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Managing Dual Currencies
        David Jesse, Gaia Online




1          Confidential – Do Not Distribute
Gaia’s economist




2                  Confidential – Do Not Distribute
Quick Tour of Gaia




3      Confidential – Do Not Distribute
Gaia overview




       Shopping                                       Forums/
                                          ...
14.4 million shopping transactions per month / 9 B gold spent


5                        Confidential – Do Not Distribute
4.8 million monthly marketplace transactions / 88 B gold traded

6                         Confidential – Do Not Distribute
25 million posts per month / 1.8 B cumulative

7                Confidential – Do Not Distribute
6 hours spent in “hang outs” per active user per month

8                     Confidential – Do Not Distribute
2 ¾ hours per active user per month in casual games

9                   Confidential – Do Not Distribute
Managing Dual Currencies




10         Confidential – Do Not Distribute
The challenge
Getting value from different users
     Propensity to spend

                           High




           ...
Engagement vs. cash currencies
  Overview

                           Engagement Currency*                                ...
Influencing user behavior
     Propensity to spend

                           High




                                  ...
Example: Gaia’s dual currency system

                          Gaia Gold                                           Gaia C...
Monetizing non-buyers
     Propensity to spend

                            High         Cash rich
                       ...
Example: Gaia’s marketplace
User to user trading




         Cash buyer                                              Non-...
Monetizing non-buyers
Should you sell engagement currency directly?


    Trade has to serve both parties
       Clear n...
Maintaining control over currencies

    Implied value of currencies likely to attract fraud attempts
       Botting of ...
Controlling abuse on Gaia

    Controlling cash currency
       Set limits on conversion for new purchasers
           ...
Managing inflation
Maintaining value of engagement currency


    Importance of a budget
       Consistent rewards and s...
Gaia’s gold budget
Getting the most out of engagement currency granted


    Budget set based on expected usage
       S...
Other suggestions

    Balance uses/sinks of each type
       Cash currency uses pay the bills
       Engagement curren...
Pros and cons of dual currencies

                    Pros                                           Cons

     • Flexibil...
Thank you!




24   Confidential – Do Not Distribute
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Gaia - Managing Dual Currencies

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Transcript of "Gaia - Managing Dual Currencies"

