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  Why People Pay For Virtual Goods
by Nicholas Lovell on 03/18/10 08:42:00 am   Expert Blogs   Featured Blogs
11 comments Share on Twitter Share on Facebook RSS
 
 
  Posted 03/18/10 08:42:00 am
 

[This blog post originally appeared on GAMESbrief]

I was at the Games Gone Wild event in London yesterday (good attendees, format needs work).

I heard a fundamental misconception about virtual goods and entertainment purchases repeated a couple of times.

“Consumers who enjoy playing free to play games will purchase virtual goods because they are used to paying for entertainment. And that’s what we offer them.”

This is not true.

Consumers do not play a game, decide that they are enjoying it and therefore decide to buy a virtual good. And if that’s what you think, you are going to struggle to design games with viral mechanics and compulsion loops that monetise well.

It’s not a big secret

Virtual goods only work in social settings: online games, virtual worlds, social games. And the compulsion that makes a player purchase a virtual good are the same as the compulsions that make us buy goods in the real world:

  • We want to stand out.
  • We want to get ahead
  • We want to belong
  • We want to flirt

Understand this, and you have got the first principle of the difference between a traditional AAA game design and the designs needed to make a successful virtual goods business.

Dress up, or look scruffy

I often ask clients this question:

“When you are at home, with no-one watching you, do you:
a) dress up in your best trendy clothes; or
b) hang out in an old T-shirt and a tracksuit (or whatever your equivalent is)

No-one has ever answered (a).

I then point out that the same is true online. If no-one else can see what you are wearing, why will you spend money on it?

This, in essence, is why Oblivion’s horse armour flopped so badly.

Many designers say “but we’ve always included wearables in our reward structure for single player games. Why don’t they work in online worlds?”

The answer lies in the difference between “rewards” and “purchases”. For a player to feel the need to purchase something, they have to get a feeling, an experience, a social benefit from it. They need:

  • to feel more powerful (i.e. have better weapons, level up faster)
  • to fit in (like the one million people who bought a Santa Hat in Kart Rider in the run up to Christmas 2007)
  • to stand out (like anyone buying a unique set of clothes for their avatar)
  • or a combination (like a guild all kitting themselves out in purple clothes so everyone recognises them).

(see Free to play gamers will pay for power-ups and self-expression, but not for new content for more on this topic).

Players do not buy virtual goods for the goods themselves. They don’t buy them for entertainment value.

They buy them for self-expression. For status. For all the same reasons that you buy branded clothes in the shops.

Harness this, and you will have a massively successful business. Fail to understand this, and you will be creating horse armour until doomsday.

 
 
Comments

Craig Stewart
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I believe we buy virtual things online because we have all been conditioned to consume all our lives. The reasons to buy are quite separate from anything real, like a purpose. Now that we have lost the ritual of buying music, movies, books, etc and replaced it with a rather dull experience of ordering something online instantly, we still crave for those feelings we have been conditioned for. To understand why people buy virtual things you only need to know why people buy things at all, and that is a very well defined science; Consumer Behaviour.

If you haven't watched THX 1138, watch it now, it seems all the more relevant these days.

Nicholas Lovell
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I agree with the second part of your comment more than the first. But I certainly agree that if you understand why people buy things at all, you will be in a much better position to run a virtual goods business.

Mac Senour
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It sounds to me like you are suggesting that Virtual Goods will not be big sellers in single player games. If that is the case, I would disagree. I think VG work in single player games because of your second point "We want to get ahead".

We want to get ahead so badly that we'll play games like crazy and then buy items to help us get more ahead. I am assuming that these single player games have social connections, Facebook and Twiiter along with their own game community.

If I misunderstood your point, I apologize.

Mac

Yes, I talk all about this game dev stuff in my blog...

http://aboutmakinggames.blogspot.com/


Nicholas Lovell
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I do think that virtual goods don't work in a single player game. By which I mean a game where the primary motivation is what *you* achieve, not what *other people* see you achieve. I believe that even in close-knit multiplayer games (say 8-16 people) virtual goods are a harder sell. You need a representation of the real world: 100s, 1,000s, even millions of people for virtual goods to take off, in my mind. Single, or small multiplayer, games will focus on selling additional content, not virtual goods.

Shava Nerad
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Well, my comment got so elaborate, I decided to post my first blog post -- but it has to be approved by the mods, since it's my first.

The summary is this:
It's hard to get over the idea that since virtual goods are fluff, any fluff is going to be a successful virtual good. To develop the differentiation, we need to learn a deeper cultural understanding of fashion.

I post the URL for the blog article as it is approved! Great article.

Jeremy Reaban
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I don't know about that, The Sims spawned quite a number of sites that provided user made content (objects, clothing, hair) for a fee. Then EA themselves got in on the act with their own object for money service (which you can buy cards for in Walmart).

I think the horse armor is a bad example because it was so useless and so overpriced. I think the real key is there has to be value for such downloads.

Kim Pallister
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This thread has a lot of 'I think...' and 'I believe...' in it. Forgiveable, it's a blog post after all :-) However, it'd be interesting to see some actual data.

Microsoft & third parties have sold a lot of downloadable content, some of which is for single player games. Not sure what the delineation is for 'virtual good'. Is a level pack a 'virtual good'? How about a new car in Forza? What if the game sold you a drivers license that then gave you access to the Autobahn? Is that a virtual good? Hmm...

Seems like if you can assemble some 1's and 0's in a way that players find valuable, you can sell them. If you do so in a digital fashion and make them small/cheap enough, they'll be labelled virtual goods. I agree with the initial point that people don't hand over money for no reason, they need to find value-for-money somewhere, but I don't think there's a finite list of what that can be. It's infinitely long.

Hillwins Lee
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I think the key is to have the player immersed into the game. Once she believed it is real, she will behave like it is real. Take The Sims as an example, all these additional contents sell because folks want their avatar to have them.

Immersion is key.

Alan Wilson
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Well, to Kim's post... we've sold a solid amount of the DLC character packs we did for Killing Floor. No, I'm not going to quote you the figures, though :p

These character packs make no difference to gameplay. They don't even make a difference to how you see your own character (well, apart from the sleeves, this being an FPS). But it IS a co-op game, so everyone ELSE can see your cool choice of (warped) character. So I largely have to agree with Nicholas: people are buying it because they want to be a bit different to the pack. Mind you, quite a few also claim that they are doing it as a "thank you" to us for giving them additional free content. I rather hope it is a combination of the two - for fun AND to show they love us!

But we can safely say that the DLC packs we've done turned a profit - which contributes towards us creating more free content. Everyone is happy - BOO-YAH!

Shava Nerad
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Here's the URL for my Gamasutra blog response:
http://www.gamasutra.com/blogs/ShavaNerad/2778/

bill rogers
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Yep, its true even i do it for entertainment but i have never tried virtual goods for any pleasure. I play virtual games like http://www.horseracegame.com as i am big fan of horses and horse race games. But the concept "virtual goods is really new to me".


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