Thought Leadership Series: Challenges of porting games across social networks

Offerpal Media continues to develop its ‘Thought Leadership Video Series .  We sat down with Blake Commagere to talk about various topics. In the first interview, he shared his thoughts on what to learn from the traditional gaming industry. In the second interview, he spoke to us about gamer’s psychology, social networks bringing new audience to gaming and much more…In his third interview, he shares with us the challenges of porting games/apps across different social networks and platforms.

Blake is the creator of the highly successful Zombies, Vampires, and Werewolves games on Facebook. Previously, he led the development of the Causes application on Facebook.

EPISODE 1: “What social game developers can learn from traditional games?”

In this interview, Blake revealed his insights on social versus traditional (PC/console) game development.

EPISODE 2: “Are gamers moving away from pricey console games?”

In this interview, he shed light on how social networks bringing new audience to gaming and challenges to traditional game developers.

EPISODE 3:  “What are the challenges of porting games/apps across different social networks and platforms?”

Topics include:
- Lessons learned from Blake’s perspective
- The biggest challenge to porting
- Differences in monetization across networks

osted on October 19, 2009 by myofferpal | Edit

Offerpal Media continues to develop its ‘Thought Leadership Video Series ,‘ in which we will interview some of the foremost experts, entrepreneurs and, yes, “thought leaders” in the field of online gaming and social publishing. In the first video interview, we sat down with Blake Commagere to talk about various topics. In the second interview, he spoke to us about gamer’s psychology, social networks bringing new audience to gaming and much more…

Blake is the creator of the highly successful Zombies, Vampires, and Werewolves games on Facebook. Previously, he led the development of the Causes application on Facebook.

EPISODE 1: “What social game developers can learn from traditional games?”
In this interview, Blake revealed his insights on social versus traditional (PC/console) game development.

EPISODE 2: “Are gamers moving away from pricey console games?

Topics include:
- Gamer’s moving away from pricey console games?
- Social networks bringing new audience to gaming
- Challenges to traditional game developers in this new social gaming environment.

An Open Letter from Offerpal’s New CEO

I am the new CEO of Offerpal (as of yesterday) and although I’ve only got 48 hours under my belt, and have entered this industry in the midst of a recent firestorm of controversy, I thought it was time to share some of my thoughts and plans.

Direct marketing, in particular lead-gen, has always been full of questionable, misleading, and outright fraudulent marketers and offers.  We all get these daily via snail mail, email, phone, and late-night TV.  Unfortunately, this is the nature of the Direct Marketing beast.

Although a distribution channel which carries such offers does not actually create the offers, I do believe that a channel that wishes to be perceived as credible and of high integrity does indeed have a responsibility to make sure that the offers it distributes are not deceptive or “scammy.”

Over the last year, the use of offer-based payment systems such as Offerpal has skyrocketed, and it’s pretty clear today that the industry has not kept up with its explosive growth in terms of properly policing the offers that are being distributed.

I am not going to comment on events leading up to this situation, nor on other players in the industry, but I have quickly concluded that regrettably, Offerpal has been guilty of distributing offers of questionable integrity from some of our many advertisers.  The policies we’ve had up until now have not been thorough enough to prevent such offers from airing, nor has our organization had the proper focus and accountability to ensure quality assurance over the offers we distribute.

As a result, we’ve had a number of offers which were recently taken down by either ourselves or our partners.  Although we believe that the majority of our offers were valid and not misleading in any way, we have acted conservatively by taking down the majority of our offers and we are now in the process of letting them back into the system after inspection.

However, we’ve also made some erroneous communications to partners and developers about the state of our compliance.  In particular, we recently sent a letter to our Facebook developers which assured them that we were completely in compliance with Facebook standards, when in fact we were not.  This was not a deliberate tactic of any kind, it was a mistake that reflected our ineffective checks and controls.  But nevertheless, it was an inaccurate claim and for that we take full responsibility, and I apologize to Facebook and to their user community.