  1. 1. Managing Dual Currencies David Jesse, Gaia Online 1 Confidential – Do Not Distribute
  2. 2. Gaia’s economist 2 Confidential – Do Not Distribute
  3. 3. Quick Tour of Gaia 3 Confidential – Do Not Distribute
  4. 4. Gaia overview Shopping Forums/ Chat Avatar Friends/ Games Profiles 4 Confidential – Do Not Distribute
  5. 5. 14.4 million shopping transactions per month / 9 B gold spent 5 Confidential – Do Not Distribute
  6. 6. 4.8 million monthly marketplace transactions / 88 B gold traded 6 Confidential – Do Not Distribute
  7. 7. 25 million posts per month / 1.8 B cumulative 7 Confidential – Do Not Distribute
  8. 8. 6 hours spent in “hang outs” per active user per month 8 Confidential – Do Not Distribute
  9. 9. 2 ¾ hours per active user per month in casual games 9 Confidential – Do Not Distribute
  10. 10. Managing Dual Currencies 10 Confidential – Do Not Distribute
  11. 11. The challenge Getting value from different users Propensity to spend High Low Low High Site activity level Different segments  different needs and opportunities 11 Confidential – Do Not Distribute
  12. 12. Engagement vs. cash currencies Overview Engagement Currency* Cash Currency Target • All, but particularly non-paying • Paying customers customers Purpose • Reward majority who • Offer additional benefit for can’t/won’t buy those able/willing to pay • Incentive for all users to be • Pay to run, grow business more active Sources • Regular site login • Direct funding • Specific feature usage • Completion of ad offers Sinks • Basic site interactions • Gameplay advantage • Higher status • Premium access Dual currency system addresses needs for multiple segments * Also known as reward, attention, action currency or points. 12 Confidential – Do Not Distribute
  13. 13. Influencing user behavior Propensity to spend High Cash currency Low Engagement currency Low High Site activity level Dual currencies can help make users more valuable 13 Confidential – Do Not Distribute
  14. 14. Example: Gaia’s dual currency system Gaia Gold Gaia Cash Type • Engagement currency • Cash currency Sources • Daily one-time activities • Direct funding • Posting to Forums and other • Third party offers site usage • Participating in sponsorships • Sale of items won Sinks • Buying basic virtual goods from • Buying most coveted virtual Gaia goods • User trades • Attain wealth faster • Entering contests • Level up faster in MMO • Creating private forums 14 Confidential – Do Not Distribute
  15. 15. Monetizing non-buyers Propensity to spend High Cash rich BUT points poor Cash poor Low BUT points rich Low High Site activity level Opportunity to make both groups better off through trade 15 Confidential – Do Not Distribute
  16. 16. Example: Gaia’s marketplace User to user trading Cash buyer Non-buyer Item traded via purchases earns gold via marketplace premium item activity Trade provides gold to buyers, exclusive items to non-buyers Both are happier  16 Confidential – Do Not Distribute
  17. 17. Monetizing non-buyers Should you sell engagement currency directly?  Trade has to serve both parties  Clear need for non-buyers to trade for exclusive items  Need for buyers to trade stronger without direct sale  Encouraging user trades has other positive effects  Some buyers become distributors, contributing to sales  Additional supply of items to ecosystem  Higher perceived value of engagement currency  Likely to be perceived as unfair  Devalues investment of time by non-buyers, who may feel second class  Transparent advantage might be considered cheating Consider carefully before selling engagement currency directly 17 Confidential – Do Not Distribute
  18. 18. Maintaining control over currencies  Implied value of currencies likely to attract fraud attempts  Botting of site (“gold farming”) to earn engagement currency  Payment fraud to gain cash currency  Allowing conversion/trading increases costs to manage  Trades increase difficulty of tracing source and reversing transactions  Direct conversion raises consequences of any exploits/bugs/errors  Accounting difficulties for cash and revenue  Legal questions if attention currency is convertible to cash Set systems to prevent and manage fraud/botting Consider restrictions to granting/trading if necessary 18 Confidential – Do Not Distribute
  19. 19. Controlling abuse on Gaia  Controlling cash currency  Set limits on conversion for new purchasers  Amount minimizes exposure  Trade delays allow for review of transactions  Log trade activity, with ability to reverse  Managing engagement currency  Select use of Captcha to limit automation  Mass registrations tracked and banned  Extreme usage blocked or reviewed  Negligible fraud, limited black market availability of Gaia Gold 19 Confidential – Do Not Distribute
  20. 20. Managing inflation Maintaining value of engagement currency  Importance of a budget  Consistent rewards and standards for progression  Currency loses perceived value if granted too freely  Set desired level of inflation: investment versus accessibility  Elements to balance in economy  Amount granted (including rewards converted to currency)  Sinks that will counteract inflation and add to perceived currency value  Supply of goods available for purchase and trade  Other things to consider  Approximate proportions by type of activity  Relative “wage” of rewards (e.g. amount per activity, time or value) Manage budget to maintain value of engagement currency 20 Confidential – Do Not Distribute
  21. 21. Gaia’s gold budget Getting the most out of engagement currency granted  Budget set based on expected usage  Scale with site usage  Adjusted to achieve controlled inflation  Amounts set to direct site usage  Decreasing “gold curve” to have diminishing returns to grinding  Encourage trial of diverse site features  Premium on community/social activities  Gold grants across multiple categories Once a day  Once a day rewards Revenue  Engagement activities  Revenue generating sources Engagement 21 Confidential – Do Not Distribute
  22. 22. Other suggestions  Balance uses/sinks of each type  Cash currency uses pay the bills  Engagement currency uses keep your site active  Maintains perceived value of each and increases benefits of trading  Engage users before pushing monetization too aggressively  Could be turnoff if they aren’t yet committed users  More experienced users become easier upsell  Set expectations and manage commitments carefully  Manage exchange rates  Set fixed official exchange rate for consistency, implied fairness  Monitor implied market exchange rates for signs of over-inflation  Watch offsite trading as sign of exploits and fraud 22 Confidential – Do Not Distribute
  23. 23. Pros and cons of dual currencies Pros Cons • Flexibility to engage different • Added complexity of user user segments experience • Separate virtual economy from • Investment to manage and real money balance interactions • Can indirectly monetize active but non-buying segment via trade 23 Confidential – Do Not Distribute
  24. 24. Thank you! 24 Confidential – Do Not Distribute
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