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BestBuy launching prepaid cards for online games August 20, 2008

Posted by jeremyliew in business models, games, games 2.0, gaming, mmorpg, virtual goods, virtual worlds.
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Although some still doubt that free to pay games have a viable business model, this month’s launch of game cards at Bestbuy may change some minds. Reports Virtual Worlds News

Stardoll, Meez, AdventureQuest, and Gala-Net have all partnered with GMG Entertainment to launch individually branded prepaid cards at Best Buy. The Meez card will come with an exclusive virtual good, and Stardoll, which has previously worked with GMG Entertainment, is expanding its prepaid offerings to include a $15 card that will unlock various virtual goods.

I’ve noted in the past that prepaid cards at retail are an excellent way to monetize MMOG players. Earlier this year, Raph posted on the game card endcap at Target who have pioneered this category.

Sean Ryan
, MEEz’s CEO, notes:

So why should anyone care about old-line retail stores and physical goods when we’re all selling cutting edge virtual goods? Isn’t it all going to be virtual? The reason is that retail still matters a great deal, especially when addressing a somewhat unbanked audience like teenagers. We all know teens acquire an estimated $60B each year, whether it’s from allowances or part-time jobs – however, they don’t have an easy way to send it to their favorite virtual world or Massively Multiplayer Online (MMO) game company since they don’t have credit cards, are not happy borrowing them from parents, and aren’t as comfortable with PayPal, even though it can be linked to a checking account. Plus, teenagers still go shopping a lot, and that retail foot traffic is incredibly important since it provides another way to reach that audience when they’re not online. Finally, parents or friends are more comfortable giving gift cards these days so it’s easier for a teenager to ask grandpa for a $10 Meez card for graduation vs asking for cash – it’s a big Win/Win for the category.

Retailers are notoriously data driven when it comes to what they will give floorspace. Music is already getting cutting back according to Silicon Alley Insider:

… the three big retailers who comprise most of the industry’s sales — Best Buy (BBY), Wal-Mart (WMT) and Target (TGT) — will likely make significant cuts in the amount of floorspace they devote to CDs. We are hearing predictions of cuts that range from 20% to 40%, with Wal-Mart making the most aggressive pullbacks.

If retailers are giving shelf space to free to play games, that is a big vote of confidence in their future.

Managing fraud when selling virtual goods August 18, 2008

Posted by jeremyliew in fraud, games, games 2.0, gaming, mmorpg, virtual goods, virtual worlds.
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Worlds in Motion interviews Vindicia‘s Gene Hoffman about the science of MMO fraud, but the lessons apply to any virtual goods business. Hoffman notes:

The first question about MMO fraud is whether there is a real currency resale market. If there is a way to create cash directly or over on eBay, there will be real fraud attempts to use stolen credit cards to create cash.

Even though there is no actual “cost of goods” for virtual goods, MMOGs need to worry about fraud (as measured by credit card chargebacks) because if your chargebacks get over 1% for a protracted period, Visa, Mastercard and Amex will remove you as an accepted merchant. This will dramatically effect your ability to monetize your users.

Game operators need to worry about not just real fraudsters, but also “friendly fraud”; real players who really did buy the goods, but just don’t want to pay:

On the back end, many MMOs have a very hard time tying their chargebacks to the actual accounts and shutting those accounts off. That means that customers have learned that they can chargeback their transactions to get credit or money back and often still play next month. We actually see this happen around Thanksgiving as chargeback volume spikes so that people have more Christmas spending money.

It is relatively easy to reduce fraud rates by making gross business rules that block whole classes of potential customers that fall into higher risk categories. But in a business where your cost of goods is zero, the opportunity cost of “false positives”, where you turn away many good customers in order to stop a small number of bad customers, is very high. As Hoffman notes:

…we have noticed across all our gaming clients when it comes to fraud is that the 1% chargeback rate is really a marketing budget.

Having your chargebacks too low often means you aren’t being aggressive enough on the customer acquisition side. One of the real side benefits of a large customer base is that the denominator in your chargeback rate is quite large and offset by very safe and trustworthy transactions.

Those two processes create a virtuous cycle that allows you to push hard to sign new customers up if you have someone like Vindicia really watching the chargebacks on the back end.

In general, there are two ways of managing fraud:

1. User based approaches (such as Vindicia’s) look to identify both good actors and bad actors across multiple virtual goods merchants, creating a network of trust. These approaches lend themselves to being outsourced to an expert third party.

