6 Free-to-Play Design Lessons from Clash of Clans to Engage Players and Increase Profits December 13 2013

With this article, we celebrate Clash of Clans’ success and take a closer look at monetization and retention mechanics that power Clash of Clans and make it so wildly successful. Below are some key lessons for game developers hoping to achieve the benchmark quality level that Supercell has established with Clash of Clans. The last lesson in particular shows how Supercell went against Zynga's teachings and conventional wisdom to satisfy both players and monetization needs.

Clash of Clans is a free-to-play city building/strategy game by the Finnish game developer Supercell. It was released on iOS in 2012 August and has since reached the top position in app stores in over 130 countries, including the biggest markets of Germany, Canada, UK and the USA. It has currently over 1.8 million daily active users and over 3 million monthly average users and at one point made 2.4 million per day, reaching revenues per user that few companies can even dream of. Success of Clash of Clans is the reason why Supercell broke all records in company growth speed in Finland and elsewhere.


1. Let players progress quickly (at first)

Progression is an integral part of any modern free-to-play game. In many F2P games, it functions as the core driver for monetization by setting goals for players and providing them with incentives to spend a bit of hard currency to overcome them. There as many flavors of progression as there are games, but there’s one thing in common with almost all of them: getting ahead requires you to spend time and effort. From a developer’s perspective, it can appear very desirable to create a progression system that is very demanding to stretch out content and incentivize players to pay. However, we should keep in mind that making players grind to achieve goals before they care about them can be dangerous. Too much waiting or grinding can alienate new players easily and ruin retention rates. On the flipside, completely avoiding difficult goals that take long to complete can be harmful too. If everything can be achieved in a snap, there is no compelling reason to pay. Furthermore, players might start leaving in droves once fresh content runs out. What to do, then?

Clash of Clans tackles this challenge issue by gradually ramping up progression times as players get ahead. The core loop of Clash of Clans is very quick at first and drives players to engage with the game continuously for a good fifteen minutes or so. Supercell takes things a step further by bringing in Gems, the hard currency in Clash of Clans, into the mix.  Waiting times that would usually get in the way are dealt with using Gems (described in more detail in the next section).

Past the initial experience, progression times gradually increase from minutes to hours to days as players become more engrossed and engaged. Top level players have to wait up to 14 days for certain buildings and upgrades to be finished. Gradually increasing waiting times serve two purposes. First, it elongates the lifetime of content and makes sure that all but the very top level players have goals to complete. Second, lengthening progression times effectively build up the pressure to purchase and use Gems. Learned habits die hard, and using Gems to skip waiting becomes more and more attractive as waiting times increase.

Key lesson:

Design your progression mechanics to go easy on new players and ramp up the requirements later on when players are thoroughly engaged with your game

2. Carefully teach your players how to use hard currency

Conversion is a concept that all free-to-play developers are familiar with. It is a percentage metric that measures how many players have converted into paying customers within a time period. Having a healthy portion of players convert to paying customers is of utmost importance for financial viability of any free-to-play title. There are several things that affect conversion, but there is one prerequisite condition that one must not neglect: ensuring that your players understand the value of the items you are selling and know how to obtain them with hard currency.

This is something that Clash of Clans really excels in. Gems, the hard currency in Clash of Clans, are carefully integrated into the new player experience. Every starting player is given a considerable pile of free Gems and are then educated on how to take advantage of them. Several times, the waiting times that the player would normally have to endure are skipped using Gems, driving the value proposition of Gems effectively into players’ heads. After the tutorial is done, players usually have Gems left to spare.

The key role that Gems play in the tutorial translates into two great benefits down the line. The first benefit is that having players use Gems in the tutorial makes player engagement even stronger by smoothing out the initial experience. The new player experience flows effortlessly and any obstacles or waiting times are dealt with Gems every player starts with. Providing a seamless flow to new players in the first fifteen minutes increases the chance new players are engaged and later on, retained. The second benefit comes later with monetization: by the end of the tutorial, every player understands why Gems are desirable and are already getting into the habit of using them. The generous supply of Gems given in the beginning lasts some ways beyond the tutorial and when they finally run out, a strong desire for more has already been kindled.