The good news in all this is that it has brought to light some very important issues for our collective industry which need to be addressed immediately.   For our part, we will be doing the following:

1. It will be a fundamental part of the Offerpal culture that any offers we distribute meet stringent standards of integrity and quality, as specified by our partners, credible industry experts, and good old common sense.
2. We will individually inspect and approve every single individual offer before it is allowed to go into distribution on our system.
3. We will customize our offer profiles to meet the needs and standards of each partner and will not attempt to have a “one size fits all” approach.
4. We will do everything we can within reason to lead the industry and set the example in these efforts.

Over the coming weeks you will hear much more from us on this issue, but more importantly you will see action and results.  I will remain personally involved in this initiative and consider it one of my highest priorities in assuming my new role here.

Virtual Goods Summit ‘09: What an ending!

Yesterday’s 2nd Annual Virtual Goods Summit was, by all accounts, a wild success. Organizers Charles Hudson and David Sachs once again brought together a who’s who of the industry’s best for a full day of informative, thought-provoking sessions and the most valuable networking opportunities of the year.

The single most talked about moment of the show, however, came at the very end, after the panel on Payments Infrastructure for Virtual Goods was opened up to questions, when one prominent tech blogger decided to chide practically the entire industry — payment providers, publishers, even the platforms — for what he described as unethical behavior.

The gist of his comments were that (1) payment providers were knowingly allowing children to steal their parents credit cards in order to purchase virtual currency or complete ad offers, (2) advertisers were being scammed into accepting leads (and oftentimes duplicate leads) that had no real interest or intention on following through on the offer, (3) that the game developers and even the platforms themselves were complicit in this behavior because it helped them generate considerable revenues, and (4) that the offers themselves are misleading.

Because our own Anu Shukla represented the only offer-based payment platform on the panel, she was in the best position to address the blogger’s claims. Since this blogger will no doubt use his platform to continue railing against the industry, we’d like to use our own blog to recount Anu’s points and help set the record straight.

1. In defense of the accusation that the industry knowingly allows children to steal their parents credit cards in order to purchase virtual currency or complete ad offers:

As Anu pointed out, this happens in such small quantities that it is hardly worth talking about. Of the millions of transactions Offerpal and other payment providers conduct every month, less than one-tenth of one percent of our customer service inquiries come from parents disputing charges on their credit cards of which they were unaware. Besides, this behavior is hardly unique to the gaming or virtual goods industries. If children are going to “borrow” their parents credit cards, they are just as likely to do so for material goods as they are for virtual goods. Why one tech blogger feels this problem is unique to the virtual goods industry or somehow a reflection on the payment providers who power it is entirely unclear. It should also be pointed out that Offerpal, like many others in the industry, is very proactively fighting fraud at every turn. As Sean Phinney, Playdom’s VP Business Development, pointed out in the press release announcing our suite of security and fraud prevention services, “As social games provide more immersive entertainment, player adoption of virtual currencies will only grow. Given our commitment to delivering a great player experience, Playdom sees this as a high priority issue. We commend Offerpal’s leadership putting safety measures in place to protect our players.”

2.) In defense of the accusation that advertisers are being scammed:

The blogger used the example of gamers signing up for offers from major advertisers such as Netflix in order to acquire virtual currency, only to immediately cancel their accounts and sign up again in order to game the system. For starters, the blogger couldn’t have picked a worse example. Netflix is perhaps the most sophisticated direct marketing advertiser on the Internet. To think that they don’t have a system in place for de-duping leads is ludicrous. And for those advertisers who don’t de-dupe themselves, we have our own de-duping system. Similarly, to suggest that the leads are so insincere and the lead quality so poor that advertisers are being “scammed” is just as erroneous. The truth is that Offerpal works with powerful, big-brand advertisers including not just Netflix but Disney, the New York Times, Discover Card, DirecTV, Blockbuster, Nielson RetRatings, Comscore and thousands of others who are quite happy with the quality of leads we generate for them. It’s not like this is an entirely new channel for them. Many of our advertising clients have been working with us for two years now and have done nothing but increase their orders every month. In fact, most advertisers are finding that the lead quality is by far better than they get through other channels such as affiliate programs, email, co-reg and the like. As we’ve pointed out in a previous blog post Offerpal is 100% committed to generating high quality leads for our advertising partners, and we’ll let the renewing of advertiser insertion orders speak for themselves. If advertisers were not happy with us as a source of consumer acquisition they would have turned us off long ago, since they are the final authority on whether the metrics meet their program goals. With hundreds of millions of ad spend at stake, it is naive to assert that they don’t have appropriate measurement tools in place.

