Saturday, July 30, 2005

Space Crack: Financial Mechanics

This is part 13 of an ongoing game design document written as a blog. Be sure to catch up on previous posts. In the last installment, we talked about the benefits of plot. This time we'll look at what it takes to design money making capabilities into an online game.

Your kind isn't welcome here
In the various financial scenarios I’ve put together, the most glorious TBS game ever concieved (aka Space Crack) reaches break even at 8000 subscribers paying $5 a month. We reach an expansion state at which we can begin building a second title at 13,000 subscribers. To put these numbers in perspective, here are one analyst’s predictions of comparable break even numbers for the mainstream game industry.
“A game on all three consoles would have to sell around 600,000 in its first year, plus another 600,000 over the next couple of years just to break even. A million unit seller isn’t what it used to be.”
- Analyst Michael Pachter, Wedbush Morgan (EGM, September 2005)
Ah, such different universes and a rather good summary of why most big publishers will never invest in games like Space Crack. The moment you state “I want to make a casual TBS game that I’m hoping will sell over 13,000 subscriptions!” you’ve effectively killed your title before it even reaches the starting gate.

In order to make a friendly title like Space Crack, we can’t rely on the old “Sell a million copies” business practices. We’ll need to forge new business ground in order to make Space Crack a viable enterprise.

In the spirit of launching a new financial adventure, we’ll dig into practical options for making money with the Space Crack game design. There are several viable mechanisms including pay-to-play, micro payments for new content, subscriptions and retail-style pricing. I’m going to tweak and judge these various mechanics in light on two major criteria
  • Market Needs: Do the financial mechanics fit with the requirements outlined in game anthropology exercise I went through at the beginning of the design? Are these mechanics, as game mechanics, fun?
  • Financial Needs: Do the financial mechanics allow me to build a viable business?
Balance, Grasshopper
The intelligent balance between these two items should result in a game that people enjoy spending money on. It is important to realize that proper mix of financial success and player fun is not an ‘either / or’ situation. You can do both and you can do both well, but it takes a conscious effort.

You cannot simply focus on the art of game design and hope that that miraculous thing called ‘genius’ gains you financial success. Many indie game developers are caught in this trap. Nor can you focus on the financial mechanics and hope that cold-hearted process will yield a critically successful title. Many publishers are caught in this trap (Tomb Raider comes to mind). Hone both skills and success will be yours.

Market Factors
The market factors involved in using financial game mechanics are numerous and difficult to navigate. Money has complex social and cultural connotations and even small missteps can result in a dangerous poisoning of Space Crack’s gaming community. Ultimately, a game must provide a fair psychological value to the player in order for them to keep playing and keep purchasing our virtual goods.

Here are some rough guidelines to keep in mind:
  • Good fit with the game anthropology: Space Crack is a game about spending time with friends. Any mechanics that break this core value proposition hurts the game community. As such, the financial mechanics lean more toward team-based system like “signing up for a bowling league together”, rather than individual mechanics like “buying lots of cards so I can kill the other teenage nerds.”
  • Meets user expectation of standard features: Given the open-endedness of Financial Mechanics, it is easy to imagine systems like “every time you want to save, pay me $2.” Talk about an instant player rebellion. Focus your efforts on value added features, not expected features.
  • Fairness (aka Game Balancing): No one likes to play a game that is impossible to win. If you build financial mechanics that give one player a substantial advantage over another, you’ll end up with some frustrated players. This is game balancing 101, but too often game designers let people who spend the most money ruin the game for paying majority. Balance financial mechanics just like you would any other mechanics.
Financial Factors
On the other side of the coin are the financial factors.
  • Viable economic model: The game has to pay for its upkeep and provide the game developers with a reasonable profit. Game developers need to eat and if they make something great, they deserve to be own luxury yachts much like Gene Autry, Cake or other powerful rock stars of yore.
  • Moral financial practices: I’m a great believer in the power of games to effect human psychology for both good and for ill. Creating a game that ties into a player’s finances increases the potential for harm. In online titles, the game developer is morally obligated to take on the roll of a bartender for those who are obviously over indulging. “Sir, I’m afraid you’ve been investing a bit too much in Space Crack. I’m going to have to cut you off for the night.”
Financial Mechanics are similar to Game mechanics
The concept of financial mechanics is based on the risk / reward sequences we have discussed in the past.
  • Action: The player performs an action in the context of the game. However, this action results in the direct or indirect transfer of money to the developer.
  • Reward: The player gets some in-game reward
  • Penalty: The player doesn’t get some in-game reward
The wonderful thing about these mechanics is that they are almost completely open-ended. Any existing game mechanic can be turned into a financial mechanic. All it takes is a bit of imagination and knowing when to stop.

