Virtual goods can drive engagement and revenue by enhancing gameplay, integrating with game mechanics, and drawing users in more quickly. To optimize an economy, developers should measure transactions, currency sources and sinks, user spending behavior over time, popularity and revenue from different goods, and experiment by changing prices to find the best balance. A case study describes how Social Gold's payments solution seamlessly increased monetization for the game Lil Green Patch by over 6.7 million users without requiring account creation.

1. How to Drive Engagement &
Revenue with Virtual Goods
Vikas Gupta | CEO | Social Gold
vikas@jambool.com
Game Developers Conference 25 March 09

2. Who am I?
• Co-founder and CEO, Social Gold
• Developer: Send Good Karma and a host
of other social applications/ games
• Lead Inventor: Amazon’s Flexible Payment
Service

3. So what?
I understand game development, payments and
how those two converge in virtual economies

4. Who are you?
A developer who has focused on game
experience until now, and is ready to . . .
• implement a virtual economy
• optimize an existing economy

5. Who do you want to be?

6. Who do you need to be?

7. Who are your users?
59% of US online population: 144M
Source: Entertainment Software Association and IGN

8. More Social than Non Gamers
40% more likely to
go out to movies
50% more likely to
play team sports
20% more likely to
go out with friends
Source: ESA & IGN

9. More Yuppie than Dorm Rat
Majority are . . .
30+
married with kids
HHI > $100K
Source: ESA & IGN

10. New Focus:
Connectivity/ Community
Source: ESA Image: Jerome Sudan

11. Monetizing the Social Gamer
• Subscriptions: appeal more to hard-core
gamers, and even they can’t manage too many
• Advertising: low ROI and disrupts game play
• Virtual Goods: enhance game play and
capitalize on social nature of today’s gamer

12. Building an Economy
.
Game: World War II
Active Users: 125K
Description: Use
authentic WW2
weapons to combat
with and against others

13. Defining your Sources
.
Users earn currency by
• Logging in
• Staying longer
• Recruiting friends
• Completing missions
Or . . .

14. Defining your Sources
Users earn currency by
completing 3d party
offers
Or . . .

15. Defining your Sources
Users purchase
currency without ever
leaving game

16. Defining your Sinks
.
Users can redeem currency
for functional goods
• Weapons
• Armor
• Vehicles
• Expediting missions
**Games also can include
decorative goods or gifts

17. Driving Engagement
.
Virtual goods drive
engagement by
• Integrating closely into
game mechanics (v. ads)
• Enhancing game play
(fighter plane v. bayonet)
• Drawing user deeper
into game more quickly
(time v. money)

18. Managing your Economy
• Launching your economy is the easy part
• Managing is key:
• Merchandise existing virtual goods catalog
• Introduce new virtual goods regularly
• Make currency as conspicuous and easy to
earn/ buy/ redeem as possible
• Optimizing is where you start to see real $$

19. What matters to you?
• Your Economy
• Transactions
• Users
• Goods
• Your Profits

20. You can only improve what you measure

21. Transactions
Number of transactions is a direct measure of the
health of your economy
Sinks
Sources

22. Transactions
Balance your sources and sinks

23. Transactions
Know your Economy: How is currency created?

24. Economy
Know your Economy: How is currency depleted?

25. Remember:You need enough data to create statistical
significance

26. Users
Who’s paying, and who is not?

27. Users
How does spending behavior change with time or
level in game?
40000
35000
Less than 1 year
30000
Less than 6 months
Less than 3 months
25000 Less than 2 months
Less than 1 month
Less than 2 Weeks
20000
Less than 1 Week
New Users
15000
10000
5000
0
1 10 19 28 37 46 55 64 73 82 91 100 109 118

28. Goods
• How should you price your goods?
• What do you want to optimize for?
• Engagement (or usage)?
• Revenue?

29. Goods
Change prices, measure popularity

30. Goods
Change prices, measure revenue

31. Analytics give you actionable data. What you do with
them is your choice.
e.g., pricing of goods? engagement? currency demand?

32. Revenue
Virtual Currency is great
Real Money is better

33. Revenue channels
Compare different channels: Conversion

34. Goods and Revenue
What goods drive people to spend real money?

35. Summary
• Economics is all about measurements
• You can create experiments and tune
• What else would you measure?
• Top Users
• Game levels and user behavior

36. Case Study: (Lil) Green Patch
.
Developer: David King
Active Users: 6.7M
(Facebook Top 15)
Description: Build a Green
Patch with your friends to
fight Global Warming
Benefit: Completion of
certain tasks saves 1 sq ft
of Rain Forest

37. Why I use Social Gold
.
• Quick and easy API
• Seamless, in-app
payments
• No acct creation (uses
Facebook/ MySpace login)
• Fraud controls
• Customer Service

38. Testimonial
“Social Good has assembled a stellar team of payments
experience. We're super impressed with their
understanding of the space and their attentiveness to
developer needs. Their payments product is simple for
developers to integrate and makes payments easier for
users. Easier payments means lower friction for users and
higher revenue for developers. We're looking forward to a
continued and deeper relationship over time.”
-David King
(Lil) Green Patch

39. Questions?
vikas@jambool.com
mike@jambool.com