3.) In defense of the accusation that developers and platforms are complicit in allowing this to happen:

Here, the blogger singled out Facebook, stating that they turned the other cheek to all of this “scamming” and “fraud” because they generate such incredible revenues from all of the game developers who pour their money into advertising on the platform. We can only assume that the blogger doesn’t follow Facebook’s policies very closely, or he would be aware that the company is extremely aggressive in enforcing its stringent advertising guidelines, which strictly prohibit anything misleading, unclear or scammy. In fact, as part of their platform changes announced just last week, the company announced that they were doing away with their Application Verification program because from now on they expect all applications — not just verified apps — to conform with these highest of standards as set forth in their Principles and Policies.

4.) In defense of the accusation that our offers are misleading:

The terms for completing every offer in our system are spelled out very plainly and very clearly in the language in our I-frame and on the advertiser’s landing page. We have a full team who constantly scour the offers to make sure they are in full compliance with our policies, which parallel Facebook’s policies against misleading copy or creative. Any landing pages that do not clearly spell out the terms of the offer are instantly removed and the advertiser is banned from our system. Are there some offers that are of higher quality than other offers? Absolutely. Is it our job to police the lower quality offers and remove them from the system, or at least make sure their terms are clearly spelled out? Yes, and we have been working very hard, in conjunction with Facebook and other platforms, to do exactly that.

It is unfortunate that someone from outside the industry decided to use the pulpit offered by the good folks at the Virtual Goods Summit to rail against those on the inside. The good news, however, is that his doing so gives us the opportunity to address these issues. This is, after all, still an emerging industry, and as it grows larger and larger it will attract more and more attention, and it is quite possible that many others outside the industry who do not necessarily know better might share the blogger’s sentiments. But for those on the inside — the payment providers, the publishers, the advertisers and the platforms — we are able to discern the misconstrued perception from reality.

We, personally, would like to thank Anu Shukla for so emphatically and enthusiastically dispelling the myths. Perhaps a sampling of Twitter references to the confrontation sum it up best:

• @TinaTranT: oh my, what a lively end to #VGS09 ! @Arrington and Anu Shukla of @OfferPal throw down. The lady is impressive.
• @milhaus12: just gained a helluva lot of respect for anu from offerpal. #vgs09
• @mitali: An[u] shukla puts arrington in his place!! #vgs09

 

Yesterday’s 2^nd Annual Virtual Goods Summit was, by all accounts, a wild success. Organizers Charles Hudson and David Sachs once again brought together a who’s who of the industry’s best for a full day of informative, thought-provoking sessions and the most valuable networking opportunities of the year.

The single most talked about moment of the show, however, came at the very end, after the panel on Payments Infrastructure for Virtual Goods was opened up to questions, when one prominent tech blogger decided to chide practically the entire industry – payment providers, publishers, even the platforms – for what he described as unethical behavior.

The gist of his comments were that (1) payment providers were knowingly allowing children to steal their parents credit cards in order to purchase virtual currency or complete ad offers, (2) advertisers were being scammed into accepting leads (and oftentimes duplicate leads) that had no real interest or intention on following through on the offer, and (3) that the game developers and even the platforms themselves were complicit in this behavior because it helped them generate considerable revenues.

Because our own Anu Shukla represented the only offer-based payment platform on the panel, she was in the best position to address the blogger’s hyped up claims. And boy, did she ever. By the time she was finished, the crowd erupted in applause, clearly proud that she had defended the industry so well against these uninformed accusations.

Since this blogger will no doubt use his platform to continue railing against the industry, we’d like to use our own blog to recount Anu’s points and help set the record straight.

