News, research and discussion on virtual goods, currencies and economies globally.

Virtual Economy at GDC2009

Game Developers Conference 2009 took place at Moscone Center in San Francisco USA in March 23. One of important keywords from this year’s Game Developer Conference is digital distribution of video games. So, many sessions dealt with issues related to digital distribution like virtual economy models, new revenue models for casual games distributed via console networks including PSN, XBLA. In addition, virtual goods trades and how to make more money through various new distribution methods were focused by a number of sessions.

At his keynote lecture, Iwata Satoru, the CEO of Nintendo announced that Nintendo’s new handheld platform, Nintendo DSi will implement a digital distribution service. Especially, he announced that the new sequel of one of Nintendo’s biggest franchises, The Legend of Zelda will be only available through the digital distribution. The fact that they adopt a digital distribution model for their most profitable handheld platform means they will change their main distribution method from package selling to digital distribution. This change implies that there will be more possibilities of virtual goods trades and microtransaction models for mobile game platforms. Actually, Sony PSP, Apple Iphone have implemented digital distribution methods as well as Nintendo DSi.

Among various summits at GDC 2009, Worlds In Motion Summit deals with virtual worlds in video games and methodologies to integrate socialization into video games. At this year’s Worlds In Motion Summit, a wide range of issues about virtual worlds and virtual economy were discussed. At the first session, Sulka Haro, the creator of Habbo Hotel talked about success factors of Habbo Hotel. He explained how Habbo Hotel’s game mechanics which has no rules creates social game plays and dynamic interactions between users. At the second session, Don Choi, the CEO of OGPlanet gave a lecture about the free-to-play business model of OGPlanet, describing how and why it has been successful. Also, he talked about maintaining balance for games having microtransaction system and in-game shops. In addition, Erik Bethke from GoPets and Andrew Schneider from Live Gamer discussed about optimal design methods for real money trading. They emphasized that a game design that encourages users to socialize each other and make virtual communities will enhance the revenue from real money trading. Also, they mentioned the importance of balance between primary item markets and secondary markets. Sibley Verbeck, the CEO of Electric Sheep talked about real money trading as well at his session. He focused on user-generated contents in online games for kids.

Some sessions at Business and Management Track dealt with virtual economy issues as well. Case studies about social games by Kristian Segerstrale, the CEO of Playfish were very instructive. He gave a lecture about five key lessons learned from developing social networking games and explained why those lessons matters for the future of overall game industry as well as social networking services based on his game projects. His five lessons were as follows. 1. The era of franchises may be over. 2. All games will become services. 3. Marketing by numbers will become important. 4. Game designs will change into multiplayer-driven. 5. Game developers have to listen to their users.

A round table session called Free to Play, Pay for Stuff: Virtual Goods Explored coordinated by Daniel James from Three Rings and Matt Mihaly from Sparkplay Media was useful as well. During the session, many game developers discussed various issues about microtransactions and virtual goods trading like secondary market issues and multiple-currency issues.

"3. Marketing by numbers will

“3. Marketing by numbers will become important.” — Any idea what this means?

Good post, thanks!

Marketing by numbers..

I think that means the importance of analysis based on accurate data.

Ah ok, makes sense, thanks.

Ah ok, makes sense, thanks. Kristian’s advice clearly reflects the fact that he is an SNS app developer, but it is interesting how it all still seems applicable to the larger context of gaming — as a gamer I hope not *all* games will eventually become like Facebook apps 🙂


As a gamer, I agree with you.


There is clearly an increased discussion about all sorts of metrics. Mainly the metrics seems to fall under acquisition(unique visitors, register etc), retention(retention rate (after timeperiod x) and monetization(ARPU, % of paying users, etc) metrics.

These metrics can be seen in a causal and predictive manner in relation to each other and help in analyzing between which metrics lays the bottleneck. For example, many services have acquired lots of users, but have problems in effective monetization (e.g. facebook and twitter). Same setting is as well applicable to games, especially for free-to-play games this trinity of metrics has an emphasized importance, as the revenue streams rely on high volume of users.


These metrics are getting important in the overall game industry. At GDC 2009, Chris Swain’s session related to MasterMetrics was very insturctive.