How Design Choices Impact Virtual Goods Purchases in Games

[Donghee Yvette Wohn is a Ph.D. candidate at Michigan State University; her post, below, is based on research she is doing in social games. Wohn is also editor of Play as Life, a blog examining the cultural impacts of gaming.]

Only two years ago, I was attending a conference on virtual worlds and people were discussing whether or not microtransactions would be a viable business model. Many people were skeptical about whether the success of microtransactions in Asia would translate to North American users. Now, there seems to be less talk about whether or not microtransactions work, and more talk about what makes them work.

Industry stats show that yes, people are spending real money on social games. That said, however, the percentage of players who actually spend money is extremely small. From a research standpoint, it has been difficult to find out the characteristics of these spenders because of the difficulty in getting enough people to provide a sample size large enough to derive results that we could generalize.

To look at a larger population, my colleague at Keio University and I collaborated with Puppy Red, a social gaming service in South Korea, to collect de-identified log data. The game that we looked at was for children and tweens, similar to services like Club Penguin.

We collected the data of users who had accessed the site at least once during three months from November 2009 to January 2010. After conducting filtering process on missing data and outliers, the dataset showed 224,827 users. Among this population, 64,076 users (less than 28.5% of total active users) had spent real money at least once and only 17,750 (less than 8% of active users) had spent real money during the most recent three months.

The below graph shows the number of paying users and their cumulative spending. You can see that 2,000 of 18,000 users accounted for nearly half, 46 percent, of the total money people spent on the site.

Factors that contribute to spending real money

We looked at factors that contribute to spending real money, and found several positive predictors: time spent playing the game, length of membership, and overall number of items. However, players who had received more free items spent less real money. This point was interesting, because a lot of marketing research shows that free items are good for getting consumers to purchase more items. Our research suggests that too many free items can decrease the likelihood of spending.

Impact of Gifting on Spending

Perhaps our more interesting findings were those on “social” factors. For instance, giving virtual gifts and receiving virtual gifts were positively associated with the spending of real money. The number of friends did not determine whether one player who purchased virtual goods spent more money than another, but spenders did have significantly more friends than non-spenders. This implies that while more friends don’t lead to higher spending, players without a lot of friends may not spend any real money at all.

Implications

For those who want to cash in on microtransactions, our research suggests the following:

  1. Provide a lot of virtual goods so that players can customize their game space and avatar.
  2. Limit your amount of free virtual goods.
  3. Encourage multiple types of exchange behavior between players; this is the second study we’ve done that implies that social players spend more
  4. Incentivize having friends. Friends can increase playing time, encourage social interaction, and create competitive elements that contribute to spending.