Key lesson:

Give free hard currency to all new players that enter the game and make them use it multiple times throughout the tutorial. Be generous to promote habit creation.

3. Provide goals of varying size and difficulty

As described in the first section, finding the right balance and cadence in progression is important. If everything is within reach quickly, players have little incentive to use hard currency and might soon churn through the content and exit the game with nothing to achieve. However, stretching out progression too much will risk losing players who simply give up in the face of the grind. Designing your progression times to ramp up over time is a good solution, but it can be augmented further by mixing things up at the same time: give players long-term goals to make your content last while also provide them with smaller goals that are achievable within minutes or hours to keep them tightly engaged. Having goals of varying sizes and lengths keeps the player engaged on multiple levels. There is something to do daily, there is something to wait for and there is something that can be planned ahead. Unfinished is remembered when it comes to bigger aspirations. Having longer term goals will improve your retention by giving players goals to come back for.

Clash of Clans features goals both large and small in its core gameplay. Unlike other city-building games, there are plenty of routine and intermediate tasks that demand the players’ attention in short cycles. Players can perform a variety of routine tasks that take little time to complete, such as attacking other players (provided that you have your troops ready to go) and collecting resources. This doesn’t mean that players can disregard the bigger goals, however, as new units, unit upgrades and the number of resources generated ultimately rely on leveling up almost all buildings in the village.

The important thing is that players always have tasks small and large in front of them and have choice in which to engage.

In Clash of Clans, routine tasks include such things as gardening, resource collection and arranging your village into a shape that is optimal for defense. These are tasks that are almost always available. Gardening features a nice mechanic for seeding hard currency: removing plants that occasionally grow next to your village comes with a chance to find a few Gems. Resource collectors fill up quite often and they need to be collected manually for the resource production to continue. This is also encouraged by the loss of resources you get when successfully attacked. A destroyed resource collector will give 50% of the resources to the attacker, while a destroyed storage will only give 30%. Resources are collected from the collectors (mines, elixir collectors and dark elixir collectors) to the storage rooms. Each resource has dedicated storage buildings and you can build more as your town hall levels up. As both buildings scale accordingly and gold and elixir are interconnected, it is impossible to be caught in a rut where you have ample amounts of other resource but a dire need for another. The player is kept constantly engaged.

Intermediate tasks take a while to complete, but an active player can still do them many times per day. These tasks include unit production and attacking. Attacking comes with a risk and potential for high rewards. A successful attack can yield a hefty pile of resources as loot and work to increase your current trophy level, which can increase the amount of guaranteed loot for successful attacks. Unit training takes some time, but not nearly as much as upgrading or building. Within an hour the player usually has his barracks full, and the training time scales with the level of troops being trained. On the lower levels the cycle can be as short as 10 to 15 minutes, constantly tempting engaged players to return to the game even though their bigger projects are not yet complete. After all, they can already work ahead, gather resources and ultimately save time when the next big task becomes available.

Key lesson: 

Design to provide goals of various sizes to all players for pacing purposes. Allow your players some easy and quick wins while simultaneously working on the bigger goals.

4. Give players strategic choice when spending hard currency

In Clash of Clans the player decides when to spend and the developers clearly have given them options to do so.  Even though you always have the choice to simply buy the resources needed to build a building or train a unit (option that is always prompted when you try to build something you cannot afford), you cannot do so until you have the resource storage space to house all the needed resources. The player’s choices are always limited in some way and though paying your way to the top is possible, it is also prohibitively expensive.  

There are usually also at least two choices on how to spend Gems: strategically by boosting building capacity/resource gathering speed (which is cheaper), or by buying instant upgrades (which is more expensive). Having both is important, since they cater to two different player types with different motivational drivers.