1) In defense of the accusation that the industry knowingly allows children to steal their parents credit cards in order to purchase virtual currency or complete ad offers:

As Anu pointed out, this happens in such small quantities that it is hardly worth talking about. Of the millions of transactions Offerpal and other payment providers conduct every month, less than one-tenth of one percent of our customer service inquiries come from parents disputing charges on their credit cards of which they were unaware. Besides, this behavior is hardly unique to the gaming or virtual goods industries. If children are going to “borrow” their parents credit cards, they are just as likely to do so for material goods as they are for virtual goods. Why one tech blogger feels this problem is unique to the virtual goods industry or somehow a reflection on the payment providers who power it is entirely unclear. It should also be pointed out that Offerpal, like many others in the industry, is very proactively fighting fraud at every turn. As Sean Phinney, Playdom’s VP Business Development, pointed out in the press release (http://offerpalmedia.com/offerpal-secure.php) announcing our suite of security and fraud prevention services, “As social games provide more immersive entertainment, player adoption of virtual currencies will only grow. Given our commitment to delivering a great player experience, Playdom sees this as a high priority issue. We commend Offerpal’s leadership putting safety measures in place to protect our players.”

2) In defense of the accusation that advertisers are being scammed:

The blogger used the example of gamers signing up for offers from major advertisers such as Netflix in order to acquire virtual currency, only to immediately cancel their accounts and sign up again in order to game the system. For starters, the blogger couldn’t have picked a worse example. Netflix is perhaps the most sophisticated direct marketing advertiser on the Internet. To think that they don’t have a system in place for de-duping leads is ludicrous. And for those advertisers who don’t de-dupe themselves, we have our own de-duping system. Similarly, to suggest that the leads are so insincere and the lead quality so poor that advertisers are being “scammed” is just as erroneous. The truth is that Offerpal works with powerful, big-brand advertisers including not just Netflix but Disney, the New York Times, Discover Card, DirecTV, Blockbuster, Nielson RetRatings, Comscore and thousands of others who are quite happy with the quality of leads we generate for them. It’s not like this is an entirely new channel for them. Many of our advertising clients have been working with us for two years now and have done nothing but increase their orders every month. In fact, most advertisers are finding that the lead quality is by far better than they get through other channels such as affiliate programs, email, co-reg and the like. As we’ve pointed out in a previous blog post (http://myofferpal.wordpress.com/2009/04/30/offerpals-commitment-to-our-advertising-partners/) Offerpal is 100% committed to generating high quality leads for our advertising partners, and we’ll let the renewing of advertiser insertion orders speak for themselves. If advertisers were not happy with us as a source of consumer acquisition they would have turned us off long ago, since they are the final authority on whether the metrics meet their program goals. With hundreds of millions of ad spend at stake, it is naive to assert that they don’t have appropriate measurement tools in place.

3) In defense of the accusation that developers and platforms are complicit in allowing this to happen:

Here, the blogger singled out Facebook, stating that they turned the other cheek to all of this “scamming” and “fraud” because they generate such incredible revenues from all of the game developers who pour their money into advertising on the platform. We can only assume that the blogger doesn’t follow Facebook’s policies very closely, or he would be aware that the company is extremely aggressive in enforcing its stringent advertising guidelines (http://www.facebook.com/ad_guidelines.php), which strictly prohibit anything misleading, unclear or scammy. In fact, as part of their platform changes announced just last week (http://developers.facebook.com/news.php?blog=1&story=326), the company announced that they were doing away with their Application Verification program because from now on they expect all applications — not just verified apps — to conform with these highest of standards as set forth in their Principles and Policies (http://developers.facebook.com/news.php?blog=1&story=326).

It is unfortunate that someone from outside the industry decided to use the pulpit offered by the good folks at the Virtual Goods Summit to rail against those on the inside. The good news, however, is that his doing so gives us the opportunity to address these perceptions. This is, after all, still an emerging industry, and as it grows larger and larger it will attract more and more attention, and it is quite possible that many others outside the industry who do not necessarily know better might share the blogger’s sentiments. But for those on the inside — the payment providers, the publishers, the advertisers and the platforms — we are able to discern the misconstrued perception from reality.

