Why Social Games Are Missing Out on the Dual Currency Subscription

virtual money

 A few years ago, Jeremy Liew asked Iron Realms CEO Matt Mihaly to guest post on his blog. The article, titled "Using dual currency systems is the best way to sell virtual goods", gives an incredible look at how the gold / credit economy is balanced behind the scenes.  Since that time, a third currency has been introduced to IRE text games and other markets have taken up virtual currencies. There are even virtual currency consultants!

 

 Popular Facebook game 'Farmville' has two currencies - Farm Cash and coins. You can earn coins through sales of various products, but aside from small amounts of Farm Cash you 'earn' by clicking their sponsors, you have to buy Farm Cash from Zynga with real cash. It seems they haven’t yet learned what Matt Mihaly discovered nearly 12 years ago, namely the importance of monetizing all factions of the user base. Or, they see the possibility and would rather force people to spend money on their game and not worrying the risk of disenchanting some users.

 

 In their article, "Using Dual-Currency Systems for Better Revenues and Engagement", Matt McAllister and Jaini Shah of Offerpal Media offer four scenarios for using virtual currency. They also talk about the value added by non-paying customers, through word of mouth, participation and the possibility of becoming paying customers if they care about the game or site. 

 

 At Iron Realms, using McAllister and Shah’s descriptions, scenario four is used. It is the most liberal, least controlled scenario. In every IRE text game, two currencies (credits and gold coins) are used which people can buy and sell freely, publically and on a faceless credit market. You can use real life cash to buy credits if you wish, but you can also work in game to earn gold to buy credits. They also advise checking in on the systems and balancing as necessary, which IRE did when it offered ships for sale for gold only.

 

 To me, it seems like Farmville is suffering from the two tier system that Achaea experienced in 1998, which is permanent second-class citizens. Imagine if they unlocked the latent pent-up demand that exists among their non-paying users as Achaea did in 1999!

 

 Iron Realms is consistently far ahead in virtual currency innovation. Each Iron Realms game recently had a third currency added; depending on which you play, they're called crowns, dingbats, tokens, or black iron coins. The market of this premium currency has been fun to track. The first 'crown' sold for around 10 credits; now, one is hard pressed to find one for 40 credits. During this introduction, the price of credits has increased as well. True to the lessons learned, IRE has provided items that can only be bought for these premium virtual currencies, and they are in true demand. Premium virtual currencies can only be gained through a credit sale promotion, prizes for in-game contests, bought from another player, or as part of a monthly elite membership in some IRE games.

 

 The brilliance shown here is amazing. What is your slowest financial month? Offer a premium currency promotion with increasing numbers of amounts awarded for increasing amounts of real money spent. Spike it even higher with new offerings of virtual goods that can only be purchased with premium currency. 

 

 It seems to this writer like Farmville could learn a thing or two from IRE, the seasoned experts in virtual currency. 1) Set up a market for buying cash with coins. 2) Don’t regulate it, allow users to interact and sell to each other. 3) Allow for conversion between currencies. 4) Introduce a premium currency, with its own fabulous items that are only accessible with that currency.

 

So can a niche MUD teach a mega-hit social game a thing or two? Perhaps they can.

 

Beth E. is a virtual currency economist who enjoys the best role playing games from Iron Realms!

Comments

I enjoyed this.

 

^

I second this.

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This was very nicely done and an interesting read. I rather enjoyed it.

^

This was one of the most thoughtful, and interesting replies to read. I thoroughly enjoyed it.

^

I rather liked this article. And the comments.

Ah the credit market...I remember when they were dirt cheap. *daydream*

Yeah, I'm still not sure myself what drives the prices to go up forever. I would assume it is because bashing areas continue to be created, thus putting more potential gold into the system/hour, but even still...an individual can only generate a limited amount of gold/hour for themselves.

Inflation sucks!

and it takes forever for it to get down

Is it going down?

Yeah, but there aren't more and more things to buy with gold.