A great example of strategic spending choice in Clash of Clans is the builder’s hut. Builder’s huts are hard currency items, purchasable in the marketplace at any point. You have two of them at the start of the game, the maximum amount is five. Each additional builder’s hut grants the player an extra builder. Extra builders let the players build more buildings simultaneously and thus allow the players to progress more quickly since they don’t have to wait for previous building projects to be completed before starting a new one. Since the mechanic is thoroughly introduced in the tutorial, players can do a mental calculation and end up with the conclusion that a builder’s hut is a good investment. Paying to complete individual buildings will rack up to be more expensive over time than the upfront, one-time fee for a builder’s hut. By spending an upfront sum on them early, players can “save” a lot down the line. As such, they are a very attractive first-purchase option for players who have money to spend, but haven’t yet opened their wallets.

Another beautiful trick in play here are the free gems: with careful play the player can save the gems needed to build the third hut through achievements and pruning your village, but the difficulty ramps up quickly for the last two huts.  They cost 1000 and 2000 gems respectively, together amounting to about $25 and with the third one added in about $30. Getting them for free is still feasible without paying, but most players, having the choice, probably tend to pick the easier way and purchase Gems for real money.

Key lesson:

Provide different ways to spend money towards the same goal. Let fiscally-minded players invest in their play and provide those who just want to get ahead immediately with avenues to instant gratification.

5. Offer quantity discounts on bigger purchases

The marketplace of Clash of Clans offers no high cost performance items that would entice big spenders to buy them. So how does Supercell monetize their big spenders (or “whales”)? How to keep the big spenders happy and provide them with enticing options to spend money on? While some titles create unique, expensive items to cater specifically to whales, Supercell solves this by having the monetization model scale to the spending behavior of each player. From the start, everything can be accelerated or skipped with hard currency. This has the benefit of making hard currency purchases scale, regardless of spending habits.  Nobody is ever locked out of playing the game by not having money and can choose their level of spending to suit them. Casual players may invest a few dollars in a builder’s hut, while hardcore players can quickly boost their village to compete with the best.

While the model caters to big spenders very well, having costs linear would mean that accelerating progression with hard currency would quickly become outrageously expensive. This is solved by offering quantity discounts on larger purchases. The more you buy, the lower the unit price.

Offering quantity discounts allows big spenders to continue spending as they progress without costs getting out of hand. Should they not be there, Clash of Clans would probably suffer from a much higher monetization burnout rate when it comes to whales.

Key lesson:

Offer quantity discounts on large purchases. If your monetization model differs from Clash of Clans, don’t worry: you can offer quantity discounts on progression boosts, premium accounts and use bundles to discount consumable items.

6. Avoid blocking core gameplay to force conversion

Using time and waiting to entice players to pay has since the social game era been a definite part of the free-to-play monetization toolkit. Probably one of the most well-known time-mechanics is Zynga’s energy mechanic, in which the player is required to spend energy to play and to spend money to replenish energy. At one point the energy system was considered the only viable monetization tactic there was, at least in social games. Having forced periods of waiting adds pressure into the game and entices the player to spend real money in order to avoid waiting.

Clash of Clans is not different in the sense that waiting is also a core part of Clash of Clans’ gameplay. The critical difference is that paying never presented as a hard gate: there is no energy mechanic that prevents players from continuing to play unless they pay. Playing is always possible and there are always things to do. Instead, the focus in on keeping the player engaged and entertained as much as possible while subtly offering attractive opportunities to pay.

The engagement-focused approach of Clash of Clans feeds heavily into building a large, engaged and loyal player base. Following the free-to-play funnel, Clash of Clans focuses strongly on engagement. That engagement leads to retention and retention ultimately to monetization. Supercell has naturally made sure that there are plenty of avenues to use hard currency, but as it seems, the primary focus has been on building a very engaging game that keeps bringing players back. The resulting high engagement and retention rates provide a foundation from which Supercell is earning its record-breaking revenues.