We, personally, would like to thank Anu Shukla for so emphatically and enthusiastically dispelling the myths. Perhaps a sampling of Twitter references to the confrontation sum it up best:

· @TinaTranT: oh my, what a lively end to #VGS09 ! @Arrington and Anu Shukla of @OfferPal throw down. The lady is impressive.

· @milhaus12: just gained a helluva lot of respect for anu from offerpal. #vgs09

· @mitali: An[u] shukla puts arrington in his place!! #vgs09

Meet Offerpal at VGS2009 and join us at the AfterParty at Harlot

Meet Offerpal at the Virtual Gaming Summit Today, Oct 30th.

Here is the agenda:

VGS: Friday, Oct 30, 2009 from 8:30 AM – 6:00 PM (PST)
San Francisco, CA

The Virtual Goods Summit 2009 is focused on the emerging market opportunity for virtual goods and economies. Once restricted to the world of online gaming, virtual goods and currencies are beginning to influence the development of social networks, community sites, and many other new and exciting markets.

Here is a link to the event: http://www.vgsummit.com/2009/

Offerpal is sponsoring this event and Anu will be speaking on a panel to share data and perspective with all in attendance involved in the  virtual goods space.

Details on panel below:

5:00 PM – 5:45 PM – Panel: Payments Infrastructure for Virtual Goods.

Details on the Offerpal VGS after-party, Hosted by Offerpal Media

Time : 6:00 PM – 9:00 PM

Venue:  Harlot, 46 Minna St, San Francisco.

Date: Oct 30, 2009

Playoffs to win Wii, flip camera, champagne and many more gifts….

You don’t want to miss it.

Here is the link to the event:  http://www.vgsummit.com/2009/after-party

Offerpal completes 2 years and continues to grow

Offerpal is in the news this week as it completes 2 years and on its anniversary it announced that it has issued more than 730 billion virtual points to 160 million consumers. Offerpal helps publishers on Facebook, game platforms, and virtual worlds to monetize their apps.

VentureBeat ran the following article:

Offerpal has quietly built a special offer empire. On its two-year anniversary, the company is announcing that it has issued more than 730 billion virtual points to 160 million consumers.

Offerpal helps publishers on Facebook, game platforms, and virtual worlds monetize their apps. Rather than selling to consumers, it gives them an alternative payment system via special offers, which are targeted ads such as surveys or credit card deals. To gain virtual points that they can spend in a game, users fill out a survey. Advertisers pay Offerpal for each complete survey, and Offerpal shares the proceeds with the app publisher.

So far, Fremont, Calif.-based Offerpal has signed up more than 2,000 publishers. Offerpay has also created a turnkey payment platform that now powers millions of transactions per month. It has payment options in 190 countries and offers in more than 80 countries.

Continue Reading the article on VentureBeat: Offerpal Hits 160 million consumers with special offers

On Reuters: Offerpal Media Marks Two-Year Anniversary with 160 Million Users and 730Billion Virtual Points Issued

On San Francisco Biz Journal: Offerpal Media Marks Two-Year Anniversary with 160 Million Users and 730 Billion Virtual Points Issued

On StartupMeme: Offerpal Media completes 2 years and continues to expand exponentially

Offerpal hits more than 160 million consumers with special offers

the company is announcing that it has issued more than 730 billion virtual points to 160 million consumers. Offerpal helps publishers on Facebook, game platforms, and virtual worlds to monetize their apps.

What the recent Facebook Platform changes mean to you

Facebook yesterday for the first time revealed their 6 month product roadmap, and there was plenty of interesting changes that will affect how game developers communicate with their users, generate new installs, and manage their applications.

One of the most important changes is that developers will now be able to ask users for their email addresses. Basically, this gives the developers more direct communication with their users, or, as Facebook puts it on their blog, the point of the move is “to reduce friction and empower application and Facebook Connect developers to manage their relationship with users.”

Other significant changes coming down the pike include:

• Notifications -  These will be removed, and instead developers will use stream, Inbox, and Email.
• Requests – Will be moved to Invites and Inbox.
• Invites – Will be moved to either a filter in Inbox or surfaced in the Application and Games Dashboards.
• Inbox – Users will be able to share application content with one another via the Inbox.
• Stream – Stream stories will be rendered slightly differently: 1 image, a few lines of text, and 1 action link (without “formatting”-style characters).

