[This text, on the crucial aspects of virtual goods design, is an extract from the ninth chapter of Social Game Design: Monetization Methods and Mechanics, by Tim Fields (Certain Affinity) and Brandon Cotton (Portalarium). In the book, the two authors closely examine how social games function as a player-responsive business.]

Fake Estates

The very phrase "Virtual Goods" is something of a delightful contradiction. Anything "virtual," by definition, doesn't physically exist, and goods, at least when appearing within the context of the marketplace, are typically an article of trade.

For our purposes, though, virtual goods are real enough that they generate billions of dollars in revenue each year, and are so important to players that they can drive binge play sessions, provoke real-world fights, create (and destroy) marriages, and keep users spending money twenty-four hours a day, in almost every country in the world.

Virtual goods may be an amusingly 21st century contradiction in terms, but they're also big business, and a major part of social and mobile game design.

Virtual goods can end up taking on many different forms in a game. They can be literal items which a player or character buys in order to enhance their in-game abilities, or they can be instantly consumed "items" which grant the user more turns, or access to some previously-unavailable feature.

They can also be purely cosmetic items which stroke a user's vanity by letting them customize the way their character or car or card or farm animal appears to other players. These items can be a core component of gameplay, or they can be special, even seasonal items.

We'll discuss popular items of all types, and talk about how such items can be used to affect, alter, or destroy a game's balance. We'll discuss how to avoid some of the game-balance pitfalls often created by offering functional items for sale, and ways to make visual customization features appealing to your users as a way to distinguish themselves from the crowd.

Selling Premium Goods

If a game is going to monetize via the sale of virtual goods, it's ideal for the game design to account for this from the moment of the game's inception. To be well executed, the game's designers need to plan in advance what types of items will be sold, and understand very clearly the ways in which these items will affect the game balance. Virtual items need to augment the gameplay, not distract from it.

The best types of virtual goods are those which fit nicely into the game world, and act as a core component of each and every move. In a city-building game, each different building the user interacts with could be considered a virtual good. In an online driving game, the subcomponents of the user's car can be the basic building blocks of the virtual goods system. For a first person shooter, each gun or bullet could be a purchasable item, and so on.

What all of these examples share in common is that the goods for sale are a critical component of almost every user's experience within the game system, and they were designed from the onset of the game to play a major role in every second of the user's experience.

Integrating the sale of virtual goods into an existing game design is difficult to do without inadvertently "breaking" the game. At best, the system is likely to feel like a tacked-on afterthought designed to extract money from customers without improving the gameplay. The best way to avoid this type of design afterthought is to carefully identify which parts of your game design could reasonably rely upon the sale of virtual goods, and which parts need to remain untangled from the influence of microtransactions.

Spend time analyzing other games in the market and take advice from there; would Monopoly be as much fun if you could just throw a dollar on the board every time you wanted to buy a hotel? Determine what you're going to sell for real money, and carefully integrate that plan into your overall game design.

Team Fortress 2 by Valve is a free-to-play FPS on Steam which monetizes by selling virtual items. Games can sell items that are either functional, cosmetic, or both.

For game designers, there is a core division between the two key types of virtual goods, and this distinction needs to be understood from the onset of the design process. In-game items (or even non-item boosts, accelerators, or features) need to be considered in terms of the degree to which they alter gameplay for the user.

Purchases that change something meaningful about the game are said to confer "functional advantages." Purchases that are purely aesthetic are often no less important to users, but they serve a different function in the game's design and moment-to-moment play. These purchases are generally considered "vanity items."

Functional Advantages

There are many types of goods that can grant a functional advantage in a game. In a shooter, this could be something as obvious as a more damaging gun, or a gun that fires faster than those available in the game for free. In a city-building game, a functional advantage could be a certain type of bulldozer that produces new buildings faster than is possible for those players who do not chose to spend real world money. Role playing games tend to favor swords and armor; for a fishing game... well, you get the idea.

When considering selling players items that give them a real advantage in gameplay, game balance should be a critical consideration. If rich players are overpowered, those who don't spend money, or as much money, will become disenfranchised and quit playing. Alternately, if players don't feel engaged because a game is too easy or too hard, they'll quit playing. There are a few ways to overcome this, and since the core problem is a different depending on the type of challenge offered in the game. First, there are some general issues to consider for items of this type:

Here are some tips for reducing the feeling that users are "buying their way to victory." These guidelines can apply to both PvP and PvE games.

Game Balance Considerations

For any game type, there are sure to be issues of pricing and game balance, especially when selling items designed to confer a functional advantage. This type of game balance simply introduces an additional variable to the designers' balancing equation. The greater the degree to which an item allows a player to deviate from the standard curve of in-game performance, the most expensive it should be.

Ideally, your game will be such that you can calculate what the real world dollar value is of each statistical advantage the player may receive, if they purchase the item you're considering offering.

This advantage, in turn, will need to be reduced to a money-for-time equation, in order to properly quantify the effect the item will have on the world, and the offsetting balance that will need to be achieved to sustain proper gameplay.

For example, in a PvE-focused fantasy RPG type game:

If an appropriately leveled player of average skill takes, on average, 1000 seconds to fight their way through a particular dungeon, and they receive, on average 1000 gold for doing so, then the average ratio of gold/time in that dungeon is 1:1.

Let us imagine that a sword is sold for 10,000 gold which does 10 percent more damage, so the player is able to fight through the dungeon 10 percent faster. This player would now be able to run through the dungeon in 900 seconds. This item has just increased their gold/time ratio to 10:9.

Imagine that you sell gold to the player at the rate of $1 for 1000 gold. This means that the real world ratio between dollars and time is 16.6 gold per second saved. Consequently, the value of the 10,000 gold sword, which will save the user 100 seconds per dungeon run, should be about $1.60. Clear as a MUD?