Key lesson:

Avoid designing mechanics that prevent core gameplay. If you succeed in engaging your players, they will want to stick around. If they do, you’ll have a good chance of getting them to open their wallets.


Clash of Clans is a remarkable piece of game design. It is smooth and it is possible to play it for ages before running out of things to do. There are no obvious “new” features that a monetization expert could criticize but neither are there obvious faults in the game design that would make it unenjoyable. The designers of Supercell clearly adopted the games-as-service mantra before it became the chant you can hear everywhere.  This game is a service; it is being constantly updated and controlled and at no point is the player left without anything to do. As far as best practices go, Clash of Clans is a great subject for study.

Here's a table of the key lessons for easy reference:

# Lesson Explanation
1 Let players progress quickly (at first) Design your progression mechanics to go easy on new players and ramp up the requirements later on when players are thoroughly engaged with your game
2 Carefully teach your players how to use hard currency Give free hard currency to all new players that enter the game and make them use it multiple times throughout the tutorial. Be generous to promote habit creation.
3 Provide goals of varying size and difficulty Design to provide goals of various sizes to all players for pacing purposes. Allow your players some easy and quick wins while simultaneously working on the bigger goals.
4 Give players strategic choice when spending hard currency Provide different ways to spend money towards the same goal. Let fiscally-minded players invest in their play and provide those who just want to get ahead immediately with avenues to instant gratification.
5 Offer quantity discounts on bigger purchases Offer quantity discounts on large purchases. If your monetization model differs from Clash of Clans, don’t worry: you can offer quantity discounts on progression boosts, premium accounts and use bundles to discount consumable items.
6 Avoid blocking core gameplay to force conversion Avoid designing mechanics that prevent core gameplay. If you succeed in engaging your players, they will want to stick around. If they do, you’ll have a good chance of getting them to open their wallets.


We hope that Supercell continue their success in bringing their high quality games in to the mobile market. Right now they have the funding and the data to do so at least.  We are eagerly waiting for when their newest game Boom Beachis ready for an analysis.

Virtual Economy Analysis: The Simpsons: Tapped Out October 18 2013

The Simpsons: Tapped Out  is currently the top grossing iOS app in the US and several other markets, and the 2nd top grossing app on the entire Android platform. In this analysis, I will try to summarize the monetization strategies and virtual economy features of this city-building and management game developed by EA Studios, and even venture to suggest how the game could be improved.

The reason why I wanted to cover The Simpsons is simple. It is the biggest. It has the biggest developer, highest production costs (those original voice actors can’t be cheap!) and some of the biggest revenues of mobile games currently on the market. The high production costs alone would make me analyze this, as mobile game design is normally thought as a low-budget enterprise. High-budget productions, especially in gaming and film, tend to conservative affairs that follow a thoroughly tested formula. Does this hold true in the new medium of mobile games?

First impressions: Social game with high production values

The core loop of the game is about building a city – Simpsons’ Springfield. By building, you unlock characters who can perform different actions. The characters earn you money and donuts, the currencies of the game.

In the tutorial missions and some way after, the high production values really show. Sounds are varied and well designed, response times are fast and the user interface is easy to use. The game brims with content. The six month old game already incorporates three expansion packs.  

The tutorial follows the tried-and-true method of introducing the player to both the gameplay and the in-app purchases. The first five levels are done within the first 30 minutes. At this point you should have obtained enough money and donuts to last for a few levels more. Money is the soft currency of the game, relatively easy to obtain by playing the game. Donuts are the hard currency: rare, valuable and required in copious amounts to get the best items and the most profitable buildings. Donuts can also be used to increase building speed.

Every resource in the game has to be collected from the map manually after it has been earned, which engages players to log in more often. The developers have ensured that this interaction feels really juicy. Collection animations and sounds are designed to make resource collecting fun instead of a chore. Many games could learn from the user flow of The Simpsons, as moving about and doing things in the game is incredibly smooth. The only thing distracting the experience for me were the several updates that took a while to complete. 