It also sounds like Facebook is going to start applying their platform policies more aggressively. They’re doing away with the Verified Application Program, for example, and instead applying the standards for this program to all applications, rather than just the select few that pass. This is all part of the new set of principles they established for developers to live by. 

These are just a few of the changes described at an invite-only Developers Garage hosted yesterday at the Facebook offices. You can watch the entire presentation via ustream. For more analysis, you can also see how VentureBeat, InsideFacebook and AllFacebook covered it.

What all this means to you is that you will have to get more creative in how you grow your app virally and attract more users. Be sure to check out the changes and see how you can utilize new channels like the stream and email to attract new users and build relationships with current ones. This is especially critical because you will no longer be able to rely on notifications and requests, at least not as they currently exist, both of which have been so important to help you acquire new users.

Facebook is constantly changing the platform, and perhaps the best news of the day is that they now plan on releasing regular roadmaps to help developers anticipate these changes and plan for them themselves, rather than just having to react to the changes after they’ve occured. To stay on top of the changes, follow them at the Facebook Developers page.

Tapjoy – Easy and effective monetization of virtual currency

Here is an article on MobileCrunch by Gagan Biyani how Tapjoy’s ease of use and effective with offers.

Tapjoy, the small development shop that brought us the incredible TapDefense for the iPhone [iTunes link], has quietly built out an extremely strong toolset to provide monetization options for app developers. Through two strong offerings, they claim to increase ad revenue for free apps by more than 250%. I first met them at the TechCrunch50 DemoPit, and was thoroughly impressed by the Tapjoy platform.

First, they aggregate ads from all the major mobile ad networks and serve the highest-paying ad for an app. This method leaves the developer with nigh an unfilled ad; Tapjoy boasts a 99.9% fill rate. Second, they enable developers to sell virtual goods within their apps (such as extra points in Mobster or extra towers in TapDefense) for real money. They do this by providing the user with the option to download an app in exchange for the virtual good. Be sure to read about this later on in the article, because it is truly the most innovative 3rd party platform I’ve seen on the iPhone all year.

First, the ad aggregation. Similar to AdWhirl (recently acquired by AdMob) and Mobclix, Tapjoy has a platform that combines ads from 10 mobile ad networks and provides your app with the one that has the highest PPC. And this platform is completely free for developers. In the nacent mobile advertising market, fill rate is crucial to developers, since the major ad networks are struggling to independently keep up with demand for advertising. Tapjoy, like AdWhirl and TechCrunch50 startup Mobclix, scours the networks for the highest paying ad and fills your ad with that advertisement. Meanwhile, they are collecting a gold mine of data about the habits of the users of the roughly 1,000 applications running the Tapjoy SDK. Co-Founder Lee Linden told me that ad networks like Tapjoy because they provide the networks with a large amount of data and increased fill rates. Furthermore, they work hard to build relationships with the networks – something that will serve them well in the long haul.

Continue reading the article on MobileCrunch : Has Tapjoy solved monetization of free apps on the iPhone and Android?

Here is a case study on how one iPhone app — gpsAssassin — used Offerpal & Tapjoy to monetize virtual currency: How the iphones next hit games makes money.

Offerpal featured in San Francisco Business Times

The San Franciso Business Times‘ Patrick Hoge ran the following article with the mention of Offerpal Media.

Fremont virtual goods firm hiring as revenue doubles.

Offerpal Media has enjoyed a bang-up year.

The Fremont-based company, which collects money for sales of virtual goods for web based application vendors, particularly games on social networks, is on track to double 2009 revenue over 2008.

It expects to reach between $70 million and $80 million in revenue this year and is filling 30 positions ranging from engineering to advertising, sales and accounting, said CEO Anu Shukla.

The company, which got a $15 million round of capital in February, currently has 60 employees, plus nearly 45 working offshore in contract positions, according to Shukla.

Here is the link to the short version of the article: Fremont virtual goods firm hiring as revenue doubles.

