1. Robin D. SteeleThe Development of Gamification Professor Eric Brey April 10, 2012
2. Basic Overview Sports are such an important part of culture because people thrive on the spirit ofcompetition. Although certain sports are more popular given the preferences of the region thedesire to win is the same regardless of cultural differences. Companies have now found ways tointegrate this spirit of competition into their business models to promote their brand andultimately increase profits. This trend is known as gamification and is defined as “the use ofgame design techniques, game thinking and game mechanics to enhance non-game contexts”(Bersin). Although this is not a completely new concept its emergence has spread quickly overthe past year and it is predicted that 50% of organization will gamify their innovation processesby 2015. The basis of gamification is to make technology more engaging by encouraging usersto increase their engagement through a systemized gaming process that is challenging, yetrewarding to users who complete the tasks. This technique can encourage consumers to engagein tasks that are usually seen as boring such as completing surveys, reading web sites, andinputting data. It was first seen in the hospitality sector through hotel loyalty clubs and airlinefrequent flier programs. As traditional forms of marketing continue to fail companies are turningto more unique techniques such as gamification to increase customer loyalty and overallengagement with the brand. There are various game mechanics that are used which fall under the gamification trend.The point system is one of the most common because it can be used in so many different ways tosignify achievement and also to compare a person’s performance to their peers. For example,Health Month is a site that asks its users to set up weekly health goals and stick to them for anentire month. Each user starts with 10 “life points” and the goal is to end each month with atleast one life point. The key is that every time the user breaks a rule they lose a point, but friendscan also trade points if a user runs out of points for the month. This system promotescompetition, but in a more friendly way because users are encouraging each other to not breaktheir rules, while still being able to view their performance in comparison to others. Anothergame mechanic that is similar to points is badges, which was made popular by sites such asFoursquare to signify a person’s level within the game. Many times users are ranked on aleaderboard to encourage competition amongst friends. It is also important that the gamemechanic be challenging in order to engage users, so many companies create actual challengesfor users to complete to gain a specific reward. Starbucks rewards its users with virtual pointsand badges for completing tasks such as checking in to five different retail locations onFoursquare. After completing the task the user is rewarded with a free or discounted beverage inexchange for their efforts. Challenge is what fuels competition because even if the reward issmall people automatically want to win. Many psychologists argue that a reward is notnecessary, but rather people will be motivated by the pure spirit of competition (CITE). Consumers are motivated by these game mechanics because of game dynamics. Thisfundamental need for rewards, status, achievement, and competition among other things all worktogether to motivate consumers toward a certain behavior. It is important that companiesintegrate these dynamics into their business models to create an experience that drives behaviorby satisfying one or more of these human needs. The goal is to engage consumers and get themto participate, share, and interact in some activity or community.
3. Examples of Gamification Gamification has made a great impact on the business world because it is a technique thatcrosses cultural boundaries and exploits the natural competitive spirit within all people. Thereare basic implementations of this trend that have been present for years, such as loyaltyprograms. It is only recently that companies have used gamification as a tool for customerengagement and encouraging desirable website usage behavior.Pepsi-Sound Off Pepsi adopted the use of gamification when it created a gamified social network centeredon the TV show The X Factor. Because Pepsi is the main sponsor of the show they wanted toincrease television ratings, which would in turn increase their brand presence in the homes ofconsumers. The Pepsi Sound Off platform allows fans of the show to connect with each otherand see what others are talking about without disturbing the normal conversation taking place onother sites such as Facebook and Twitter. As soon as a user signs in using their social ID theyhave the opportunity to gain “caps” which act as badges to reward users with social standingwithin the larger community. The more a user engages with the site and shares back to theirsocial network, the more caps they receive. Fans can vote for the best post and the most popularposts rise to the top of the Sound Off site, which gives users a chance to be mentioned on theactual show. Because of its success the Sound Off site has expanded to include other shows suchas Dancing with the Stars and The Voice, where Pepsi is also a sponsor (“Pepsi”). This is a great way of using gamification to increase customer loyalty because itincorporates several of the game mechanics into one social platform. These mechanics result invarious dynamics that act as motivators for consumers to interact with the brand. Pepsi shouldcontinue this social integration by creating commercials that are based on the activity of thissocial platform. Everyone wants to be recognized on a national commercial, so Pepsi shouldfollow this momentum with a campaign to find the best Sound Off user. This will expand thebrand by gaining users outside of these shows and attract more users who want to compete forthis recognition. This type of social platform can be used in any other industries where usersshare a common interest and desire an outlet for expression. For example, ESPN could create itsown social platform for sports fans to discuss their interests and also make predictions regardinggame winners. Those with the highest prediction rates could be awarded sports badges and listedon a leaderboard that runs across the ESPN network screens at a given time. This would motivatefans to become more engaged in the games and in turn they would be more engaged with ESPN.The Huffington Post The gamification trend has also appeared in the conservative publishing industry as a wayto engage readers. The Huffington Post has created a social news service called “Predict theNews,” which allows users to respond to questions accompanying an article. Most questions areeither yes or no responses or they involve selecting an option from a list of possible outcomes.Points are then awarded to the users who correctly guessed the event once it has passed. Forexample, The Huffington Post may post an article on the upcoming election and all of thepotential candidates. At the end of the article there is a question that asks “Will Sarah Palin runfor president in 2012?” Users will respond to this question and once the event has passed those