2. Behavioral approaches look to correlate certain “in game” behavior with likely fraud (e.g. a new player with a level one character who attempts to buy an expensive high level item within 5 minutes of registering). These approaches typically need to be handled on a game by game basis.

The best operators of virtual goods businesses apply both approaches.

What experiences have users had with managing online fraud by their customers?

Cartoon Networks lessons learned on virtual worlds for kids August 7, 2008

Posted by jeremyliew in game design, kids, mmorpg, virtual worlds.
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Via Izzy Neis, Virtual Worlds News posts a Q&A on Mini Match, Cartoon Network’s new virtual world. Some interesting lessons about how to design virtual worlds/MMOGs for kids:

Make it easy to get to the fun

To start with, we have three really simple games that you can jump into. Our thing was we didn’t want anyone to have to read directions. We’re going to introduce more games like that sort of simple, two-person game…

.. you don‘t have to wander around the map and find a game. All the games are at the top of the screen, and you can just drag it down and play it.

Make it easy to meet new people to play with/against

We had multiplayer gaming with digital trading cards, and we learned very quickly that kids need an instant match option. Particularly boys, but kids in general don’t run up to each other on the playground and say, “Hi I’m Molly, and I like juice.” They can play all afternoon and never get each other’s names. They don’t get a lot of biographical information.

Mouse is better than keyboard

Often we find that the kids interact just by dancing or the emoticons. Out of all the emoticons, the most popular is gas. So that’s not surprising.

Kids are explorers (of the Bartle player types)

And they love mysteries. They love these environmental games we’ve included where you bump into an item, and you’re turned into an alien, things like that. We’ve added mysteries and puzzles like that all over, and we’re adding more. It’s like Lost, except for I’ll promise you that you won’t have have to wait for six years to find out the answers.

Kids like exploring new identities (ie play acting) and self expression

The great thing about virtual interaction is that it’s still anonymous and safe. They can try out different identities, within reason, and play…

The other thing we’ve tried to introduce is a mix of modern fashion and a little bit of the fantastical. If you feel like looking like a pirate or alien or whatever or just layering your clothes, that’s there.

Why do kids and tweens buy virtual goods vs why do teens buy virtual goods? July 28, 2008

Posted by jeremyliew in game design, game mechanics, games, games 2.0, gaming, kids, teens, virtual goods, virtual worlds.
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A recent post on KZero, asks, “Will luxury brands drive the growth of virtual goods?”:

… tweens and teens (KT&T) will play a big part in the growth. This group has ‘less of an issue’ paying real money for virtual goods – their decision-making process does not take into account its a virtual good – they just want the product and see technology as invisible.

So worlds targeting KT&T (kids, tweens, teens) clearly have a major opportunity to create strong revenues here, as long as the products are right. But which types of product are right?

Obviously the ones that are demanded are the right sorts of products. But what is this demand? Certainly in the younger worlds and to a certain degree in older worlds, some virtual goods are viewed as status symbols – a ‘badge’ that sends out a message that the owner (wearer) has something unique / purchased / earned, that others do not have. And in this context, there’s a lot of perceived value associated with the item.

Izzy Neis though thinks that the kids and tweens are motivated quite differently than teens:

Kids/Tweens have less “ownership” and responsibility and ABILITY than teens do. For tweens the status is more broad than teens – who care less about the meaning & depth of an item and more about what “luxury” means to them.

Tweens/Kids seem much happier to own the item itself, as well as show it off and play with it. They remind me more of Dragons & Treasure. As in many tales of lore (oh, how I love the folksy stuff), Dragons want want want, then horde it all. It’s as much of a self-congratulations in ownership as it is a play thing or show-n-tell.

Teens are more “look at me, look at me” (to quote Kat in “Ten Things I Hate About You”). The name of the item and the social-style-competition is much bigger a pay off than the actual day-to-day use or “play time”.

In the virtual worlds, from what I’ve seen, kids are just as psyched to EARN/PURCHASE as they are own – and just like kids playing with their clutter in real life, kids yearn to earn all sorts of silliness that moms & dads won’t buy them in the real world. Empowerment.

And in the teen worlds – it’s the display of the purchase and how it makes others around react that shows the “BIG” payoff.

This dichotomy seems like an important distinction to people building social media sites and virtual worlds.

