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Exposing Social Gaming's Hidden Lever
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Exposing Social Gaming's Hidden Lever
by Betable Blog on 11/08/11 01:21:00 pm   Expert Blogs   Featured Blogs

The following blog post, unless otherwise noted, was written by a member of Gamasutra’s community.
The thoughts and opinions expressed are those of the writer and not Gamasutra or its parent company.

 
This was originally posted on Betable's Game Monetization blog.

In our last post, Gambling Makes Billions Without Innovation, we showed how each gambling game has spent decades or longer without a single gamplay innovation. We are following this up with a series where we outline each major type of gambling game and how their mechanics can be applied to the modern gaming world. One of the most striking things that we found in our research was that social gaming, a burgeoning $7.2 billion industry that’s beloved by over 800 million players worldwide, is merely a modern adaptation of an invention created in 1887: the slot machine.
 
Slot machines
See if this sounds familiar to you:

To play the game, you put currency into the machine. You then pull the knob and wait for the result. When the result is presented, you are rewarded with a cacophony of exciting sounds, attention-grabbing images, and some form of currency. Often times, this winning helps you progress towards a larger goal. You also have the opportunity with each play to win a rare prize of significantly higher value than the value of the currency you contributed to play the game.


That’s a slot machine, right? Wrong. It’s the basic action loop of FarmVille.

Here is the description again, but this time, with specific details:

To plant a crop, you must first spend resources on the seeds. You then plant the seeds and must wait for them to grow. When you harvest the seeds, you are rewarded with a cacophony of exciting sounds, attention-grabbing images, and some resources. Often times, these resources help you progress towards a larger goal. You also have the opportunity with each play to win a rare prize of significantly higher value than the seeds that you purchased.


That sounds more like FarmVille now, doesn’t it?

People have often argued that Zynga’s games lack gameplay depth, but make up for it in addictive, accessible mechanics. Jeff Tseng, the co-founder and CEO of Kontagent, even said that Zynga “appeals to the same psychology as gambling” in a recent Forbes article. So what exactly is the psychology of gambling? How did Zynga leverage gambling mechanics to build a massive gaming empire?

Schedule of reinforcement
The small lines jutting out of the trend lines indicate the time & amount of reward. VR = Variable Ratio, FR = Fixed Ratio, VI = Variable Interval, and FI = Fixed Interval.
Zynga’s success has much to do with their skillfully executed manipulation of the human brain. One such method is known as the Random Reward Schedule, based on the results of a study conducted by psychologist B.F. Skinner. In this study, he found that giving pigeons a consistent food reward lead to the least engagement. They would eventually get bored and only come back when hungry. Skinner then found that randomizing whether the reward was given made the pigeons come back more often, as did randomizing the amount of the reward. Lastly, he found that combining these experiments to randomize both whether the reward would occur and how much the award was for lead to a striking increase in engagement. Zynga and other social games companies have implemented the Random Reward Schedule to great effect in their games to keep players coming back.

Furthermore, just the act of engaging in gambling actions for fake money can be exciting for players. Dr. Clark from the Wolfson Brain Imaging Centre in Cambridge used fMRI brain scanning to measure patterns of brain activity when playing a game that involved gambling. He found a reliable pattern of brain activity when humans receive money as a reward for winning. It should be no surprise that the region of the brain (the striatum) that responds most to gambling also responds to natural reinforcing stimuli like food and sex.

Sex and money have been leveraged by advertising for years
This is nothing new, as numerous industries such as advertising have relied on the allure of sex and money for years. Zynga has simply managed to successfully leverage these same psychological cues to unlock a massive new market of people that had never considered themselves video gamers.

Paradoxical as it seems, many of Zynga’s 280 million players were gained far outside of what was previously considered the typical video gaming demographic. A key to Zynga’s success is something that is often overlooked: widely appealing graphics. Zynga’s high level of polish combined with approachable characters gave them mass appeal like no game company had ever achieved before. “We’re making mass-market entertainment everyone can play” says Brian Reynolds, Zynga’s chief game designer.

Zynga has a distinct, approachable style
Zynga combines mass appeal, addictive gambling mechanics, and an aggressive viral marketing strategy to achieve incredible growth. Their stylish, highly approachable games help them avoid the stigma of gambling while appealing to precisely the audiences that are the most avid gamblers. Zynga’s core paying audience is 30-55 year old females. It should come as no surprise that this demographic overlaps almost exactly with the core audience of slot machine users.

However, to turn this into a multi-billion dollar empire, Zynga had to convince the millions of players that they now had gambling with play money to put real money into the game. The key to doing this was to build compelling virtual equipment or enhancements for players to use in-game. Social gaming players know that they are spending real money on a game, but they do so because of the perceived value of the virtual goods they are acquiring in the game. In this way, gambling and social game players are also similar, because both players know that they are losing money as they play, but they do so because their perceived value and enjoyment is worth the expense. To quote the University of Cambridge’s article on the psychology of gambling, “at its heart, gambling is a rather paradoxical behaviour because it is widely known that ‘the house always wins’.”