Progress in The Simpsons: Tapped Out is measured in levels that are gained with XP, with more XP required for higher levels. As the figure above shows, the first levels are easy to reach, but the XP requirements rise steeply as the game progresses. The abrupt rise in XP requirements that starts in the 20rd level also marks the end of the launch content. All levels after level 20 have been released in post-launch expansion packs. Steepening the experience requirements on the later levels makes sense for several reasons. First, it’s an inexpensive way to stretch out content and provide goals for players. Second, ramping up the requirements serves the monetization strategy, as it creates incentives to spend hard currency to speed up progression. Finally, high-level players are more inclined to accept steeper requirements since they have already committed considerable amounts of time (and possibly money) into the game. While a new player faced with such high requirements might stop playing, committed players are much more likely to continue.

The friend mechanic of “alternate Springfields” shows how great a city that has progressed further looks like, encouraging players to develop their own Springfields and to add their friends. This should benefit both user acquisition and retention.  Another feedback type mechanism that encourages playing is the “Conform-o-Meter”, a meter that rises depending on several different measurements, including “Gluttony” (build more restaurants) and “Vanity” (more decorations). The Conform-o-Meter’s reading provides percentage bonuses to XP earnings and in-game money earned from buildings and completed missions. Besides encouraging construction, it also encourages players to diversify their purchases. If you only have a lot of one measure, such as gluttony, you will miss out on bonuses from other stats.  

Thus far, the game’s design seems right out of a Zynga textbook: monetization mechanics, gambling, login hooks and lots of notifications are all there. Everything is designed to ensure that the player knows how to play, returns to play again, and especially understands why they should pay for the in-app purchases. Still, all this is achieved with style. The user flow to the store feels remarkably smooth (it is one of the first things presented in the tutorial) and aggressive in-game advertising and merchandising of the purchases is completely absent. 

The virtual economy: Tight core loop, no surprises in item pricing


The core loop of the virtual economy of The Simpsons: Tapped Out is depicted in the figure above. The figure shows that the core loop is quite typical for a city building game. Real money consumption speeds up soft currency production. Soft currency production offers diminishing returns, which encourages more real money consumption. What sets the game slightly apart from some others is that many kinds of items are needed to maximize the productivity gains, thus encouraging the buying of all types of items, not just a few. Every resource has a built-in sink and the system is designed optimally to soak in hard currency.

Almost all items in The Simpsons: Tapped Out offer functional gameplay benefits in the form of percentage points added to XP and Money collection over time, making them attractive purchases. However, major characters and buildings are only available for soft currency earned through gameplay, which makes sense in terms of retaining non-paying and low-spending players. Still, there are plenty of useful items that are obtained with hard currency.

The pricing strategy of The Simpsons is slightly peculiar. The figure below illustrates this. Most in-app purchases are priced at the 2-8 dollar range. Cheap consumable items that are meant to be recurring purchases (what we call “popcorn goods”) are absent. So are expensive items targeted at high-spending players (items worth over $20, what we call “whale harpoons”). These often raise ire in players who either cannot afford them or simply don't want not pay for them.

Instead of such tactical offerings, The Simpsons offers a fairly uniform range of purchase options. It is possible to spend a lot, especially if you are using donuts to speed up the action, but for most players, just a few purchases will be enough to make the game more enjoyable. This is true even in the later levels, where player progression slows down. None of the products stand out, and there are no obviously useful purchases that really upgrade the playing experience, unlike, say, the Builder’s Huts in Clash of Clans. With a more creative inventory design, monetization could probably be improved without breaking the game.

This conservative pricing strategy makes sense, because a free Simpsons-themed game by a well known developer is sure to draw a large audience initially. It is safer to attract these customers to play the game over a long time than to scare them off with large price tags or try to cash them out quickly. More expensive content (both in soft and hard currency terms) has been added in the expansion packs, confirming this theory. Periodically added content works well with large developers and large budgets and it can really bring new life into a game. For small studios, this is not as feasible, as the money that could be used for content development is often needed for marketing, as initial audiences and therefore revenues are smaller. 

