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Inner Workings of  Virtual Goods Economies
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Inner Workings of Virtual Goods Economies


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A talk I gave on 12.February.2010 at the Casual Connect Conference in Hamburg on virtual goods economies.

A talk I gave on 12.February.2010 at the Casual Connect Conference in Hamburg on virtual goods economies.

Published in: Technology

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  • 1. Margaret Wallace, CEO
    Twitter: @MargaretWallace
  • 2. 1996
  • 3. Making Free-to-Play Games Work for You
  • 4. Successful Use of Virtual Goods Touch on Core Experiences
  • 5. Know What Motivates Your Audience
    Values & Belief Systems
    Are they loyal to any brands?
    How much disposable income do they have?
    What motivates them to come to your game?
    Being Creative?
    Zoning Out?
    Killing Time?
  • 6. Type of Free-to-Play Game  Users Virtual Goods
  • 7. Gear
    Functional Items
    Earth Eternal
  • 8. 50% Functional
    50% Decorative
    Puzzle Pirates
  • 9. Virtual Goods Make Up 85% Of Habbo Revenue -- $70M in 2008
    Social, Decorative Items
    Habbo Hotel
  • 10. 60% -- 90% of revenues selling virtual goods ranging from digital farm buildings to poker chips.
    Predominantly Items
    that Allow You to
    Tend to Farm
  • 11. Enhance Game Play
    Access New Levels
    Customize characters
  • 12. Gifting & Flirting!
  • 13. Integrating Virtual Goods Into Free-to-Play Game Experiences
  • 14. In-Game / Functional
  • 15. Social Status
  • 16. Decorative
    Playfish sells around 20M items in Restaurant City every day - in either money- or time-based currencies.
    Source: “Building Social Games at Scale” Panel, Social Gaming Summit, June 23, 2009
  • 17. Gifting
    Playfish titles are typically released with just 20% of their final features developed and implemented.
    The rest is introduced over time in response to the demands of the community and success of the title.
    Source: “Building Social Games at Scale” Panel, Social Gaming Summit, June 23, 2009
  • 18. Collectibles & Rare Items
    Limited number, niche appeal, unique appeal.
  • 19. Setting Goals
  • 20. Trading / Exchange
  • 21. Rewarding Behavior
  • 22. Conferring Status
  • 23. Metrics
    Must have metrics in place!
  • 24. Metrics & Reporting
    Sample metrics needed to track and have at your finger-tips anytime:
  • 25. Measuring Active Users
    What percentage are returning players who do something significant in your game?
    For MMOs = Once every 30 days
    For Social Games = Measured Daily
  • 26. Average Revenue Per User (ARPU)
    Measuring Average Revenue Per User Allows You to Gauge the Success of Your Service.
    Total Monthly Revenue / Active Users = ARPU
    € 2 Million / 150,000 = € 13 ARPU
    € 2,000 / 150 = € 13 ARPU
    Gaming the System!
  • 27. Lifetime Value of User
    How Much a User is Valued Over Time
    ARPU x #/Months on Site = Lifetime Value
    € 13 x 6 months = € 78
    Facebook game churn is around 8 weeks.
  • 28. Average Revenue Per Paying User (ARPPU)
    How Much Paying Users Spend
    Monthly Revenue / Paying Users = ARPPU
    € 2 Million / 20,000 = € 100 ARPPU
    NOTE: Factor in Cost Per Acquisition, which can cost up to .70 to 1.50 Euros Per User
  • 29. What Does This Mean?
    Social Games ARPU =
    .30 – 3 Euros
    ARPU for MMOs sometimes reported as higher,
    but they may have far fewer players.
  • 30. Common Mistakes
  • 31. Common Mistakes
    Retrofitting virtual goods into an already-existing design – and making stupid design decisions to compensate for that.
    Not preparing your community for changes.
    Not responding to community.
    Not having a content plan once first set of goods released.
  • 32. Common Mistakes
    Having a set price for purchasing virtual currency, independent of the payment method.
    Not designing enough “sinks” in the economy – i.e., selling back items @ 50%, having enough consumables.
    Having bad metrics in place.
  • 33. Questions?
    Contact: Margaret Wallace, CEO
    Twitter: @MargaretWallace