4. who correctly guessed the answer will receive points. These points are used to create aleaderboard of users who best predict the news. Although this is a good tool for consumerengagement, there are critics who argue that this type of tool compromises the integrity of theindustry. Publishers want to make sure that the information they deliver is received in a seriousmanner, rather than for gaming purposes. So far there is very little participation on the Predictthe News service, but the company believes that it will be an important factor in increasingengagement in the future (Davis). There are certain industries that are more serious than others, so the term “gamification”will not always be well received. Despite these concerns, there is a place for this trend in thepublishing industry because there must be an audience present to receive the news. There arealready comment boards available on most news sites, so this prediction component is justanother form of engagement. The Huffington Post could expand its service by incorporating asharing component and rewarding points to users who have friends that comment on the articleor participate in the prediction question. This type of social news service could also beapplicable in the finance industry where people could predict the movement of stocks. Of coursethis occurs in real-life, but from a social side it could be used to get more people interested in thestock market by first playing in a game environment before making actual investments.The Future of Gamification Gamification is a trend that has progressed at a rapid pace, with virtually all of the majorbrands having some element incorporated in their business model. Because it stems from basicideas such as loyalty points which have been around for years, many industry professionals havereduced this emerging trend to only being a fad. They believe that gamification is a buzz wordthat is the result of new technology companies trying to reinvent the wheel of customer retention.Critics argue that the gamification of business and virtual worlds creates an expectation amongpeople that real-life interactions follow these simple mechanics, which creates a kind ofdisillusionment for the user. New York Law School professor Dan Hunter believes thatgamification is the next big trend to be used by companies around the world to reach theircustomers on a deeper level. He does not completely disagree with critics in that gamification ispartially motivated by its hype, but still believes that it is a viable business strategy. “The criticsare right in that gamification is a hype word and soon we won’t talk about it as a separate entity.My argument is that any good marketer must know what their customers will respond to andgamification is just an extension of this knowledge. It’s been around for years in isolatedelements, but we are finally starting to see businesses integrate it into their model and experiencehigher levels of customer engagement” (Hunter). It is true that the market for gamification is growing rapidly. “EMarketer projects thatsocial-gaming ad revenue was $368.9 million in 2011, with about 46% of that coming from theU.S. It forecasts that the market will grow to $672.2 million by 2014” (Delo). With this growthtechnology startups such as Gigya have emerged to provide a variety of social networkingtechnologies for websites. Their goal is to make every website social by integrating thegamification mechanics that drive consumer engagement. There is also an increased focused onthe education of gamification, which will be crucial to its survival. Professor Hunter along withProfessor Kevin Werbach taught a new MBA course at the Wharton School of business that isbased on the gamification topic. “It is vital that people not only understand what gamification is,but how to properly implement it into an existing business model. We are moving toward an era
5. of integration where if a component is not properly implemented it could ruin the whole system”(Hunter). As Hunter explains the gamification trend may no longer be recognized once itbecomes fully integrated into business models, but its impact will be noticed for years to come(Goodman). Because gamification is centered on customer engagement it is applicable in almost everyindustry and consumer segment. Marketing is defined as the process of communicating amessage to consumers, but in order to deliver these messages consumers must be receptive andin a position to receive the message. Gamification is simply a tool that can be used to attractconsumers by sparking their interest in competition. Hunter explains a unique application in thepolitical environment where the Obama campaign has created a competition by challenging itssupporters to knock on the most doors and raise the most funds for the campaign. Their progressis tracked on a leaderboard that is available to all of the campaign workers, so that they canmonitor how they are doing against other workers. Even though there is no real winner in therace it shows how competition can encourage a certain behavior. Hunter believes that more andmore companies will adopt this strategy because of its low-risk and high rewards. “There reallyis nothing to lose by implementing this strategy because a reward isn’t necessary to motivatebehavior. In my opinion the competition is better with no reward because it relies on intrinsicmotivation” (Hunter). As long as a company has the ability to implement the structure of thegame the consumers will fuel the interaction and ultimately promote the brand. Another great example of how gamification has made an