New gold sinks would be the only way to keep credit prices from going up.

That's one possible reason, but I'm thinking one other reason is that people who buy real credits would also like for their real money to be worth more in the game in terms of gold if that's what they want to convert it to.

Those were the days!

this article was well researched and that Matt Mihaly article was fascinating

Agreed! Actually very interesting

Agreed.

Undoubtedly, one of the best things about IRE games is that credits are highly accessible. Bardics and Artisanals, Monthly Promotions, Lotteries, Hunts etc. help alot in keeping you afloat and progressing. Market Prices have been rising intolerably though...

And commenting here and facebook credits too! But yes, the in-game credit prices have been horrendous lately.

yay for free credits, heh

Free credits. We like them. Expensive in-game credits...not so much, but it beats having no in-game credits.

It definitely does.  I'm all for free credits.

May I join this bandwagon?

Oh, it appears I have,

hello credit, we do debase ourselves for this

Yet another day, yet another credit.

Oh.

Hi, Araz. Herpderp.

 

Sorry, whoever is reading this comment trail, but...yeah. This is what happens when you offer free credits for posting.

Hey look, it's Ishtar :D

And another credit was born.

Another credit, you say?

Don't mind if I do.

I see a pattern forming here.

The pattern is in the shape of a credit.

This is such an odd hoop to jump through just for a credit, but I'll jump!

Here we go again.

Yet another post for credit.

I truly enjoy the wonderful MMO RPG Iron Realms articles and the free promotional credit.

I agree with the above sentient human.

Credit claiming.

Each time I reply the comment box gets smaller, I wonder how small it can get?

Testing, testing.

for science!

Reaching a point of no return.

Text games are played in a box much wider than this

I wonder if this goes on far enough, if we'll invert existence as we know it.  Also, good read!

Can the box get any narrower?

There appears to be a flaw in the system!

What happens now?

Oh dear.

for greater science!

Cross-realm, co-operative research.

Hmm!

Credit post.

Further testing is required.

Yes.

Yep

A good read this is.

Uh

Sure. 

To greater discovery!

Until  credit inflation...

really, there were times when it was half of what it is now.

 

credits in Achaea used to be marketed for 2500 gold. Now they're 5500, and while its easier to get gold, for low-mid level people, 2 hours of bashing will be worth 5cr or less. That's one trans mainskill every two rl months if you bash 2 hrs a day.

 

I dunno about the other IRE games, but Achaea does have several other ways to earn credits on fairly regular basis, which is nice

Achaea's credit market prices are roughly half the price of the other games. It could be worse.

It could definately be better.

Yaaaay!

love the free credits

Credits through a facebook app? Interesting, but I'd rather not spam my friends with invites all the time.

you can only invite a person once and then you can't invite them again. its only fair for the 100 farmville/cityville/mafia wars requests they send you.

Ahaha. But hey, that's what filters are for.

It makes me feel like buying like 500 credits and selling them on the market for like 2000 gold each just to drop the credit prices

500 would never force prices down. Someone with 2.5M gold will just buy them all. If you really wanted to control the market, you'd have to dump a huge amount that nobody in their right mind would ever have enough gold for...10K+?

economy sucks in real life, so I escape to a game where the economy...also sucks

they have

 

Ugh, they're terrible now. But a credit a day keeps the doctor away and all that.

 

The fact that credits have allowed customization of characters is what I believe is the main reason behind its success. And with customize I also refer to skill training and artifacts for advantages over none credit players.

Intresting, I didn't even know this was in some of the games, very infomative. Now I need to see what is available for my characters.

The triple currency system actually makes for some really interesting interactions, economically, since each has such a specific use.  You have a crown to sell?  Wonderful.  Do you want credits or gold for it?  Well, right now there's an influx of gold from the current promotion, so credit prices have skyrocketed.  If you get credits now, you run the risk of not getting enough credits.  But if you're patient, maybe gold is the better option!

