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Looking at In-Game Currencies
This is a guest post from GameSparks, crossposted from their blog
The dominant approach to making and monetizing free-to-play games is constantly in flux. The market continues to grow and new contenders are always attempting to shake up the formula. Today we’re going to be looking at currencies in free-to-play games, how they define your in-game economy, the different approaches to implementing them and why the most popular models work.
Most free-to-play games these days have opted for a multiple currency model for their economies. This all stems from the initial formula used with early free-to-play games that featured a dual currency system. One “Soft Currency” that players earn through gameplay and one “Hard Currency” that can only be purchased through an IAP. These days a lot of free-to-play games have more complex economies than this, but the principle remains the same: your players can play a lot for free and earn the Soft Currency, or trade money for time and acquire the more valuable “Hard” currency to speed up in-game progression. This is by far the most popular model for free-to-play games, especially on mobile.
No In-Game Currency
We’ll look more into why the multiple currency setup is so effective a bit later on, but first let’s talk about some of the other economies out there. The two main alternatives are a single currency system, or no currency whatsoever. Free-to-play games with no currency at all are more popular on the PC than on mobile, but some recent iOS releases have been using this direct purchase model to good effect. Having no currency is most effective when each transaction the player is going to make is a one-time purchase, such as new cosmetics or weapons. Dealing in real money allows you to make effective use of sales and promotions to encourage purchases. Players will buy more items when there are multiple discounts or if you create one-time bundle items.Tweaking and changing the price of items in your shops is a easier too as each item is an individual object that can be purchased directly with separate price tags. The no currency model best fits games that don’t have a soft currency at all , where the only way to get the products would be through an IAP or a random drop.
The single-currency model is good for games which feature gameplay that doesn’t revolve around the balancing of an in-game economy. You can give out small amounts of the currency as a daily reward and over time it shouldn’t devalue as there is no alternative currency against which it competes. This single currency system can be used to get the player used to making frequent trips to the store to make a purchase, thereby increasing the likelihood of them dropping real money on your game.
However the undisputed king of economies at the moment is the “Soft Currency”/”Hard Currency” model. It’s used by the top three grossing apps in App store at the moment and has been honed to almost a monetization science. Using this model has a myriad of advantages that explain its position at the top. These days games feature more than just two currencies, around four has become the default when you factor in currencies based on progression and social gifting but there is always a “Premium” currency that can only be purchased. Resource and Multiplayer Base-Building games favour this system as it makes balancing an economy and controlling devaluation and inflation more manageable when there are multiple resource in the mix. Having more currencies makes for a more complex economy, more complex economies will encourage players to make purchases. Along with the monetization benefits, a complex economies can also be a boon to game developers offering a lot more options with which designers can tweak and tune the economy.
In fact, so universally effective has the “Premium Currency model” proven that even the pricing for the currency packs has reached a constant between games. The $4.99, $9.99, $19.99, $49.99 price points is present in multiple games. Even when a cheaper pack is available, the majority of players will choose the $4.99 price point over it. Players can be encouraged to make these purchases just like with a single currency model by giving them small amounts of the premium currency as, for example, a reward for completing daily quests. Just like with the single currency model they will get used to spending the currency and return to the store to buy more.
We can look even deeper at why the “Premium Currency” formula works so well. It’s harnessing some well documented psychological patterns with it players. Everybody experienced loss aversion, we are afraid of waste and try hard to avoid it. Premium currency packs take advantage of this loss aversion through the “Sunk Cost” effect to encourage its players to pay more. The “Sunk Cost” effect is when not losing money in a losing proposition becomes the main reason to throw in more money. In this case leaving unspent Premium Currency is the “losing proposition” and the player, having already invested money into the game, is inclined to spend more to acquire additional premium currency and use the unspent currency sitting in their accounts effectively, thereby in their mind, nullifying the initial loss.
Getting your currency right in free-to-play games is key to monetizing successfully. Hopefully this post can help with that, and don’t forget GameSparks supports multiple currencies over multiple builds so you can figure out exactly what works for you.
References and Further Reading
- http://www.allworkallplay.org/blog/clash-of-clans-time-monetization-formulas-demistifyed/ Great article breaking down the Clash of Clans formula
- http://gamasutra.com/blogs/WolfgangGraebner/20140501/216687/5_Premium_Currency_Pricing_Trends_and_Tricks_used_by_Mobile_FreeToPlay_Games.php Analyzing the emergence of the current currency pack price points
- http://www.psychologyofgames.com/2011/05/the-psychology-of-microsoft-points-part-1-waste-aversion/ – Applying Loss Aversion and the Sunk-Cost effect to games
- http://www.pocketgamer.biz/mobile-mavens/59105/is-the-rise-of-engagement-focused-in-game-currencies-confusing-player/ Good insight on the evolution and development of currencies
- https://nativex.com/blog/free-to-play-monetization-a-lesson-on-virtual-currency/ Practical application of currency best practice