impact in a particular industry isthe presence of games in medical research. A game developed by the University of Washingtoncalled “FoldIt” was designed to aid in scientific research by allowing users to play with thestructure and shape of proteins. The game is designed to utilize the human ability to solveproblems by predicting protein structures in order to design drugs for them. This is fundamentalto the study of AIDS, which is developed through these protein structures. Players are awardedpoints based on their ability to correctly predict the structure and they are ranked on an overallleaderboard which shows their rank against other players. This game design has proven to beeffective because Foldit credits one of its users with solving a long standing problem associatedwith AIDS research. “A problem that has puzzled scientists for years only took gamers threeweeks to solve” (“Gamification used”). These examples show that gamification is indeed a business worthy trend that will beused by many different industries. Moving forward the trend will become a natural componentof business (specifically marketing) that is not only implemented by companies, but taught aspart of the basic business education. Hunter describes the importance of tech companies and howhe believes they will also be integrated within companies, rather than outsourced. “Softwaredesigners are only going to become more important in the future and companies will realize thatit is cheaper to integrate them into their companies rather than paying them to constantlymaintain these sites. I don’t expect to see companies such as Gigya and Bunchball around forvery long” (Hunter). Gamification is a unique tool because it can encourage consumers to engage in behaviorthat they wouldn’t normally do. This is intriguing to many marketers because it provides theopportunity to reach them in a way that is not usually feasible. It can also be used internally tomotivate employees to engage in a specific behavior. This is an important factor for anycompany because employees are what make the company and their level of motivation effectsbusiness operations. In order to stay ahead of the competition companies must determine how tosuccessfully integrate gamification into their business model. Successful implementation will
6. motivate consumers to interact with the brand and motivate employees to create optimal brandvalue for the consumers. Once these two sides of the business are operating in sync the companywill have a competitive advantage that is difficult to emulate.
7. Works CitedBersin, Josh. “Game On.” Chief Learning Officer. Business Source Premier. Feb. 2012 Vol. 11 No. 2 pp. 16-17.Davis Kho, Nancy, “Getting Gamified.” Business Source Premier. March 2012, Vol. 35, No. 2 pp. 20-24.Delo, Cotton. “What is gamification, and how can I make it useful for my brand?” Advertising Age. Business Source Premier. Feb. 2012. Vol. 83 No. 9 pp. 58-59.“Gamification Used To Successfully Solve AIDS Research Problem.” Simply Zesty. Online PR & Social Media. 19 Sept. 2011.Goodman, James. “Expert: Technology is more than a game.” Democrat and Chronicle.com. 30 March 2012. < http://www.democratandchronicle.com/article/20120330/NEWS01/30330 0045/Expert-Technology-more-than-game>Hunter, Dan. Telephone Interview. 3 April 2012.Pepsi Unveils New Social TV Platform, Pepsi Sound Off and Social Media Visualization Tool, Pepsi Pulse." PR Newswire 19 Oct. 2011. Academic OneFile. Web. 10 Apr. 2012. http://go.galegroup.com/ps/i.do?id=GALE%7CA272874408&v=2.1&u=tel_a_uofmem& it=r&p=AONE&sw=w
8. Interview Results – Professor Dan Hunter How would you define Gamification? The use of game mechanics in non-game settings. A good example would be loyalty points that motivate people to do things or buy things. Typically this results in them buying things that they wouldn’t normally buy. Another form that has been used for many years is employee of the month. People love to be recognized even if it’s for something small such as coming to work every day. Companies are now finding ways to capitalize on these needs. When did Gamification become an actual business practice that could be used to increased profits? Overall it’s the general process of appealing to people’s fun side. It’s a practice. We’ve had elements for years, but now the practice of designing elements that motivates people through competition is becoming more prevalent. It’s finally starting to stand-along as its own entity, whereas in the past there were only bits and pieces of this trend being practiced. Who and when was the first company to implement the techniques behind Gamification? Like I said it’s been around for years in the form of frequent flier miles and similar programs. The actual term came from a conference that was held about 2 years ago. This is when people finally started seeing how gamification could be used in other forms of business, so they wanted to meet with like minds to discuss the possibilities. Can you give some good examples (recent) of companies who have effectively implemented Gamification and seen great benefits? One of the most interesting implementations that I’ve seen recently is how the Obama campaign is making a competition out of fundraising. They are challenging their supporters to knock on the most doors and raise money and they are tracking how much money they are raising on an actual leaderboard. Some people may think why would people want to create an internal competition, but it’s a great way to motivate people. There really is nothing to lose by implementing this strategy because a reward isn’t necessary to motivate behavior. In my opinion the competition is better with no reward because it relies on intrinsic motivation Sometimes people are looking for a reason to get involved and they feed off of the need to be competitive. I wouldn’t be surprised if more candidates used this strategy because it does work, we’ve seen that. What are potential applications of Gamification in business, specifically marketing? There really is no limit to how gamification can be used, but to be clear it is important that we are only talking about customer engagement. The purchase process is a whole different issue that most likely will not be affected by the game itself. It’s about customer engagement and retention, but what you do once you have the customer is completely different for each company. What is the first step in implementing gamification?