US Virtual Goods Market
This is one way to explain what people have been struggling to understand for years: why do people pay real money for virtual goods that have no tangible value? In a way, these users are not unlike the millions of players per year that go to play slot machines until they are out of chips. They are not playing to win or even to hit the Jackpot – they are playing for the thrill of the game. The money they set aside to play is simply the cost of a game they enjoy.

This comparison is striking when put in the context of virtual currency in social games. Players who purchase virtual currency often spend it quickly because once it crosses over, it isn’t seen as money any more. The converted currency simply becomes a tool for playing the game, which is almost word-for-word how professional poker players describe money in the real world.

Zynga is a well-disguised gambling company
Zynga proudly states that they are an “an analytics company masquerading as a games company”. We see this a bit differently: Zynga is a gambling company masquerading as a new form of games company – and a wildly successful one at that. Their ability to leverage gambling mechanics has earned them over 200 million monthly active users, almost $1 billion in revenue in 2011, and a potential $15-20 billion valuation in their pending IPO.

No matter the volume of Zynga Poker chips a player earns, or FarmVille resources a player accumulates, their real money has been exchanged for virtual currency, just like an other cash-for-goods transaction. The biggest thing that unequivocally separates social gaming from gambling is that the players have no ability to tangibly recoup the money put into the game. By giving players the ability to win back their investment of time and money in real-money rewards, that would quite literally be a game changer.


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Comments


Joe McGinn
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OK article but it seems strange to start with the good analysis of reward schedules, but not proceed to the well-documented exploitation of loss-aversion psychology that is the self-professed heart of Farmville and other Zynga games. It is the two principles in combination that are so powerful, both in slot machines and Zynga games.

Betable Blog
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Good point Joe, I got into the psychology aspects but I feel like I left a lot unexplored. I'll make a note of this and be sure to include it if I ever do a follow-on here. Thanks.

Darren Tomlyn
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(As usual - my reply is based upon the contents of my blog - (click my name).)



Of course - the bigger problem with all this, is that gambling is no longer A game, in general. Gambling, most often, involves a competition, instead.



Gambling USED to be what the word game itself represented, when used as a noun - but NOT any more... Game as a verb, is of course still used to represent such a thing, and is a remnant from when the word game crossed paths with such behaviour.



But A game, is no longer consistent with the word gambling at all, now - even though poker, for example, is probably the main game that is and can be used to enable such a thing in addition to the game itself.



The problem, of course, is that there's a very large industry out there that makes money from convincing people otherwise - that their competitions are games.



Unfortunately, the difference between A competition and A game, is not recognised or understood - leading to much confusion between the two. This is BADLY affecting people's perception and understanding of games in general, usually to the detriment of all.

Betable Blog
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We've found this perception gap as well, especially in America where gambling is largely portrayed in the context of Las Vegas, aka "Sin City". Gambling is really just the act of real-money in, real-money out on the games that already exist. You can play Zynga Texas Hold'em for fake chips and it's the exact same game, and millions of people play it, but it's not gambling because there's no way to actually take your money out.



This is one of the pains that Betable is addressing. In a way, we expect real-money games to largely merge with the existing gaming industry as the real & virtual worlds collide. The first instance of this is Diablo 3's Real Money Auction House, which is definitely going to help change consumers perception of both games and real-money play.



In the future, there will be competitive gaming that includes real-money rewards, especially if a buy-in is required by players. This will up the ante on the competition and make the game more fun, while also rewarding hardcore players for their hard-earned skill.

Darren Tomlyn
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@ Tyler



The problem with all this, of course, is that people are not being taught and informed what the difference is between games and competitions - meaning that a lot of propaganda has now managed to have a lot of effect on people.



But as soon as games start becoming a medium for gambling - their place within the law changes, too. At the minute, any real-money involvement is purely down to the players and not the people running the game - but if that changes...



TBH - I'd really like to see another word used for games that involve gambling - to separate the two further, but, oh well...

Christopher Plummer
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A game is when you compete for fun. A competition, as it relates to games, is when you play a game for something. And gambling, as it relates to games, is specifically when you risk upfront money to play a game with the chance to win a larger sum of money when the game is over.



The whole point of a Slot Machine is that you are not competing and it's not social. The competitive people are playing on the video poker machines. The people looking for non-competitive, social gaming are playing Roulette. The people looking for competitive social gaming are playing Blackjack, Craps, or Poker.



Slot Machines and Zygna games do have something in common, which trumphs what people are looking for, and that's their accessibility. Everywhere else on the floor has high-visibility and a premium cost attached to it, something you can avoid with slot machines.

E McNeill
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Heads-up: your "slot-machine users" link is broken.

Betable Blog
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ack! Sorry, it got broken in the port from our company blog


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