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Inner Workings of  Virtual Goods Economies
 

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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    Inner Workings of  Virtual Goods Economies Inner Workings of Virtual Goods Economies Presentation Transcript

    • Margaret Wallace, CEO
      margaret@playmatics.com
      Twitter: @MargaretWallace
    • 1996
    • Making Free-to-Play Games Work for You
    • Successful Use of Virtual Goods Touch on Core Experiences
      Decorative
      Items
      Consumables
      Social
      Accelerators
    • 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?
    • Type of Free-to-Play Game  Users Virtual Goods
    • Gear
      Weapons
      Functional Items
      Clothing
      Earth Eternal
    • 50% Functional
      50% Decorative
      Puzzle Pirates
    • Virtual Goods Make Up 85% Of Habbo Revenue -- $70M in 2008
      Social, Decorative Items
      Consumables
      Habbo Hotel
    • 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
    • Enhance Game Play
      Access New Levels
      Customize characters
    • Gifting & Flirting!
    • Integrating Virtual Goods Into Free-to-Play Game Experiences
    • In-Game / Functional
    • Social Status
    • 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
    • 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
    • Collectibles & Rare Items
      Limited number, niche appeal, unique appeal.
    • Setting Goals
    • Trading / Exchange
    • Rewarding Behavior
    • Conferring Status
    • Metrics
      Must have metrics in place!
    • Metrics & Reporting
      Sample metrics needed to track and have at your finger-tips anytime:
    • 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
    • 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!
    • 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.
    • 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
    • What Does This Mean?
      Social Games ARPU =
      .30 – 3 Euros
      ARPU for MMOs sometimes reported as higher,
      but they may have far fewer players.
    • Common Mistakes
    • 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.
    • 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.
    • Questions?
      Contact: Margaret Wallace, CEO
      margaret@playmatics.com
      Twitter: @MargaretWallace