January 2012: Virtual Goods

January 2012's topic, Virtual Goods, was submitted by game designer Sande Chen.

She writes:

In 2007, I started working for a company that was interesting in bringing Chinese-style "microtransactional" games to the West.  People weren't sure how these would translate -- if American consumers would go for it, this "free but with microtransactions" model.  We had seen in China that the MMOs and even the middlecore games were having success selling power-ups, weapons, cosmetic items and other virtual goods.  The price was so low, maybe 1/10 of a cent, but the large volume of sales made up for it.  I found that in designing these initial microtransactional games, I needed to give incentives for people to buy, but I also wanted people who were not paying to be able to earn the power-ups. 

The following year, I wrote the article, The Social Network Game Boom, for Gamasutra, predicting the success of social network games.  At this time, companies were experimenting with different models.  Were people willing to pay $50 for a virtual item?  Would people buy monthly subscriptions in addition to virtual goods?  Was there a good mix between advertising and selling virtual goods?

Fast forward to this year and we see that mobile game marketplaces are loaded with free apps, but these free apps are making money by selling virtual goods!  There have even been some shifts in the MMO market to feature virtual goods for premium currency rather than the straight subscription model.  So what have we learned?

Here are some questions from the Game Design SIG to think about, if you want to contribute an article to GDAM:

• What are the most lucrative virtual goods?  What are the most popular?  Are these necessary the same?
• Why are so many virtual goods so expensive?  What happened to microtransactions, selling items for 1/10 of a cent?
• Is most monetization of virtual goods from whales or from the microtransactions of millions of players?
• If monetization is dependent on whales, how can we make Virtual Goods more appealing to the mainstream?
• Are consumables the way to go?  How about energy packs that extend the amount of time a player can play?

Sande Chen is a writer and game designer whose work has spanned 10 years in the industry. Her credits include 1999 IGF winner Terminus, 2007 PC RPG of the Year The Witcher, and Wizard 101. She is one of the founding members of the IGDA Game Design SIG.