Kids who are collecting virtual goods for the love of ownership (perhaps enjoying the control that they do not have to buy things in the real world) need less of a social experience to justify their purchases. THis is good news because (i) creating a social environment implies communication between members, which is more fraught with risk when it comes to kids and (ii) if kids enjoy “soloing” the demand for virtual goods can start earlier in the lifecycle of the company. But ownership for it’s own sake can get boring when you own enough stuff, so there may be a more well defined limit on how long any virtual world can hold a kids attention.

Teens (and adults), who more focused on how others react to their virtual goods than in the ownership of the goods themselves, require a social environment to justify and validate their purchases. Ownership is a performance, one of the three ways that social networks are different from other forms of online communication. This social environment takes longer to develop, and hence demand for virtual goods can be delayed versus a more “soloing” environment. But the flipside is that as the social environment changes and evolves, you can maintain an ongoing demand for virtual goods to stay current with the environment, just as the fashion industry does in the offline world.

I’d be interested to hear from readers if they agree with this dichotomy.

IMVU selling over $1m/mth in virtual goods June 25, 2008

Posted by jeremyliew in business models, games, games 2.0, gaming, mmorpg, virtual goods, virtual worlds.
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GigaOm says that IMVU is generating over $1m/mth in revenue:

Flying under the proverbial radar for the last four years, the web-based virtual world chatroom IMVU has released new jaw-breaking data: Since April 2004, it has amassed 20 million registered accounts, with 600,000 of those active monthly users. By comparison, Second Life took five years to acquire about 550,000 active users.

The company, well known to web surfers because of its ubiquitous ads, is now earning $1 million a month in revenue, 90 percent of that from the sale of virtual currency and 10 percent from banner ads embedded in its interface, CEO Cary Rosenzweig said. That works out to about $1.66 a month per active user.

This is within the range of monthlyly ARPU for MMOGs. The article notes that Peak Concureent Uers (PCU) is around 70k, so ARPU based on PCU is >$14/mth.

IMVU sells credits to its users who use these credits to buy items from their catalog to personalize their avatars. The vast majority of the items in the catalog are user generated. Of the 20m registered users, 100k are registered to make items in the catalog, but only a fraction of these are active. Still, they have created 1.7m items, so are averaging 20+ items created per active “item maker”.

Interesting stats.

Notes, video and commentary on the Social Gaming Summit June 16, 2008

Posted by jeremyliew in asynchronous gaming, business models, casual games, game design, game mechanics, games, games 2.0, gaming, mmorpg, social games, social gaming, user generated content, virtual goods, virtual worlds.
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The Social Gaming Summit was quite a success on Friday. Over 400 attendees seemed to enjoy the sessions based on the high proportion of people in sessions (vs in the lobby) and the fact that even the last session, that ended at 6pm on Friday evening, was very well attended.

The attendee list was a good mix of game developers and publishers, with people coming from both the gaming side and the social media side. Most of the attendees with gaming backgrounds came from casual gaming, web based gaming or MMOG backgrounds. With the notable exception of EA, there were few representatives from the giants of the console space.

Although each of the topics covered different topics, it was clear that monetization was top-of-mind for all panelists as the discussion on most panels eventually turned to this issue.

I (Jeremy Liew) moderated the first session, on What Makes Games Fun, featuring game design thought leaders Amy Jo Kim, Nicole Lazarro and Ian Bogost, plus John Welch of Playfirst, the company behind one of the most popular casual game ever, Diner Dash.

The discussion was wide ranging and covered Nicole’s framework for generating emotion in games and the four types of fun and Amy Jo Kim’s five game mechanics.

There was excellent discussion about how fun, addictiveness and business models can either collide or work together, with in depth discussion of two games in particular, Pack Rat and Parking Wars.

Pack Rat was lauded as an example of a game that did a masterful job of creating addictiveness through game mechanics, and a game that had a natural digital goods/service business model baked into it. But some panelists questioned whether the “grind” without real “payoffs” at different levels could burn players out. In contrast, Diner Dash had real changes in game dynamic and strategy as players level up (e.g. when Flo gets the coffee maker at level 4, it changes the winning strategy) that made leveling up more meangingful and rewarding.

Parking Wars was pointed to as a highly social game with a genre matching to the mass market that let players “play slight variations of themselves” where they could explore slightly nefarious behavior in a safe environment. But “winning” in Parking Wars forced activity to the edges of the social network, instead of to the core, so the “points” game mechanic ended up working against the “fun”.

UPDATE: Virtual worlds has an excellent writeup of the What Makes Games Fun panel.