Obviously, the specifics of how to balance time, difficulty, and two different currencies (in-game and real world dollars) will need to be entirely customized for each individual game design. But getting these specifics right is of critical importance, especially when selling items that can give players a functional advantage over one another, or over the game itself. The alternative is an unbalanced game and alienated players.

Games which are either entirely PvE or entirely PvP are considerably easier to balance than those attempting to straddle the line between the two. In blended games, which offer both types of challenges, the designer ends up needing to account for the tastes of a few very different types of players. This problem is difficult enough without allowing for external influences on the game balance (like functional item purchases.) However, because a game that manages to appeal to both types of players can potentially have a far greater customer base, this is a challenge that is well worth undertaking.

League of Legends sells new champions, new skins, and new runes for your summoner in their online store. Selling items that improve player performance can be risky, especially in PvP games, and doing so requires great care and attention to balance.

Aesthetic "Vanity" Items

Is there anything about a handbag from Louis Vuitton which makes it fundamentally better than a similar handbag sold in Target? Perhaps (but probably not). At a gross level, they perform an identical function, and provided they are the same size and shape, there is very little practical difference between the two. So why is one many, many times more expensive than the other? Because people like status items which help distinguish them from one another based on their accoutrements.

Selling vanity items is a relatively straightforward proposition, because such items don't have any real effect on gameplay. From a shiny red hat for the player's avatar to sweet, blacked-out rims for their favorite car, allowing players to customize their game experience can be a very powerful user draw. Even games without any player avatar can accomplish this personalization by offering players prestige skins for... almost anything. On the Xbox Live version of Magic the Gathering, for example, players can buy shiny tinfoil backing for their decks of cards. And they do, in droves.

Planning what sort of items you'll allow your players to customize is integral to the design and feel of your overall software project. It should be something you consider from the start, because customization can be very difficult to retrofit, depending on what you hope to achieve.

For example, a character system with the ability to add "paper doll" style character customization might very very costly to add later if the foundation wasn't in place when the game was first architected. On the other hand, swapping out player icons, or even customizing UI elements in exchange for a dollar or two can be quite popular, and often involves little more than some advanced planning and a little extra 2D artwork.

One of the great features of vanity items is that they are, in effect, viral. If a player sees someone else walking around wearing an item they want to wear, the value of that item is increased, and some players will go to elaborate lengths to acquire that item. Because goods that cost real money are automatically rare (since, statistically, more people play than purchase) scarcity is preserved, adding value to the virtual goods.

World of Warcraft has consistently found success in exploiting this feature, by allowing the introduction of new gear that can only be found in a certain area that just happens to be part of an expansion pack. Of course, while the gear must be found in the new area, players are free to wear it in the old. When players discover that the only way they can get the new and wonderful items is to buy the pack and explore new lands, they're motivated to purchase the expansion pack.

When designing vanity items or skins, remember that your games (should) exist in a global marketplace. Consider the different sorts of different items that might appeal to varied markets. National flags tend to be very popular, because they allow gamers to identify themselves by region. Symbols associated with different districts, sports teams or belief systems can be popular as well.

Of course, you'll want to take care as to the sorts of iconography you allow. Swastikas, for example, may be popular among certain subgroups, but you probably want to avoid them in your game. For every icon that gets a player excited, there's another that could upset a player to the point that they abandon your game. For this reason, allowing users to create their own symbols, icons, or skins is likely to expose your team to a number of headaches.

A happy medium can be found in allowing users to create their own custom liveries from a pre-determined set of icons, colors, and the like. Both Need for Speed and Call of Duty have made great use of such features, allowing for limited user insignia customization while avoiding the problems of completely freeform user creation.

Rarity

People love a bargain, and when their motivation is to feel unique, or express themselves, they want to feel as if the item they are buying isn't something everyone else will have.

One way to accommodate both of these goals is to have limited time sales offers and only release certain goods in a limited number. ("Only 1828 Golden Hammers remain! Buy one now for only 200 points!") By offering an item in such a way that it has perceived scarcity, you create demand, and appeal to the user's desire to get a special bargain.

Most of the sales and marketing tricks surrounding the concept of rarity hearken back to traditional advertising models. "Buy one, get one free!" has always been a great enticement for consumable items. "Upsize for an additional $.50" is a good way to sell users on a slighter larger amount of product than perhaps they actually need. (In the dual currency world, this often manifests as a bulk "discount" for purchasing virtual currencies in larger denominations.)

And of course, the same tricks used by retailers related to product positioning apply in the virtual storefront. Want to sell more of an item? Put it at the top of the list, or give it a brightly colored icon.

Likewise, consider offering items that are tied to the calendar in some way. For example, Santa hats are always a top seller around Christmas time, at least in some parts of the world. Here, again, a little attention to global trends can go a long way.

Are there special goods you can sell that will help users celebrate Chinese New Year in your game world? What about Guy Fawkes masks? Depending on your game engine and the flexibility of your store and backend systems, you may be able to customize offers for a particularly territory, which can help you target sales to those most likely to be interested in them.

Almost anything that can be sold in real life -- and quite a wide array of things that cannot -- can be sold as virtual goods in a social game. Since the gameworld is limited only by the imagination of the designer, there is no feature, offering, or fantasy that a user cannot be enticed to indulge. Your game can sell seahorses to ride, or shiny-tin foil rims for a virtual car, or a literal horse-of-a-different-color, or a magic flamethrower that lets a user extract petty revenge on a player who has recently wronged them.

Deciding what to sell, and what properties to imbue each virtual item with can be an incredible challenge, as can balancing the ways these items interact with other game systems. As we move forward, we'll look at some of the ways that designers can further nuance these decisions by offering different types of items for different types of currencies.