And so on.

I agree entirely with all of this. Matt needs to buyout Facebook and run it right.

*Farmville?

This.

I know - its amazing Facebook seems to just scrape by

When such a scheme was introduced in an MMO, it suffered horrendously from influx from several disreputable organisations trying to earn "money" through gold-grinding in game. I guess this only works because Achaea is a relatively small and relatively well-regulated community in comparison to most MMOs.

aka an efficient economy

true enough.

Its too bad the free facebook credits aren't really advertised at all :/

I had never even heard of the facebook credits until recently. IRE really should remind players about it.

I had never even heard of the facebook credits until recently. IRE really should remind players about it.

Yeah, but the problem is none of my "friends" would understand if *I* played games, and not role playing games. But that's just me and my problem.

 

I like to keep my in game persona and rl persona seperate.

Yeah, I didn't even know the facebook app could give credits until like.. two weeks ago

well said

I much prefer articles like these, showing the behind-the-scenes methods and economics of the company.

wow, what a great read

This was actually pretty interesting. Surprised.

...i really wish facebook was like this...i might actually pick a game and stick with it if it was...

Crowns go for 40 credits? Lusternian Dingbats are lucky to go for 2!

Midkemia tokens are utterly useless, you could probably buy them for five for a credit if you wanted.

Maybe they don't have the twenty per month from people with Iron Realms Elite membership. That must help supply plenty.

I was dismayed at first, and have in fact quit Lusternia several times over the credits issue. But recently I've come to appreciate the way that it's done, because it's not simply a pay for perks system like so many other MMOs I've eventually left. That credits can and will be obtained through ingame methods and promotions means that I eventually will trans some skills and maybe even get an artifact or two, if I'm determined enough. I'll never be quite at the same level as those who can continually plunk down wads of cash for credits and are parading around with custom items and custom pets and fully functional aethercities, but I can get to a level that's good enough for me.

It's actually not all that imbalanced if you know where and on what to spend/invest your credits. The right class with the right skills need never buy website credits/lessons at all if the player focuses his attentions (and credits) on that singular area. Of note is that if you either don't invest in a tradeskill at all, or invest in one like herbs/alchemy nearly garunteed to turn a profit at low skill levels, then you can use the lessons you would have spent on that to focus on, for instance, guild skills and runes for your class. Bards only need a few combat runes (rune of Shielding, the increased magic damage rune, and a song-time increasing rune, with perhaps a rune of Dominion for an expanded enemy/allies list, or a Rune of Absorption for survivability.) to be 'top tier', Mages are the same with the song time swapped for a Rune of Demesnes, and Guardians should really only need a handful.

Will it take longer to reach this through only in-game credits? Absolutely. Is it unreasonably so? Not at all.

I don't know what you mean, Lusternia is nearly as bad as Achaea about the fact that if you're not omni-trans with a few arties you better just steer clear of combat and enjoy(lol) the long grind to top levels.

I'm going to have to respectfully disagree with you there. Luenn has never bought any credits from outside the game (other than from promotions like this). While he's not very good at combat, it's largely due to the fact that the system I wrote kinda sucks and I don't get enough practice, not because he can't afford arties. (And actually, he has nearly transed all his guild skills, after only "10 days, 6 hours, and 25 minutes" in game)

 

You might want to try reading this article: http://www.ironrealms.com/text-games-maximize-your-credit-report. Changed his life

As far as combat goes, some classes are decent enogh without having to trans like warriors and mages, but I as a non-hexen wiccan think it'd be ridiculouly difficult to kill someone without transing Wicca (For Toadcurse), Moon (For Drawdown) and healing (for bedevil).

But I don't think it will be too hard to gather the credits without buying them. I mean the first prize for the bardics is worth $100 where it may take quicker to write that story then to earn the same amount of monkey IRL. Also, I don't think no amount of credits could replace experience as far as comat is concerned.

