Casual Connect panel on designing, balancing and managing a virtual economy

Freetoplay.biz has raw notes taken from the session on Designing, Balancing and Managing a Virtual Economy. Some good quotes include:

On inflation:

Gaia

• did not manage economy when they started
• want ppl to earn quickly for initial wow experience
• down the line, someone who has been playing for months and months get really rich – what is left for them to buy?
• need to manage these disparities correctly from the beginning
• company has one full time economist balancing it

3 Rings

• don’t screw up
• mudflation – overinflation of currency is easy to introduce if you are not being rigorous about sources of attention currency
• need to have some level of instrumentation… need to pay attention and be set to react when something goes awry
• it is a discipline that is tough to master

On creating one time currency sinks to battle inflation:

3 Rings

• incredible opp to take fantastic amounts of wealth and turn it into a one-time exclusive item
• when we shut down alpha server we challenged people to throw Pieces of 8 into a hole… winning group got their name on top of a list

Gaia

• we wanted to redo our amazon-like stores within the site, so we created a fiction inside Gaia that stores were getting shut down because of recession… asked users to help donate to help build higher quality stores… we created a concept of leaderboards… where largest donating teams got their names in lights… they felt as though they were getting status within the site

On pricing and maximizing ARPU:

Nexon

• you want your players to spend all the money they have so they need to get another payment card, etc
• you should offer your players lots of diff ways to spend their money
• players are not buying 1 item at a time… they are batching… buying $10 of virtual currency at a time… so you need lots of options for purchase so people don’t have money just sitting there

2 Fish

• i love pricing… counterintuitive in some places
• barrier pricing… i.e. everybody wants one of the cooler cars
• initial thought is that cars should be expensive
• but really they should be cheaper as they are a barrier item
• once they have a new car they can spend more on customizing it
• think about what kind of behaviours you want and price to encourage that

Nexon

• we actually do sell cars for $10
• we sold 120,000 cars for $10 apiece
• agrees re: barrier
• but barrier for ppl in game is not 10c, but $10 for initial payment… so you need enough items to justify that
• if you have 100 ppl playing game, what % are going to pay and how much
• what items can you create to get to a $15 ARPU

Gaia

• we do exactly that re: modeling an ARPU
• interplay between getting ARPU up vs getting percent of people who pay up
• clearly they should be complementary
• but fascinating thing is that we are not really clear on which one matters more, we go with what is easy
• getting dollars per player up is always easier
• people who want to pay are willing to pay a lot of money
• relatively easy to find small % of ppl who pay and pay
• more interesting thing is how to get a higher percent of ppl to pay
• that has more ramifications on long term business health
• barrier is getting the money into the game via cc or payment card

On dual currencies and managing fraud and chargebacks:

Gaia

• we need to be clear… if you can get your money out, then it is a big issue
• SL has a currency where you can invest your time and get it out in real dollars
• as soon as you do that, you can run into regulation issues, but more primarily, people will try to game the sytem… bots, farming, etc
• if you are going to go down that path, plan on having half your dev team working on managing exploits for the next few years
• you have then become the best target for money laundering
• we chose not to do that… greatly simplifies life… branding decision as well – is your site a place where you can spend time and earn money? a career? or is it a fun experience where you put in your money but don’t expect to get it out

Gaia

• ways to avoid hitting the 1% chargeback
• not allowing you to purchase on day 1
• maxing the amount ppl can spend in a month
• making sure ppl can’t pull money out

3 Rings

• we hit chargeback problems … we hadn’t switched on address verification… turned it on and problem went away
• WoW has big chargeback isseus as people farm on stolen CCs