Conclusions: Big budget, little risk

It is clear that The Simpsons: Tapped Out is more on the traditional side of monetization and some features (like added growth on buying items) are straight from another Electronic Arts mobile game: The Sims Mobile. It seems that my guess was correct: big budget means conservative design. The Simpsons is almost like a traditional social game, following on the footsteps of Facebook games that are already several years old and well tested and analyzed.

Simpsons: Tapped Out is a success of high production values, monetization and analytics rather than innovative game design. The gameplay is slow and rather unexciting compared to other games in the market. The gradual slowing down of the gameplay may not in the long run satisfy customers who have more engaging options available in the market. With a bit of creativity and added player engagement, retention rates could be much higher and the game would have a longer life span, even without content upgrades.

EA Mobile has a vast amount of consumer data at their disposal from their earlier successes, and it is likely that this data along with the hugely popular franchise has contributed a lot to the continuing success of The Simpsons: Tapped Out. The numbers speak for themselves: bigger apparently makes better, at least in terms of profits. But as others have showed, this is not the only way to victory. It is possible to do with a lot less. Stay tuned for the next edition of Virtual Economy Analysis!

Designing Virtual Markets for Fun and Profit: Vili Lehdonvirta's GDC lecture online April 01 2013

Here are the slides of my Game Developers Conference 2013 talk Designing Virtual Markets for Fun and Profit. To hear the audio of the talk, view the presentation on Slideshare. Thanks to the hundreds of people who showed up and asked smart questions (and special thanks to you all for granting me and Ted Castronova our little special request at the end;).

My consulting practice, Virtual Economists, is about to publish a new product: F2P Games Virtual Goods & Currencies Pricing Report + Data. You can preorder it now at a reduced price to have it delivered in May. This is what pays for my GDC trips, so if you like my talks, check it out! We also supply reports and data on mobile and social virtual goods and currencies.

Designing Virtual Markets for Fun and Profit

Game Developers Conference, San Francisco, 27 March 2013

Today's games are full of different kinds of markets for buying and selling virtual goods and currencies, such as item shops, auction houses, NPC vendors, and real-money marketplaces. Some markets are player-to-player, some are publisher-to-player, and some involve even more parties. Some markets are fun to use, some are quick and efficient, and some generate social interaction. Based on economic theory, consulting experience, and real examples, this lecture shows you how to approach this complex space in a structured manner in order to design great markets that support your gameplay or monetization goals. 

About the speaker: Dr Vili Lehdonvirta is one of the world's leading scholars dealing with virtual goods and currencies. He is a visiting fellow at the London School of Economics, an adjunct professor at the University of Turku, and the principal author of the World Bank report on virtual economies. He has advised leading interactive entertainment companies including Rovio (Angry Birds), Sulake (Habbo), CCP Games (EVE Online), Digital Chocolate, Gameforge, and Live Gamer. He has lectured at the Game Developers Conference, Game Developers Conference China, Online and Social Games Summit, Virtual Goods Summit, and numerous other industry events. Before his academic career, Lehdonvirta worked as a game developer, creating some of the web's first real-time multiplayer games with a micropayment revenue model. His book on virtual economy design (with Edward Castronova) will be published by MIT Press.

New report on mobile virtual goods and currencies analyses over 2,000 items July 18 2012

Mobile Games Virtual Goods & Currencies Pricing ReportI'm happy to announce that we've just published our new analysis report focusing on virtual goods and currencies in mobile games. Mobile and tablet games are a rapidly growing category where most revenues now come from in-app purchases. Our analysis is the first in-depth look at how successful publishers are designing and pricing their in-app offerings.