Credit Market is a life saver....if only it wasn't 10,000g+ a credit...

 

Fun article

Dual currency is such a clever trick to get people to spend money. The regular game gets you hooked in, and then you can't help but think, "Oh, it's just a few dollars." At that point, you are hooked!

I agree. I started buying credits when I was a teen-ager, asking for credits for my birthday rather than real presents. I've never been materialistic. I still have every email (except the first) from my credit purchases. The dollar amount is staggering to think about.. and it started out the same way with me. One $10 purchase here, one $20 purchase there, until I caught myself spending $200+ at a time on credits.

achaea uses, pay for perks, works well.

Would have thought

Indeed

Yes

Love the article

aye

it's really neat to see what goes into things behind the scenes, and we all know IRE is -the best-

I submit to the Court, Exhibit A, SecondLife? Secondlife has just L$, aside from just buying outright through local currencies, I guess? But even then you're going through one intermediate currency, And not two or anything.

A very interesting article.

mayan crowns, credits, gold :)

Achaea, mentioned because it is the only one I know well enough to comment on, seems to have done an above-average job at making irl currency feel like part of the game. A miracle, if you ask me

Cry

I miss my cheap credits on Lusternia.  13000 gold per credit?  Yuck!

... that's crazy, switch to Achaea ^_^

They make me sad, too :(

The free market of allowing a credit or 'cash' market is essential. If not it puts off those who are strong in games.

that some players cannot enjoy the game unless they buy credits. Saving in game is possible but much slower than the quick buy IRL.

Never knew about this..

:)

:)

Heh

You always post the most thoughtful comments on every article. I thoroughly enjoy reading them.

 

:P

Please don't encourage Farmville, it takes over enough lives as it is!

Interesting comparisons between IRE and other games that I'd never thought of otherwise.

...was a subtle masterstroke by IRE. Word of mouth offered a cap to the prices people would pay (and sell) for credits, suddenly with a visible comparsion people dropped the assumed cap and could actively compare prices to an ingame average price.

 

People being greedy obviously results in a slow climb in price over time, increasing the time you need to invest in-game to earn them with Gold and the end result...people feel more inclined to buy Credits with real cash instead.

At least for Achaea that's as much caused by more gold being available (through bashing areas, etc.) than from simple "greed."  

Maybe we could instigate a credit future option market and watch the price of credits go through the roof through speculative gambling?

Excellent article! I new Matt Mihaly and IRE's other heads were brilliant game developers, but never realised how brilliant of economists they were as well.

Undercover Economists

I agree that having multiple ways of earning credits is a definite must to help promote a positive gaming experience. It gives people a way to work towards something. One of the things I'm still trying to learn is how to better manage city credits in order to give the hardworkers some incentive to continue working.

 

Great article

Interesting article. I also would suggest that you can earn credits by Digging articles... wait a minute... where's my credit for digging this article? What? Something "backbended" or such and it gave an error message but no credit for me? Why?

Would this comment give me the credit I deserve? Or would it happen as it happened before, when I got nothing for my comment?

Oh, life's misteries!

 

(OK, folks, I am being sarcastic, I am grateful for the free credits but, hell, sometimes I don't get it for internal errors. That sucks)

Aww it sure does. So here's another for another! XD

Maybe ire should just take over facebook and manage it right. Then I won't play a facebook game for a day and be bored. On a side note yay for free credits!

Suprised it took so long for the applying of a gold fee for credit sales.  C'mon there always is a broker fee.

And now commenting to get the premium currency I desire. But it is an interesting read.

agree

Of COURSE IRE could teach social network games a thing or two.

Social games like farm ville, they're really all the same when you think about it. Only one or two minor differences. :(

Their lack of depth is disturbing.

 

I just bought nearly 600 credits from the credits market and it kind of makes me proud having saved  nearly 200$.

Very nice!

MY

HERO!