Using Dual-Currency Systems for Better Revenues and Engagement

This was a guest post by Matt McAllister and Jaini Shah of Offerpal Media on Inside Social Games. The article addresses issues that developers should consider when implementing virtual currencies. It focuses on the tradeoffs of how to manage two types of currencies within a game.

You can download the full white paper here: Monetizing Dual Currency Economies in Online Games – October, 2009

Virtual economies are quickly becoming as complex as real ones. As more and more developers monetize their games by selling virtual goods and services, they face many of the same issues and challenges that leaders of real-world economies must deal with every day—inflation and deflation, balance and disparity, supply and demand, security and fraud prevention—plus other challenges that are unique to the online environment.

Some game and virtual world developers, such as Gaia Online, have gone so far as to hire full-time, professional economists to help them navigate the murky waters of creating a virtual economy, so important is it to their monetization numbers and overall revenue.

One common way many developers have chosen to deal with these issues is to implement a dual-currency system. In these cases, one type of currency is typically earned within the game by completing tasks or missions, and another currency can be purchased directly, either with real money or by completing advertising offers. We refer to the former type of currency as “in-game” currency, and the latter as “Real Money Transfer” (RMT) currency.

Why Two Currencies?

When implemented correctly, there are a number of advantages to creating a dual-currency system: it can help you balance the game economy and manage inflation, track and reduce fraudulent behavior, create a more level playing field for your users, and so on.

But the primary reason to adopt a dual-currency system is to engage and monetize the two distinct sets of users: paying and non-paying. Paying users are willing to fork over a few bucks, cents, or in the case of completing ad offers, a few minutes of their time in order to get premium items within the game. These typically make up between 5 to 15% of your overall user base. The non-paying users, on the other hand, just want to play your game for free. Paying users are valuable for obvious reasons. However, even though non-paying users might not generate direct revenue for your company, they can often be equally valuable, because:

* their mere participation creates value for paying customers
* they contribute to your word of mouth growth
* their visits and page views create advertising opportunities
* they might eventually turn into paying customers.

RMT currency is for users who are willing to pay real money for virtual currency instead of spending a lot of time in the game trying to earn it, whereas the in-game currency is for non-paying users who are willing to spend time playing the game in order to earn virtual currency but are not willing to spend real money on it. Having multiple currencies in a virtual economy thus helps maximize revenue and engagement across both sets of users.

4 Likely Scenarios

Two important questions that must be asked when first considering a dual currency economy are (1) whether you want to allow your currency to be converted from one type to the other (RMT to in-game currency and vice versa), and (2) whether players should be allowed to trade or transfer currency with one another. Allowing conversions and transfers opens up a slew of challenges that make it more difficult to balance your economy and prevent fraud, so many developers tend to go the safer, easier route of prohibiting both conversions and transfers. Let’s therefore begin by examining this type of economy first.

Scenario 1: Prohibiting Conversions and Transfers

Overall, this model is the least risky of the four because the game economy is completely under the control of the developer. The major advantage of this model is that it allows the developer to focus their efforts on one type of user – paying vs. non-paying – or the other depending on where they stand in the user lifecycle. For example, in order to motivate non-paying users to pay, developers may introduce a premium item that can only be purchased through RMT currency. In contrast they may also introduce certain items that can only be bought with in-game currency in order to motivate users to engage more deeply and spend more time in the game. The downside of this model is that you must give up potential virality and monetization, as we’ll see in the other scenarios.

Scenario 2: Prohibiting Conversions, Allowing Transfers

This scenario is commonly found in poker and other card-playing games, where the function of players transferring their “chips” to other players creates a powerful viral channel, such as when one poker player invites several friends and offers a few “chips” to get them started. However, this scenario creates many loopholes that can easily lead to crippling amounts of fraud if the economy isn’t closely monitored and managed, and most developers decide that the risk isn’t worth the reward.

Scenario 3: Allowing Conversions, Prohibiting Transfers

This scenario is mostly found in Role Playing Games, where many developers prohibit transfers but allow users to gain in-game currency in exchange for RMT currency at a fixed exchange rate. They may also let the paying users earn the in-game currency faster as compared to non-paying users when they use RMT currency. This model is less risky than scenario 2, since it helps keep the currency flow in check and also keep the developers in control of the game economy. It also supports monetization efforts by creating more reasons to purchase RMT currency.

