While the social gaming scene truly took off in 2009 and is expected to generate even more explosive financial growth in 2010, sometimes the basic nature of how the industry has evolved into its current state is often overlooked. Revenue generation in social games is undoubtedly one of the strengths of the medium that has garnered much of the rightfully deserved attention. Regardless of the content of the game, profit generation in online games lies heavily on introducing the proper virtual currency to your game.
As with any new business opportunity (thinking broadly beyond the social gaming industry), one’s success relies heavily on a well-planned financial model. Before the ground can break on a building site, and way prior to any ribbon-cutting ceremony, the means for monetization must be established. Introducing virtual currency into a social game essentially opens up the doors to profit generation for the following reasons:
a) It separates “value” from “cost” –– People perceive points or virtual currency as more affordable than actual money. As a result, the mental “cost” of spending virtual currency is far less than that of spending real money. This phenomenon encourages impulse purchases, as the consumer feels more inhibited to pull the trigger on transactions when the guilt of spending money is somewhat removed. It also enables the user to have more fun with purchases by removing the everyday stresses associated with tight budgeting.
b) It enables micro-payments –– you can price items at arbitrarily small price points.
c) It removes the need to price goods in many different local currencies for users. In the same vein that the Euro united the European economy, virtual currency immerses users in a common, universal experience.
d) It can create a deeper gameplay experience. Currency is an integral part of the game experience. When implemented effectively, virtual currency serves as a lever that a developer can instantly pull to create discounts, rewards, scarcity and more. For the developer to build a great experience, the control and management of currency is just as important as the virtual goods found in-game.
So before putting on a hard hat when constructing a business model for your social game, make sure a solid blueprint is in place with the introduction of virtual currency.
If you’re thinking of implementing a virtual currency in your game or virtual world for the first time, and would like our feedback and perspective, please feel free to contact us at developers@jambool.com.