Social Media can learn to send people our way :D

I appreciate a well-regulated economy and the multiple currencies and accesibility of them in-game as well as via OOC methods, but one significant downside for me personally is the semi-regular 'adjustments' via promotions and sales. Just like with other real markets, I hate it when I plunk down a wad of cash for something and then the next week there's a sale! I did enjoy the article, though.

A pretty interesting read. Did anyone offer a solution for an economy into which gold is unceremoniously dumped in copious amounts day in and day out?

 

If they do, they should let Lusternia know, too.

Very informative, as well as interesting to read!

Has worse issues than that. They couldn't fix the flash movie load that keeped me from playing for 4 weeks before I gave up on them. I hope they die off.

Part of the appeal of IRE games is just this, I hate being a second-class citizen and with games like Midkemia I don't have to be. ^^

Very interesting

agree that it is indeed interesting

I'd never considered this aspect before

Uhm

Interesting >.>

really interesting read

The saving grace for iron realms seems to be the fact that you can in theory buy credits with gold earned in game eventually. Some of these facebook games will never give you that option no matter how much progress you make.

A nice change from the usual articles.

 

Being a "virtual currency consultant" has got to be a great occupation.

FREAKANOMICS!!!

It's brilliant, people are more likely to give monetary support to a game that doesn't demand it to be able to play with the rich boys.

farmfarm

Wow

Really, virtual currency consultants? Interesting article to say the least! Thanks for sharing

A very different kind of article than I am used to on IRE.  Very well written.  I enjoyed reading this a lot.

It's probably better that FB doesn't allow you to buy creds with gold...it's too easy to get sadly addicted to the mindless 'farming' of whatever game catches the interest of the boredom at the time.

that remark! I'll start playing one of those mindless games for a while then next week I drop that one in favor of a different one. I'm only glad I don't spend actual money on it.

Very good article.

I agree. Interesting read.

A worthwhile read.

See subject.

This is nice but it's good to consider that this goes both ways.

I'm not a big fan of micropayments, but I can see that they're pretty well mandatory for long-term improving game servers.

Even though the Credit market in Imperian is pretty outrageous it's still a good system. If you really wanted to buy the credits you can easily go and bash it up, putting up a bash up enough gold to buy x amount of credits is a good way of not only keeping you busy if you are bored, but a goal to keep you going.

I've learned thanks to my fellow players that, in the past, credits were very cheap, about 4000 gold each but gold itself was hard to acquire. Now that prices skyrocketed to 10000 gold a piece, they are kinda hard to buy. But I have to admit that the new ways to obtain gold and lessons are extremely useful

Not sure about this.

What is there to not be sure about?

To me, credits are more of a bonus thing than a necessity. The games are rich enough that you can have a good time and do a good deal without needing to trans every skill and own every artifact. Sure, there are top-tier players who have done so, but you can still interact with them on many levels. It is very nice that you can earn free credits, but again, it's a nice bonus.

 

Games like Farmville are more shallow, so after you've mouseclicked a millions times, there isn't much more you can do without buying the Farm cash. This, of course, is based on my presumptions of Farmville.

I really like articles that discuss economics behind games and certainly Achaea has been designed to have a strong economic system. Great article!

Interesting.

The economics was interesting. Nice article.

 

Nice.

I miss when credits were cheap.

That I hadn't considered

One thing that I wish changed are the prices at which denizens buy some commodities. For example, because Blackrock Hills commodity shop buys platinum for 250, platinum will not go below this even though I don't think it's worth that much. People should set commodities prices, not denizens.

wha

I didn't realize credits could have inflation problems like the real market today

Everything

Good read.

I'm impressed by both IRE and the writer for this article and the innovation implemented. While I still get pissed when I see someone join after you, and get every artefact almost immediately

was interesting because of the extra lessons per dollar. How about buying/selling lessons in game?

Heh, reminds me of when they used to allow gambling lessons.  Some people would lose so many.

But then there were the people who could hit it big on a new character. Man, I wish I had taken advantage of that while it was there.

