Redwood City-based startup Twofish has revealed an in-game economic middleware called Twofish Elements, which integrates with online games to provide them an infrastructure for banking and retail.
The Twofish Elements middleware plugs into an online game's backend to enable game developers and operators to implement, analyze and manage microtransaction driven in-game economies.
Through the tools it provides, developers can view the in-game economy in the same way as if it were a real-world economy, and access analytic tools that let them track in-game market trends and properly price and value in-game items. From the game's backend, they can then adjust the price of in-game items accordingly based on data results like supply and demand trends, for example.
The venture-funded Twofish was founded in 2006 by Yahoo! Games, Shockwave.com and Segasoft Networks vet Lee Crawford, who told Gamasutra that the rise of casual gaming alongside alternative business models has resulted in a broad audience of gamers who demand a free experience.
To back up its claims, Twofish is also working on Edgeracers
, the first game to be developed using the Twofish Elements Economic Engine, and an example of its middleware in action. The title, built around "the culture of car customization and casual racing", is currently in testing and is expected to launch in Q1 2008.
But Crawford expects the transition to a microtransactions-supported business model to pose a challenge for some companies. "Game developers are not bankers," he notes.
With that in mind, Crawford says Twofish Elements offers developers the ability to control real-world economic features including inventory logic, account management policies, complex pricing models, flexible transaction types and multiple currencies.
"What people sometimes don't realize is that when you move RMTs into the game environment, even though you're dealing with virtual goods, it creates a real economy. Concerns like economic health, security and privacy become essential to ensuring the quality of experience," Crawford adds.
Currently, Crawford says the company is in discussions with a variety of major publishers and has received a lot of interest. But he also sees real opportunity and "tremendous interest" from independent developers who see the use of an economic engine as a way to compete more effectively.
"We see Twofish Elements being a way to help independent publishers and developers compete on a level footing with the technology that companies such as Nexon have developed through many years of operations in Asia," Crawford added.
"In our view, the world is moving towards the mass-market consumer and, ultimately, the hardcore player going to free-to-play with microtransactions," Crawford said.
Moreover, Crawford feels the retail price point has become insufficient to support an online experience in the long term -- after purchase, a publisher's relationship with the consumer ends.
"The operating infrastructure, after sale, continues to erode the economic value for sale, and so subscriptions ensure revenue to support the experience. If you factor in consumer expectations, the web is forcing that price point to zero. So what's needed is a model that accommodates a zero-dollar price point, but the revenue to operate very complicated infrastructures."
Many free-to-play games rely on ad support; we asked Crawford about ad-supported or blended business models. "Ads were the fantastic first business model for the internet, and it supported a content experience effectively But it's insufficient to support a content experience effectively," he said.
Concluded Crawford, "Virtual items are really the second great business model for the web."