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.

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 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.