Scenario 4: Allowing Conversions and Transfers

When player-to-player currency transfer is enabled, users can transfer either of the currencies (in-game or RMT) from one player to another, whether in a developer-controlled marketplace or through external methods like eBay. Found in applications such as Fish Wrangler, Fallen Sword, and Mouse Hunt, this type of system can often increase monetization by driving up demand for your RMT currency. Currency trading is specifically useful if the sinks (uses) for both currencies are different. For example, if there are certain premium items or special features that can be unlocked only through RMT currency, and there are certain activities or items which require in-game currency, then both types of users can benefit through currency trading. However, allowing player-to-player currency transfer can be risky and may lead to issues such as fraud and gold farming.

Tips for Implementing a Dual Currency System

Okay, so you’re ready to build a dual-currency system into your game. Here are a few tips to keep in mind as you do so:

1. Engage first, monetize second

Promote your currencies based on the users’ life-cycle. First engage them in the game through some in-game features and currency before promoting the RMT currency and driving them to the payments page. If you push RMT items before the users are fully hooked, you risk turning them off and losing them for good.

2. Balance your sinks

Maintaining a balance between the sinks for both currencies is very important. If there are a lot of sinks for in-game currency but very limited sinks for RMT currency, then it might affect the value of the RMT currency. In the same way, if there are limited sinks for in-game currency, then users may get stuck at some point and not engage in the game at all. Try to balance the RMT-only sinks with an equivalent number and type of in-game-only sinks to appeal to both types of users.

3. Offer multiple sources

For in-game currency, make sure there’s more than just one or two ways to earn the currency, or your users will quickly grow bored. For RMT currency, make sure you offer enough payment options – not just credit cards and PayPal but mobile billing methods, offline stored-value cards, and offer-based payment methods – to effectively monetize a broad set of users across different genders, age ranges and other demographic profiles.

4. Spell it out

Dual currency systems, by their very nature, are more complicated than single-currency systems, and therefore must be explained more thoroughly. Use all of the tools at your disposal – FAQs, customer support, in-game feedback and notifications, etc. – to explain the differences between your two types of currency and erase any confusion that might occur for your users.

5. Test, Measure & Optimize

As with everything in your game, you should be testing and re-testing all variables affecting your engagement and monetization. Test your exchange rate. Test your price points. Test anything and everything involving your virtual economy. Keep in mind that small fluctuations can often have a large impact on your overall revenue. At the same time, keep an eye out for inflation, imbalance, fraud and other factors that could be detrimental to your efforts, and quickly squash these before they have a chance to grow.

Conclusions

Dual currency systems aren’t for all games and all developers, but as virtual economies continue to evolve, many developers are finding that the rewards of having two currencies far outweigh the risks. If you’re thinking of implementing a dual currency system, take a look at your game and the types of users it attracts, and decide how you want to handle conversions and transfers. Do transfers make sense given the game dynamics? Do conversions make sense given your users’ willingness to pay, or would they simply rely on conversions to gain large amounts of in-game currency without actually engaging in the game (which might actually cheat non-paying users)?

Thought Leadership Series : Are gamers moving away from pricey console games?

Offerpal Media continues to develop its ‘Thought Leadership Video Series ,‘ in which we will interview some of the foremost experts, entrepreneurs and, yes, “thought leaders” in the field of online gaming and social publishing. In the first video interview, we sat down with Blake Commagere to talk about various topics. In the second interview, he spoke to us about gamer’s psychology, social networks bringing new audience to gaming and much more…

Blake is the creator of the highly successful Zombies, Vampires, and Werewolves games on Facebook. Previously, he led the development of the Causes application on Facebook.

EPISODE 1: “What social game developers can learn from traditional games?”
In this interview, Blake revealed his insights on social versus traditional (PC/console) game development.

EPISODE 2: “Are gamers moving away from pricey console games?

Topics include:
- Gamer’s moving away from pricey console games?
- Social networks bringing new audience to gaming
- Challenges to traditional game developers in this new social gaming environment.