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Why do people buy virtual goods? January 13, 2009

Posted by jeremyliew in digital goods, game design, game mechanics, virtual goods, virtual worlds.
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I recently read a paper by Vili Lehdonvirta about what drives the purchase of virtual goods. I’ve suggested three use cases for virtual goods before:

1. Attention in a noisy environment (usually digital gifts)
2. Self Expression
3. Increased Functionality

and later proposed a fourth use case, convenience.

Vili proposes a different taxonomy:

Purely “utilitarian” or use-value0based attributes can be divided into two categories: performance (simple numerical advantage) and functionality (new abilities and options). Virtual goods also have attributes capable of generating emotional or hedonic responses, particularly their visual appearance and sound, but also any background fiction or narrative associateion with them. Hedonic attributes are difficult to distinguish emperically from the conceptually different social attributes, which refer to attributes that make virtual items suitable for creating and communicating social distinctions and bonds. Such attributes are provenance, customisability, cultural references and the “branding” of an item with a known commercial brand. Rarity is perhaps the most socially oriented attribute of virtual goods, because its value is strongly associated with its ability to distinguish a (small) group of owner from non-owners

In the paper he gives examples of each of his classes of virtual goods. He also summarizes some previous research on digital goods. In particular, he notes advice from Oh and Ryu to game designers based on research on Kart Rider and Special Force:

– Balance between items that can be purchased with real money and items that must be earned through gameplay, and build synergies between the two categories
– Allow players to keep “ornamental” items permanently, but make “functional” items consumable
– In the case of items that ive the player a performance advantage, do not disclose the exact numbers;provide approximate descriptive texts instead
– Introduce items linked to specific events and communities (e.g. Christmas decorations and guild emblems).

It’s useful to read the whole paper (around 15 pages)

Comments»

1. Luis - January 14, 2009

Hi,

great recommndation, I look forward to reading this paper.

Greetings,

Luis

2. spanky - January 14, 2009

I think the research is a good start, but just starts to scratch the surface in terms of social attributes. Cooperative animations are what make a virtual world seem so “real” and drive users to purchase. I’m not talking about sexual type of animations – but instead products that allow users to cuddle on a couch or dance in a room together. In WoW, these include again dancing w/ others, or when someone puts down the new Dalaran choo-choo train that makes everyone w/in 5 yards choo-choo together. Don’t get me wrong, self expression is important, but virtual products that facilitate social interaction is what drives long-term retention imo.

3. Acai Berry Research on Acai Distributor www.IndigoWorld.com.au | Acai Information - January 14, 2009

[…] Why do grouping buy realistic goods? « Lightspeed Venture Partners Blog […]

4. Jason - January 14, 2009

Thanks for the paper

5. Mark Buchholz - January 15, 2009

Since virtual goods always have an issue of game balance and are counter-productive to create a healthy community, convenience is a highly valuable idea when creating a virtual currency monetization stream. Convenience is a broad field that allows creative designers to setup appealing systems.
In my company Splitscreen Studios we are focusing on micropayment streams, that do not negatively affect the community.

connect on twitter: @markbuchholz

6. Azam Khan - January 17, 2009

The paper stressed that the culture is important. in WoW you don’t want high level stuff to be purchasable, only accessible if you complete some ingame missions and have a factor of scarcity. However it is ok to sell items that increase functionality that hasten the acquisition of the high level stuff.

in korea many games have virtual goods where people aren’t really opposed to the aforementioned scenario.

What I found particularly interesting was that the paper talked about how people outside the realm may not be aware of the virtual good’s worth. And so there’s campaigns such as bringing certain FIFA jerseys and Artist clothes within the world as promotional campaigns.

My company deals more with social media applications – less stand alone virtual worlds – and in that realm you can see how games like Mob Wars focus a lot on behavioral/functional goods. On Iphone we originally saw that red light that signaled superiority for those willing to pay for it, an exclusivity of sorts. very simple yet powerful concept. Now that Offerpal’s platform will be brought on iphone it will be interesting to see what emerges out. i definitely want to tap into this. Great blog btw, hope to be part of the conversation more often.

@AzamKhan

7. Game Design Grab Bag « Tish Tosh Tesh - January 19, 2009

[…] Why do People Buy Virtual Goods? (Mostly for the link to a paper on the motivations behind virtual good purchases.  Very relevant for microtransaction design, and even in a sub game, to see why people chase items in the game.) […]

8. Board Exam Review - January 28, 2009

Thanks for the post although I am still at a loss on why people spend lots of money on virtual products.

9. Business Model: Who Pays for Whom and Why? « Gasellit - January 28, 2009

[…] secondlife.com)? There is a research paper on this subject by Vili Lehdonvirta and referenced by a blog entry by Lightspeed Venture Partners on this […]

10. MMO Monetization Roundup « Tish Tosh Tesh - February 5, 2009

[…] Why Do People Buy Virtual Goods? […]

11. the way to monetize off of virtual goods in social games « mod & metaphor - March 15, 2009

[…] 15, 2009 Jeremy Liew has a nice article on why people buy virtual goods here. His top reasons, attention in a noisy environment (usually digital gifts), self expression, […]

12. Technology news - Techvibes Blog - March 8, 2010

[…] games and play are basic survival adaptation and so are the way we perceive virtual goods. What the end user perceives as a virtual good is always part of a user experience–the gameplay–and it is usually delivered by the […]

13. Ayogo » Blog Archive » Game Design, Virtual Goods and Social Games - April 22, 2010

[…] games and play are basic survival adaptation and so are the way we perceive virtual goods. What the end user perceives as a virtual good is always part of a user experience–the gameplay–and it is usually delivered by the game […]


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