The second session was focused on Casual MMOs and Immersive Worlds, with Joey Seiler from Virtual World News moderating representatives NeoPets, Nexon, K2 Networks and Gaia.

One of the key questions was how to get free to play users to open their wallet. Gamasutra covered this panel in detail and noted:

Added Kim (Nexon): “A lot of people think they can make money off of casual games where people play a couple of hours a week. I don’t believe that. When people get engaged with the social experience then they’ll buy items. You need to understand the psychology.”

Reppen (Neopets) continued: “For us, it’s all about a sense of ownership that our audience has. There’s a real sense that it’s their game… The identity component to virtual worlds is so important, but there’s so many other things going on in the meta games around earning points, acquiring wealth, shopping and customizing and creating your own experiences… It’s part of a mix.”

In other words, even for casual MMOGs, you monetize the hardcore players who tie their identity into the game. Erik Bethke (GoPetsLive) said the same thing at this years GDC previously in explaining why he applies game dynamics to make virtual worlds more addictive.

UPDATE: Massively writes up the panel in Q&A style.

After lunch Andrew Chung from Lightspeed moderated a panel on Asynchronous Games on Social Networks with the CEOs of the companies behind many of the top games on Facebook, including Friends for Sale, Zombies, Vampires, Warbook, JetMan and (fluff)Friends.

Inside Social games
took live notes from the panel. One interesting counterpoint in response to the question, “How do you move people down the spectrum to make them more engaged and hard core?”:

Blake (Zombies, Vampires etc)- There is always going to be some subset of your userbase that’s never going to play more than their 30 minute lunch break, because that’s all the time they have. Don’t inundate users with too much experience at the beginning, gamers hate to read, I’ve never read a game manual in my life.

Siqi (Friends For Sale)- I think there’s a lot to learn from traditional MMO design, things like levels. If you get to the next level, you get this new shiny thing. It makes the game more complicated, but it works. Our hardest core users use more synchronous features.

Shervin (Warbook, Jetman, etc) – The first generation of social games were incredibly simplistic, and the platform was so viral, that it was a lot easier for apps to grow. But it behooves all of us to invest in content. I’m staying up late at night building social games 2.0, games with richer content, deeper stories, much better user experiences. It’s going to become harder for independent developers. I can’t talk about the games we’re working on, but you can look at Playfish. Their engagement levels are high and they’re growing faster than those that have come before.

In other words, games need to be easy to learn, but hard to master.

Next up was Dean Takahashi of VentureBeat moderating a panel on User Generated Games in Social Networks and Virtual Worlds. The speakers were from IMVU, Dogster, Three Rings (Puzzle Pirates, Whirled and Bang Howdy) and Habbo.

Virtual Worlds News has coverage of the panel and noted that:

In IMVU, said Rosenzweig, creators “do what they do because it’s cool, but they like making credits” by selling the items in world. That can then be cashed out through IMVU, which leads to 90% of its revenue, taking a cut while transfering IMVU credits to real world dollars. That user attitude is true of Dogster and Catster as well–users don’t get a cut of the money generated by creating games around their items and boosting activity. They just enjoy creating and sharing.

In other words, social game players generate content for love, not for money. But if there is money there to be had, they don’t mind taking some of that too! Last month Chris Alden noted the same experience in the blog economy.

UPDATE: Worlds in Motion also has a writeup of this panel

After a short break for cookies, the attendees reconvened to hear Brandon Sheffield of Gamasutra moderate a panel about Building Communities and Social Interaction In and Around Games, featuring the leaders of Kongregate, Zynga and Addicting Games, along with noted social architect and game designer Amy Jo Kim.

The discussion centered on the desire that many users had to communicate with each other, and how games often served as an easy way to break the ice and provide topics that made it easy to start a conversation. I haven’t found any coverage of this panel online unfortunately.

The final session of the day was focused on Monetization and Business Models for Social Games. My partner Ravi Mhatre moderated the panelists, including the leaders of Mochi Media, Sparkplay Media, Stardoll and Acclaim. This was a fantastic panel. Virtual Worlds News has great coverage.

Although most of the discussion was focused on the four models of advertising, subscription, digital goods and retail, David Perry noted that there are by his count 29 business models for games.

On the mix between advertising and virtual goods, the panel mostly agreed that virtual goods was the primary revenue stream but that advertising was an important secondary stream:

“Microtransactions and advertising go perfectly togetehr,” said Miksche. “Microtransactions drive our business, but we will never have 100% of our users wanting to pay for that. Advertising is a good way to monetize that remaining X percent.”