The Mobile Games Virtual Goods & Currencies Pricing Report 1/2012 is based on Virtual Economists' unique manually collected data set covering over 2,000 virtual goods and 200 virtual currency packages in top-grossing mobile titles. The analysis covers such topics as price distribution, pricing for whales, consumables, durables, vanity goods, functional goods and virtual currency quantity discounts. The entire data set is also available for purchase without restrictions. A highly economical bundle containing both the data and the report is also available.

In-app purchase pricing is the factor that most directly influences revenues from a mobile game. Leading publishers invest heavily into optimizing their in-app offerings. Our reports and data are intended to allow any developer to quickly benchmark their lineups against industry leaders, with zero homework required.

The new report is a sister product to our successful Social Games Virtual Goods & Currencies Pricing Report that was well received in the industry.

Virtual Economists Ltd is a virtual economy consulting company founded in 2008 by Dr Vili Lehdonvirta and Eino Joas. Our clients are game developers, publishers, online communities and virtual currency operators around the world. Drop us a line at or follow Virtual Economists on Twitter for news and product announcements.

Massive price cut for proprietary virtual goods and currencies data May 06 2012

I'm happy to report that we've now sold enough copies of the Social Games Virtual Goods & Currencies Pricing Report and Data 1/2012 to cover their production costs. To celebrate this, we've downright slashed the prices! You can now get the report for $149, and the bundle containing both the report and the data for as little as $199!

Wondering how to maximize your virtual goods revenues? Save yourself the homework and learn the numbers using our painstakingly collected data set of over 3,000 virtual items and over 100 virtual currency packages, giving you an unprecedented view to the monetization strategies of some of the most successful games on the planet. It's no secret that top publishers are spending hundreds of thousands of dollars on research and experimentation to determine best-selling prices and virtual goods assortments. Our reports and data offer a very cost-effective shortcut to some of the most important insights in the field.

Photo: (CC) BY 2.0 _sarchi

Designing Successful Virtual Currency by Breaking (Almost) Every Rule in the Economics Textbook March 08 2012

Here are the slides from my presentation given at Game Developers Conference 2012 on 7 March. Click through to Slideshare and open the notes tab to see a partial transcript of the things that I discussed during the 1-hour lecture. I really enjoyed giving the talk. The room was packed and I got some great questions and comments at the end. Thanks to everyone for attending! The conversation continues on Twitter.

Virtual Economists' Vili Lehdonvirta speaks about virtual currency design at Game Developers Conference tomorrow at 2pm March 06 2012

I'm giving a one-hour lecture on virtual currency design at the GDC tomorrow (Wed 7 Mar) at 2pm. The venue is Moscone Center, West Hall, 3rd Fl, Room 3022. Find me after the talk to get a GDC attendee discount code for Virtual Economists' new Virtual Goods & Currencies Pricing Reports and Data for social games and mobile games.

My previous GDC talk on virtual goods design was a hit and has since been viewed over 7,000 times on slideshare. Below is the abstract of tomorrow's talk. See you there!

Designing Virtual Currency by Breaking (Almost) Every Rule in the Economics Textbook
Many games today feature virtual money of some sort, whether a "hard currency" sold for real money or a "soft currency" earned through play. The question that this lecture answers is, how do you design money? Not how do players obtain money, nor how do they spend it - but how do you design the money itself. Economists have identified around a dozen attributes of a good money - the kind of money that makes an economy efficient. These attributes make a great guideline for designing serious digital currencies. But in game design, we don't always want things to be efficient - we might want them to be challenging and fun instead. In this lecture, we therefore turn the economists' advice on its head and come up with a guideline for designing "bad money"! Both historical and virtual examples are included.

Virtual Economists featured by ArcticStartup March 06 2012

 Greg Anderson over at ArcticStartup writes about Virtual Economists' new reports and data sets:

This accessible data makes sense for smaller and independent developers. Competition in the social and mobile games markets is intensifying like crazy, and data and analytics help shine light on the little differences that can have big effects in virtual economies. Currently big publishers have an inherent competitive advantage as they can leverage their learnings and research budget across their portfolio. Virtual Economists' reports and data products level the playing field by providing access to important data and analysis on monetization tactics, for only a couple hundred dollars.
[...] Instead of shooting in the dark, it looks like these guys, their reports, and their datasets have a good idea of how you should price your virtual hat. It could mean a lot of money in the long run, and I'm impressed to find this level of specialized talent in the Nordics.

