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.

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Transcript

  • 1. Margaret Wallace, CEO
    margaret@playmatics.com
    Twitter: @MargaretWallace
  • 2. 1996
  • 3. Making Free-to-Play Games Work for You
  • 4. Successful Use of Virtual Goods Touch on Core Experiences
    Decorative
    Items
    Consumables
    Social
    Accelerators
  • 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?
    Socializing?
    Being Creative?
    Zoning Out?
    Killing Time?
    Competition?
  • 6. Type of Free-to-Play Game  Users Virtual Goods
  • 7. Gear
    Weapons
    Functional Items
    Clothing
    Earth Eternal
  • 8. 50% Functional
    50% Decorative
    Puzzle Pirates
  • 9. Virtual Goods Make Up 85% Of Habbo Revenue -- $70M in 2008
    Social, Decorative Items
    Consumables
    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
    Farmville
  • 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
    margaret@playmatics.com
    Twitter: @MargaretWallace