Since their arrival in the 1990s, online games have quickly become a revolutionary form of entertainment, evolving with the expansion of the Internet around the world. The first online video game to achieve huge success was the MMO (Massive Multiplayer Online) called Lineage, which managed to gather more than a million subscribers and after this success, the great economic impact that these video games could have in the future began to be better seen. Later in the new millennium, MMO online games such as RuneScape and Eve Online gained more and more players with an ever-increasing economic impact thanks to the complex virtual economy in their virtual worlds.
Today, the virtual economy can be found in any online video game (regardless of its genre) and business models have evolved to achieve the balance between financial benefit for the development companies and player enjoyment. At least that is the case in most cases.
The virtual economy in online games has become extremely complex, so it is important for companies to know how to manage it properly, as a bad decision can cause problems for players, which translates into large financial losses. That being said, the following are some of the most important aspects that development companies should consider in order to avoid failure in the virtual economy of their online games.
The importance of design for the virtual economy of onlinegames
As mentioned above, implementing a virtual economy in a video game is a complex task that must be planned from the initial stage of videogame development (whether during conception, design or production). A very common mistake occurs when the necessary time has not been given to planning the game's internal economy. This means that the virtual currency implemented and its benefits for players are not sufficiently developed and do not fit properly into the game, which can lead to failure.
The virtual economy must be foreseen, be balanced, and have been tested from the very conception of the videogame, in order to achieve a proper alignment in its design. All virtual goods (the items purchased in the game) and virtual currencies must have a logical function in the game, appear at a specific moment in the player's journey-experience, and have a specific price, very balanced, so as not to ruin the players' experience.
In order to balance the virtual economy of online games, it is necessary to understand the concepts of Money in, Money out (MIMO). Taking this idea into account, a proper balance must be achieved between the virtual currency that comes out of the pockets of users and that which comes in, as in this way it will be possible to determine the limit of scarcity and available money throughout the entire “journey” of customers. When a videogame provides a large amount of virtual currency to players, inflation is inevitable in the virtual economy of the game, which causes a devaluation of virtual goods, which can ultimately cause a lack of interest on the part of players. But, if there is the opposite case, where there is an excessive shortage of virtual currency in the game due to the difficulty of obtaining it, then the difficulty of obtaining virtual goods will also increase, which can end up in frustration for players. That said, development companies have the difficult task of finding the right balance in MIMO.
It should also be mentioned that in order to consider the existence of a virtual economy within a video game, there must be at least the following elements: purchase/sale transactions and a place to execute them (integrated game stores or external marketplaces). In the case of marketplaces, they are fully managed by the players, but they are part of the economy of a game, since through them you can obtain virtual goods and virtual currencies from online video games. That said, a recommended marketplace is Eldorado, as it guarantees the most important aspect that an online marketplace needs, which is security in sales. In addition, on Eldorado you can exchange virtual currencies and virtual goods from the most popular online video games, such as RuneScape Gold and EVE Online ISK and many others.
After implementing the virtual economy in an online videogame, development companies must constantly study players to avoid the following three most common risks:
Overpricing: It is important to know that most virtual economies in video games exist so that companies can have an indirect relationship with the real money of the players. Therefore, it is important to know the target audience of video games very well. This implies knowledge of the average purchasing power, expectations and many other aspects related to the economy of the players. If companies do not carry out this research properly, it will not be possible to correctly determine the price range that will be accessible to most players.
However, it is also inevitable for the video game economy that the rarest virtual goods will fetch a much higher price than others, which some enthusiastic players who are dedicated to collecting rare items in games could pay. However, the key is not to raise the price of such items too much, as this could obviously end the enthusiasm of interested players. Therefore, it is necessary for companies to be careful and set smart prices that fit the economic reality of their users.
Pay-to-win: Another aspect that many companies should avoid completely when developing a virtual economy is the well-known pay-to-win, which occurs when a virtual good provides too many advantages to players who have decided to pay for it, to the point that they seem significantly superior to players who do not pay for these advantages. Another similar element is pay-to-progress, which prevents players from continuing to progress in the game if they do not make the required payments. Both pay-to-win and pay-to-progress usually get negative reviews for the game, so their inclusion should be avoided. Companies choose these elements as a simple way to make players feel the need to pay for their game's virtual goods.
Hedonic adaptation: It is relatively easy for developers to fall into this phenomenon that occurs when players end up getting excited too easily by acquiring virtual goods, get used to them and need more of them to continue to be excited about the game. This proves to be a problem because it causes an unsustainable increase in the virtual goods production chain that will end up creating excessive production costs for companies, and because it will not be able to satisfy the user, the inevitable will happen, namely the abandonment of online games by players. Although it should also be mentioned that companies with sufficient financial resources are not significantly affected by the continuous production of virtual goods, as long as there is a balance in MIMO
The importance of pre-defining a business model
When developing a videogame, one of the first aspects to define is undoubtedly the business model that the videogame will have, as this will determine how the company will be able to make a profit, while also determining the behavior of the virtual economy. When a videogame has a unique payment model, then the majority of the revenue for your company should come from in-game purchases, so you should not overdo it with the amount of paid downloadable content (DLC), as players want to buy full videogames. While with a Free-to-Play, the monetary profits for the company will come from the microtransactions that players make within the game, so it is important for developers to know how to include a large amount of varied and attractive content that players will want to pay for without any problem. That said, it is clear that business models are a fundamental part of the virtual economy of online games.