9. There is no blue print that explains how to implement gamification, but rather a companymust think about the different ways they can engage their customers. You first have to knowwho your customer is before you learn how to engage them. After that it’s just about tryingsome creative ideas and finding the right mix of game mechanics that will spark thosedynamics. Every platform will work differently given the consumer, but usually it is low-costto implement so a company can afford to make a mistake or two.How do you respond to critics who say Gamification is just a buzzword and that it willeventually be known as a fad?Hahaha. They are probably right! The critics are right in that gamification is a hype word andsoon we won’t talk about it as a separate entity. My argument is that any good marketer mustknow what their customers will respond to and gamification is just an extension of thisknowledge. It’s been around for years in isolated elements, but we are finally starting to seebusinesses integrate it into their model and experience higher levels of customer engagement.I don’t understand what the hype is about myself because this isn’t really new, but whenevera company starts making money in a way that they didn’t before it’s going to be labeled asnew. Soon we won’t talk about gamification as a separate thing. It’s just a mechanism ofgetting people engaged and to enjoy the brand.How will Gamification be used moving forward?It is vital that people not only understand what gamification is, but how to properlyimplement it into an existing business model. We are moving toward an era of integrationwhere if a component is not properly implemented it could ruin the whole system, soeducation will be crucial. As the trend itself becomes more integrated it only makes sensethat the structural design will follow suit and become integrated as well. Software designersare only going to become more important in the future and companies will realize that it ischeaper to integrate them into their companies rather than paying them to constantly maintainthese sites. I don’t expect to see companies such as Gigya and Bunchball around for verylong. All in all gamification has a bright future and it will only become more importantmoving forward. Even though it will probably lose its name because that was a result of thehype, its impact will affect the business world for quite some time.
10. Interviewee Biography – Professor Dan HunterDan Hunter is an expert in internet law, intellectual property, and artificial intelligence andcognitive science models of law. He joins the New York Law School faculty from the Universityof Melbourne Law School (Australia) and the Wharton School, University of Pennsylvania. Heholds a Ph.D. from Cambridge University on the nature of legal reasoning, as well as computerscience and law degrees from Monash University (Australia) and a Master in Laws from theUniversity of Melbourne.Hunter, who taught an MBA course on gamification at University of Pennsylvania’s WhartonSchool, is a recognized speaker and teacher in areas such as Internet law, intellectual property,and artificial intelligence and cognitive science models of law.He also is listed as a legal and policy analyst for RIT’s Just Press Play, an achievement-basedgamification project funded in part by Microsoft that encourages students to engage in social,academic, creative and collaborative activities.He regularly publishes on issues dealing with the intersection of computers and law, includingpapers dealing with the regulation of virtual worlds, the use of artificial intelligence in law, andhigh technology aspects of intellectual property. His research has appeared in journals such asthe California Law Review (three times), the Texas Law Review, the William & Mary LawReview, and the Journal of Legal Education. He is the co-author of one book (BuildingIntelligent Legal Information Systems, Kluwer 1994), is a judge for the resolution of domainname disputes for the World Intellectual Property Organization, and is on the editorial board ofnumerous journals. His work has been supported by grants from the National ScienceFoundation, the MacArthur Foundation, and the Australian Research Council. He is the recipientof a Fulbright Fellowship, an American Council of Learned Societies Research Fellowship, aHerchel Smith Research Fellowship in Intellectual Property Law, and a Science CommonsFellowship.He was one of the first scholars to examine the social significance of virtual worlds, co-foundedthe scholarly blog Terra Nova (terranova.blogs.com), and ran the 2006 State of Play/Terra NovaConference at New York Law School, and the 2007 State of Play Conference in Singapore. Hewill convene the 2009 conference back in New York.His current projects include examination of the economics and laws relating to user-generatedcontent, and the social significance of luxury handbags.http://www.nyls.edu/faculty/faculty_profiles/dan_hunter/