There was some good discussion about the tension between game balance and letting players buy powerful items in the games. Several panelists noted that self expression was a key driver of virtual goods sales:

As for who’s paying, Perry (Acclaim) expected most microtransactions to come from hardcore MMORPG playerskitting out the avatars with fancy armor and such. Instead, it comes from Dance. The game is a simple dancing activity, but because users spend so much time looking at their avatars, the appearance and identity becomes even more important.

That works well for Stardoll, a fashion-themed site, especially with trends that match the real world…

“We’re One-Click Dressing,” said Miksche (Stardolls). “You come to the site and instantly start dressing. For our users, young girls, that’s very important–instant gratification.”

For those who couldn’t attend, UStream.tv hosts video from the social gaming summit.

Andrew Chen’s blog also has his takeaways from the social gaming summit.

I’ve pulled together all the coverage I could find, but if there were additional posts, please let me know in comments.

Great agenda for the Social Gaming Summit on Friday June 12, 2008

Posted by jeremyliew in conferences, digital goods, game design, game mechanics, games, games 2.0, gaming, social games, social gaming, virtual goods, virtual worlds.
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I’m very excited about the Social Gaming Summit on Friday that I’m co-producing. The program looks fantastic:

10:00am What Makes Games Fun?
» Erik Bethke – CEO, GoPets
» Dr. Ian Bogost – Founding Partner, Persuasive Games
» Nicole Lazzaro – President, XEODesign, Inc.
» John Welch – Co-Founder, President & CEO, PlayFirst (Diner Dash)
» Me (Moderator)

11:00am Casual MMOs and Immersive Worlds
» Daniel James – CEO, Three Rings (Puzzle Pirates)
» Kyra Reppen – SVP and GM, NeoPets
» Min Kim – Vice President of Marketing, Nexon America
» Patrick Ford, VP Marketing and Community Development, K2 Networks
» Joey Seiler – Editor, Virtual Worlds News (Moderator)

1:30pm Asynchronous Games on Social Networks
» Siqi Chen – Founder, Serious Business (Friends for Sale)
» Blake Commagere – Founder and VP Engineering, Mogad (Monsters apps – Zombies, Vampires etc)
» Shervin Pishevar – CEO, Social Gaming Network
» Mike Sego – Developer, (fluff)Friends
» Andrew Chung – Principal, Lightspeed Venture Partners

2:30pm User Generated Games in Social Networks and Virtual Worlds

» Jeremy Monroe – Director of Business Development, Sports & Entertainment, North America, Sulake Inc. (Habbo Hotel)
» Ted Rheingold – Founder, Dogster and Catster
» Cary Rosenzweig – President and CEO, IMVU
» Craig Sherman – CEO, Gaia Online
» Dean Takahashi – Writer, Venture Beat (Moderator)

4:00pm Building Communities and Social Interaction In and Around Games
» Jim Greer – CEO, Kongregate
» Amy Jo Kim – CEO, Shufflebrain
» Mark Pincus – Founder and CEO, Zynga Game Network
» Dave Williams – SVP, Shockwave, AddictingGames
» Brandon Sheffield – Writer, Gamasutra (Moderator)

5:00pm Monetization and Business Models for Social Games

» Jameson Hsu – Co-Founder and CEO, Mochi Media
» Matt Mihaly – CEO and Creative Director, Sparkplay Media
» Mattias Miksche – CEO, Stardoll
» David Perry – CCO, Acclaim
» Ravi Mhatre – Managing Director, Lightspeed Venture Partners (Moderator)

Attendence is limited to 400 and it looks like it is going to be a full house. Hope to see some readers there!

How many of your MMOG’s monthly users can you get to pay? June 11, 2008

Posted by jeremyliew in business models, games, games 2.0, gaming, mmorpg, subscription, virtual goods, virtual worlds.
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I recently concluded that good MMOGs can expect $1-2 per user per month from a free to play model, with Second Life as an outlier at almost $10 per user per month.

This relatively tight band of monetization masks some fairly high variability in the ratio of paying users across games and virtual worlds. From the highest to lowest, here is some data available on the web:

Second Life reports 860k residents logged in over the last 30 days, and 383k customers spending money in world in May. As you can only spend Linden dollars if you have Linden dollars, and you can only get Linden dollars by buying them or becoming a premium members, this suggests a 45% paying ratio. (Likely the ratio is lower than this as some Second Life residents may buy dollars one month but spend it over several months)

Club Penguin at acquisition reported 700k paying users and had 2.6m UU in that month according to Compete, or a 27% paying ratio.