Can a niche MUD teach a mega-hit social game a thing or two? Hardly, if it could, Earth  Eternal wouldn't fail so miserably. So, no offence, but Matt Mihaly is hardly a good expert. He has found a good niche in niche in niche market, but's that's it.

Yay

For posting credits

 

I don't get the need or value of the 3rd currency.

 

Thanks for writing this article.

"In every IRE text game, two currencies (credits and gold coins) are used which people can buy and sell freely, publically and on a faceless credit market. You can use real life cash to buy credits if you wish, but you can also work in game to earn gold to buy credits." But if you think about it, in the end, credits-for-gold is limited. There is a possibility that one person will buy up every credit on the market and then everyone who wants them will have to buy with RL money. In fact, this possibility is what drives the prices up. Someone will be saving saving saving and as soon as they have enough gold, they *BANG* buy 2000 credits off the market for their veil/super-artie and the minimum prices are pushed up to..6000 or whatever. Still, yes, I do like this system. One real advantage to the IRE credit system is that you can actually TRANSFER them between players!! You aren't allowed to do that on other games like Gaia. One of -their- big rules is "you may not sell items in the marketplace for cash (their version of credits-for-money/ads); only gold."

I liked this one a lot.

I liked this one too

 

Facebook could learn a thing or two. It's been annoying to use since it branched from high-schoolers and college students.

free credits from facebook are fun too

Its always fun to earn money in the game to buy credits, takes forever sometimes but atleast its something to do while you're playing. Facebook ones are a plus :D

Yours are cheaper then mine. :(

Yeah I agree on this. It's a great idea but soooo expensive haha. Luckily none of the crown artefacts cost over 20 crowns.

Oh!

Interesting read!

:) 

It's interesting how the commerce in the games works. Bringing fun to people and earning money, it seems like a dream job

It certainly is quite a unique method of currency exchange...an entire market playing off the comparative value of Credits to gold, separate uses for each...and even various Auctions being posted in both Gold AND Credit selections...if it helps you can think of it much like the RL currency exchange market that people use all the time on Wall Street and other places.

 

More games really ought to use the same system I think, it's proven to work rather well barring a few greedy fools that don't care what their speculation and actions do to inflate costs insanely. 9k gold per credit was...horrific to say the least.

Free credit.

I agree. I've explained to people I know just how often credits are purchased on these text games. It would seem to me that IRE is definitely doing something right, and they have to if they want to really thrive in a such a small genre.

Dual currency is getting tiring, it is in way too many games that I play.

I think I like it more when all items are attainable with one currency.

 

I am rather fond of free credits, and I like how you can be active on websites and the like related to IRE games and you can get a credit for it. 

Now, it does get annoying when you have  to pay outragous amounts of gold for a credit, and when you are like me and have very little money IRL it can get expensive if you want something. (for example, artefacts, pets, credits for lessons, a healing system, etc)

Of course everyone loves free credits. and hey! I just got one!

 

I remember a time when credits were on the market for about 3k each. Those days are long past. I also remember when ships first came out and credits prices fell like a lead ballon. We need something that gold can buy , besides credits, that people want if we want to see credit prices go back down. Its all about supply and demand.

Yes to ^

I must have missed the old days then.

did actually read more than the first paragraph of this one, intresting read

Credits, and Dingbats are another form of money in Lusty.. which is awesome!!!

Interesting article.

IRE's credit system is very saavy

Nicely done article. Very interesting!

Lolol. I suppose the games are closer to Farmville than any actual game, when it comes to balance. Pay for perks model so hawt.

Very interesting 

IRE has the best dual currency of any games I've ever played. Adding a third currency was genius and the perks are nice :)

Agreed.

cr

cr

Achaea has it nice. Triple currency+elite membership. You pay as much money as you like, and every cent makes you stronger (or prettier), but in long run they are not the deciding one button push OP stuff, that other MMO's couldn't avoid.