun comes from the mastery process. But what the player is mastering is the model. All games are mathematical models of something. We often speak, for example, of Chess being like war (we actually speak of lots of games as being like war!).
and gives three more pieces of advice:
Advice #4: try to stop thinking about what your game looks like, for a moment, and think about what it is actually modeling:
..(ask) yourself the following questions about your game atom:
* Do you have to prepare for the challenge?
…where prep includes prior moves? …and you can prep in multiple ways?
* Does the topology of the space matter?
…does the topology change?
* Is there a core verb for the challenge?
…can it be modified by content?
* Can you use different abilities on it?
…will you have to in order to succeed?
* Is there skill to using the ability?
…or is this a basic UI action?
* Are there multiple success states?
…with no bottomfeeding? …and a cost to failure?
Advice #5: check this list for every goal, every objective, every button press, every action a user can take, every decision they make.
Advice #6: watch others play your game – you’ll quickly see where you didn’t provide enough feedback, or where they can’t figure out the underlying model. (ie Prototype and iterate)
Budding social game designers should read both posts.
What games work best on Facebook? January 15, 2008
Posted by jeremyliew in asynchronous gaming, casual games, facebook, game design, game mechanics, games, games 2.0, gaming, platforms, social networks.15 comments
Three good blog posts recently about games on Facebook.
Brian Green talks to a developer with two games, one casual and one hardcore, and based on that concludes that hardcore games do better:
I suspect the reason is because people still enjoy a good game, even if it has “hardcore” aspects like direct, zero-sum competition. Even though the party game was less confrontational, it probably didn’t include as many engaging elements as the first game. So, more people played and stuck with the game.
What he is really saying though seems to be that good games are better than bad games. Matt Mihaly checks the list of Facebook games with most daily users and finds that the top ten are all casual games, and notes that:
…good games on FB are as much about communication and/or self-expression as they are about gameplay.
I completely agree. As Matt notes in his post, there have been two paths to success for Facebook games. One has been to build lightweight “proto-games” that spread virally on the back of self expression or communicaiton. The other has been to build true games with complex and engaging game dynamics. These games do not grow as rapidly, but they do draw much higher daily engagement rates.
Nabeel Hyatt extends the analysis to compare multiplayer games to singleplayer games on Facebook.
He finds that:
Multiplayer social games such as Warbook and Scrabulous average 11.4% active daily users, a good 30% higher than the average top Facebook app (8.01%). I’m sure if we could actually get engagement, attention, and retention metrics we’d see the same trend. This combined with the relatively high percentage of games represented in the top 25 applications (7 games) would suggest that there is simply a lack of quality, socially-focused games on Facebook.
I wholeheartedly agree with Matt and Nabeel. I think that over the next few months there will be a number of exciting social, multiplayer casual games with good gameplay dynamics built on Facebook and the other social networks as they open up. Teams comprising of experienced game designers and experienced social media/viral marketing experts will be best positioned to create these games. I am actively interested in hearing from such teams.
It is no accident that Typhoid Mary was a woman January 14, 2008
Posted by jeremyliew in social games, social gaming, social media, social networks.6 comments
There is increasing evidence to suggest that in the consumer internet, females serve much better than males in spreading the viral growth of social media, social networks and social games
The most recent Pew Internet report on Teens and Social Media notes that:
Girls continue to dominate most elements of content creation. Some 35% of all teen girls blog, compared with 20% of online boys, and 54% of wired girls post photos online compared with 40% of online boys.
This is certainly consistent with the demographics of the major social networks, widget platforms and social media sites. Quantast shows that more than half of the users of these sites to be female with the exception of Digg. (Quantcast does not show a gender breakdown of Slide.)
I recently spoke to the people who run a popular social network and they shared some of their stats with me:
1) In 2007, 56% of total signups were female.
2) Females are 33% more likely to invite friends than are males.
3) Females are 10% more likely to respond to an invite from a female vs. a male.
4) Males are 50% more likely to respond to an invite from a female vs. a male.
It is easy to see that in social networks, social media, and social gaming, where viral marketing is a going to be a key driver of user acquisition, it will be important to build a product that is attractive to women. This has certain implications for the themes and genres of these sites and games. Some of the current crop of Facebook games may be more “female friendly” (e.g. Fluff Friends) than others (e.g. Duels) and these may have better success in growing virally.