NCSoft’s Dungeon Runners self reports a ratio of 3:1 free to paying users, or 25% paying ratio.

Jagex’s Runescape claimed 1m players paying $5/mth in May 2007 and 6m players per month in October 2007, for a 17% paying ratio.

3Rings’ Puzzle Pirates has been reported to have 30k paying users out of its 200k unique monthly users, for a 15% paying ratio.

Frankly, all of these public numbers are on the high side of the industry. An NPD survey found that:

… 91 percent of online gaming among kids ages 2 to 17 is free; of the 9 percent that pay to play, these kids are more likely to hail from higher income households. In addition, the likelihood of a child to pay for games increases along with the child’s age and time spent on gaming.

Monetizing kids is more difficult than monetizing adults since kids have more limited access to payment mechanisms (e.g. credit cards), so the overall industry ratio of paying gamers is likely higher than 9%.

Most MMOG publishers do not publish their monetization statistics, but private conversations with many publishers suggest that getting to a 10-12% monetization ratio of active users is a stretch but achievable target.

Do readers have other data that they can share?

Gaia’s new MMO is likely to become a major contender April 30, 2008

Posted by jeremyliew in gaming, mmorpg, virtual worlds.
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In February, Gaia announced that it would be using its current virtual world user base to launch a casual MMOG. Virtual World News has an interesting interview that gives more details about the Gaia MMOG:

Beyond the virtual world background for the casual mmo, Georgeson also highlights the fact that Gaia offers more variety in its gameplay than some other MMOGs. Locations will behave differently according to the number of people present, monsters will spawn in different ways, and a wider variety of scripts, he says, create a sensation of spontaneity.

Also, there’s golf.

“One of the other things I’m particularly proud of is that a lot of MMOs have the same experience where you go or no matter what you’ve done for how many people are in the area,” said Georgeson. “It’s a big treadmill of killing monsters and getting loot. We still have that, but we also have aboveground game like golf that people can play even if there’s a battle raging around them.”

Although the kids/teens based MMOG world is getting increasingly crowded, especially as the media companies like Disney and Nickelodean launch new games, I think Gaia’s new game will likely be a success. As Virtual Worlds News notes:

Gaia Online is described as a virtual world and a forum, which makes it seem more open-ended and unformed that it actually easy. There’s actually already a fairly extensive guild system, roleplaying community, and narrative built into the world, though. It’s just not always readily apparent.

Gaia has held many scripted special events in the past that brush right up to the edge of becoming an MMOG. They already have an avid user base that has created and customized avatars, an in-world economy, and a digital goods business model. They also have an expertise in creating fun gameplay. Adding in levels, skills, quests and powerful virtual items is a small step for them to take.

I’ll be watching their launch in the summer with great interest!

Managing Virtual Economies March 28, 2008

Posted by jeremyliew in economics, game design, game mechanics, mmorpg, virtual goods, virtual worlds.
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Scientific American has an overview of how some MMOGs manage their economies (found via Massively).

The article discusses the approaches of EVE Online, Entropia Universe and Second Life in trying to keep their virtual economies balanced. Getting the balance of crafting, economics and other such features right can drive behavior like specialization/division of labor, guilding etc, as Eyjólfur Guðmundsson, EVE Online’s economist, notes:

The new player who isn’t able to succeed roams around space trying to make ISK[s]. He tries to be a player-versus-player pilot and loses in battle. He needs help to succeed in the community. Players themselves have found ways to deal with this by creating corporations and alliances. It’s not just economics, but also socioeconomics in general.

For new game designers, keeping virtual economies in check is a non obvious but extremely important element of game design. While most designers spend a lot of time thinking about how to add money into a system and how to price virtual goods, some do not spend enough time thinking about how to balance these two elements. If you allow users to transfer virtual currency between each other, trade in virtual items will emerge. If the economies are unbalanced, you run the risk of side effects such as inflation in pricing of virtual goods or too many “high power” items in the wild. Both of these can make it hard for a new player to join the game after it has been ongoing for a while as they are either too poor or too weak to be able to do anything fun. While these things can be managed after they become problems, it is better to have spent some time thinking through the issues before launch.