Micro Transactions: Does it really work?

Also known as Micro Payments, this model offers gamers to purchase services, premium content and above all virtual goods, through small, almost secondary, payments of virtual currency, ranging from 0.30 cents to $5 USD.

The purchase is done through a virtual currency (see below) and the "goods" are received instantly, hence serving as a catalyst for "instant gratification". Estimates are that sales of virtual goods (via micro transactions) will remain the only dominate business model in the social space.


Nomenclature: Most games include two types of virtual currencies; soft-cash and hard cash. The two are usually named" in a way that will differ it from the connotation of real money(Gold & Silver, Dollars & Coins, or any other terminology). Hard Currency has a wide array of nomenclature, usually dependent of the game genre. Favor Points is one of the most popular names (origination in Zynga's first games). Other names include: Gold, Sand Dollars, Horse Shoes, etc.

• Soft Cash: also known as soft currency  is a freemium virtual currency that can be gained by playing the game repeatedly (mine for minerals, harvest resources, etc). The more activity a player conducts, the more soft-currency he can gain. This type of currency can be used to purchase a large array of virtual goods. In many cases these are vanity items (see: Virtual Goods) with minor or no effect on gameplay. 

• Hard-cash:  Also known as hard-cash, premium currency or VIP currency, this monetary system must be purchased in unique-value bundles. Though most games confer a small amount of Hard Currency to every new player, allowing him to experience the “joys” of premium goods, it is usually quickly consumed. Hard Currency enables players to purchase unique or rare goods. Many of these items have a very appealing look, a limited quantity or a powerful game effect.

Dual Currency Items - Some social games offer premium goods with a dual price point. Players can purchas the item for an ultra-high amount of Soft-Cash (requiring the players to invest hours of game time) or for a small amount of hard cash. The strong contrast between the two price points is used to push players to instant purchase of premium currency.

Exchange Factor
Very few games enable players to exchange between soft and hard currencies. Those games that do enable it, use two mechanisms to control the exchange flow:

• Exchange Rate: the exchange rate, as in real economy, exhibits how much one currency is worth in terms of the other. This is usually a round number (facilitating calculations) in the hundreds or thousands (e.g. – 1 gold = 1000 silver coins)

• Periodical Limitation: The game introduces a daily, weekly or monthly limitation on exchange factors (e.g. – “you can exchange up to 10,000 silver coins every day”)

Social Gaming

Social games have become a mighty buzz word; Startups are raising money, indies are doing social games and Zynga is monetizing like hell. So are we on a verge of a new bubble? or is this a new emerging industry that is destined to establish its presence for a long while?

good questions. Hard to answer. Mostly because we are part of this movement and judgung such phenomena can only be done retrospectively. Still, worth while examining some usage patterns among social gamers in order to understand if we are looking at a new skin for "casual gaming" or a new typology of gaming.

What is it?
Social games are An interpolation of casual games; they are a mix of casual and midcore games served over a social network . Progress in the game is dependent  on cooperation with one's friend's. In fact, playing the game in single player mode is a tedious task; content unlocks slowly, XP is hardly gained and most assets can not be triggered alone.


Usage Pattern
Many of these game focus on a Time Management Game Mechanism, meaning players need to return and play the game in given time cycles (e.g. - return in 5 hours to harvest your plowed potatoes). This dynamic generates a repetitive gameplay as well as usage pattern, exhibiting short session (5-10 minutes) occurring several (2-4 in average) times a day

• 58% of social game players in the UK are women, as are 54% in the US.
• There are two big major categories of social game players: single people with no children (28%) and married people with children living at home (28%).
• Social game players’ average age in the UK is 42, which is far younger than the 46 year old average in the US.
• 46% of Americans are 50 or older. Only 15% of Americans are under the age of 30.
• Housewives are commonly thought to be the main target of casual and social game, but the numbers show that only 11% of the respondents are homemakers and 41% work full time.

 

•  The majority (41%) of those playing social games work full-time, followed by 13% who are retired and 11% who are homemakers. 9% work part-time and another 9% are not currently working. Its is a known fact that many social games are being played during work hours, thanks to their short-session game structure

• The majority (95%) of those surveyed play social games multiple times a week with
• 34% playing several times a day, 30% playing once a day and 31% playing 2 to 3 times a week.
• The session length of social gamers varies widely with 23% playing 16 to 30 minutes at a time, 27% playing for 31 to 60 minutes and another 22% playing for 1 to 2 hours