Read the complete article on ArcticStartup.

Virtual Economists launches Virtual Goods & Currencies Pricing Data product line at GDC 2012 March 04 2012

March 5, 2012, San Francisco. At this year's Game Developers Conference, leading virtual economy consultants Virtual Economists launched a line of reports and data sets focusing on pricing decisions in the social and mobile games industries.

Pricing is the factor that most directly impacts revenues from virtual goods, virtual currencies and in-app purchases. With Virtual Economists' reports and data, developers and publishers will be able to optimize their offerings and benchmark their prices against industry leaders with zero homework required.

Social Games Virtual Goods & Currencies Pricing Report analyses information on over 3,000 virtual goods and 100 virtual currency packages to deliver insights on pricing and assortment design. Topics covered include price points, introductory prices, whale harpoons, vanity goods vs. functional goods, and durables vs. consumables. Also available is the full underlying data set for advanced analyses, as well as a bundle that includes both the report and the data set at a very affordable price.

Mobile Games Virtual Goods & Currencies Pricing Report is the most comprehensive analysis of pricing and in-app product assortments in mobile games yet. Based on manually collected data from over 30 mobile games with in-app purchases, it offers an unprecedented view to the monetization tactics of hit games and publishers. Also available is the full data set and a bundle that includes both the report and the data.

The Social Games Virtual Goods & Currences Pricing Report and Data are available for purchase at the Virtual Economists online store and are delivered immediately as digital downloads. The Mobile Games Virtual Goods & Currencies Pricing Report and Data are available for pre-order at a special price and will be delivered in early April.

Virtual Economists Ltd is a virtual economy consulting company founded in 2008 by Dr Vili Lehdonvirta and Eino Joas. Our clients are game developers, publishers, online communities and virtual currency operators around the world. Drop us a line at or follow Virtual Economists on Twitter for news and product announcements.

Why do people buy virtual goods? Answers from three angles March 03 2012

What makes someone buy a virtual good? This is something I get asked a lot, and it's also a topic I did a lot of research on in the past. This post is inteded to serve as a brief summary for those who haven't bothered with this question before, or are perhaps just getting into the virtual goods business.

You can approach the answer to the virtual goods purchases question from three angles:

  1. Unique needs of different user segments. For example, your male twentysomething wants to attract the attention of an online crush (so he buys a virtual bottle of gift champagne), while your pre-teen male wants to feel like a big boy (so he buys a virtual samurai sword).
  2. Game mechanics. For example, if players get hooked on a Tamagochi-style virtual pet that needs to be fed regularly, then soon enough you will have players buying virtual pet food. Likewise a limited energy bar tends to create demand for recharges. More complex mechanics are also common.
  3. Attributes of virtual goods. Here the focus is on what's unique about a particular virtual good that makes it desirable. Why does one virtual samurai sword sell while the other doesn't? What different factors distinguish one item from another and how do you create a good lineup?
Standard consumer research provides answers from the first angle. But to maximize your virtual goods sales you also need to understand the other two.

Concerning the second angle, one resource that you might find helpful is a paper I co-authored with Juho Hamari on the intersection of game mechanics and sales/marketing a few years ago: Game Design as Marketing: How Game Mechanics Create Demand for Virtual Goods. The same topic is today also sometimes examined under the rubric of "gamification".

As for the third angle, a resource that you might find helpful is another fairly popular paper I wrote a few years ago, titled Virtual Item Sales as a Revenue Model: Identifying Attributes that Drive Purchase Decisions. I also gave a presentation on the topic at the GDC 2010 Social & Online Games Summit. The presentation slides are embedded below.