In-game currency
A useful method for unleashing the potential of financial game mechanics is to create an alternative in-game currency that behaves like a standard in-game resource. Space Crack users will be able to buy new power ups and other items using ‘Stars.’ This currency is completely artificial and its value is controlled by the game developer.
  • Players can buy Stars by purchasing them with real world cash. 10 stars might cost $5
  • Players can earn Stars by performing in game actions such as winning battles, being rated well by other players, etc.
  • Stars cannot be transferred to other players (except perhaps in the form of gift certificates)
The result is a very simple 'one-way' economy. Players generate Stars by either buying them or earning them. The stars are spent on in-game items. As soon as they are spent, they are effectively removed from the economy. In many ways, this system is not so different than the token system used by casinos and arcades.

Benefits of an in-game currency
There are some rather substantial benefits here:
  • Additional control of use in-game mechanics: Authorizing payments, entering credit card numbers, etc is slow and irritating. It breaks the flow of the game. By having an in-game currency account for each player, you avoid this problem. Everything is pre-purchased so Stars can be treated by the game designer much like any other resource.
  • Players don’t treat in-game currency like real money: The player is psychologically distanced from the act of spending real money. Since Stars come from a variety of sources it is difficult to evaluate the opportunity cost of making a purchase. This disconnects results in less hesitation when snap purchasing opportunities are made available to the player.
  • The game developer can print money: Stars become a valuable reward that can be used as part of the standard game play. This can be a powerful incentive that helps the designer guide the player’s actions.
  • Sunk costs result in more active players: If a player has a bank account of Stars, they feel obligated to play. They’ve paid their cash and it seems a waste to simply ignore the Stars sitting in their account.
Potential Financial Systems in Space Crack
The following are potential systems that can be used in Space Crack to bring money into the game. These will have to be play tested extensively before they are implemented.

All financial systems have two stages. The first is a trial stage in which the player gains an appreciation of the mechanic. The second is the purchase stage in which the player spends money in order to take fuller advantage of the mechanic. This two stage approach is important since game mechanics are ultimately a rather abstract systems that are on the surface valueless. We need to get past the learning curve, addict the player and then hit them up for money.

The following systems are all interlinked and offer three paths to encouraging players to spend money on the game.
  • Purchasing Game Sessions
  • Purchasing Stars
  • Purchasing Powerups
  • Purchasing through Retail
Purchasing game sessions

Trial: Customers get a fixed number of game sessions. Each user gets 5 free games session by signing up for the trial.

Paid: If they want to play more than 5 games, they can purchase additional games for a fee. A single game is rather inexpensive at 5 stars, but a pack of 5 games might cost 20 Stars. There are a variety of promotional packages that can be put together using this system
  • Single game session: If they only want to purchase a single game, they can spend 5 stars
  • Unlimited game sessions per month: 10 Stars. If they want to play an unlimited number of games, they can purchase a package that gives them unlimited games for a set period of time period of time. This purchase acts as a subscription and auto-renews at the end of each month.
  • Purchase game for a friend: 5 stars
The idea here is that if someone is invited to a game, they can easily sign up for a trial. Or they can make a small one time purchase. Or they can invest heavily in the game and not worry about pricing.

The interface is very important here since complicated sales processes ruin the momentum of the purchase. Items to be purchased are displayed much like a traditional in-game shop keeper. You have:
  • A list of items to be purchased
  • The cost of each item in Stars
  • The number of Stars in your bank account.
  • A big happy button that says “Buy more Stars?”
When you are out of stars, it is a simple trip to the Star Store to gain some more. Ideally, you never even have to leave the in-game store screen.

Purchasing Stars
: During the trial stage, the player is given 10 stars that can be spent on pretty much anything. If they spend their 10 stars, they are given the opportunity to put a credit card on file. Couching the request in a non-threatening manner is critical, since getting the credit card on file allows for streamlined purchasing in the future.

Paid: In order to purchase Stars, click on the ‘Buy more Stars” button on any purchasing screen. A small in-game dialog will pop up with several packaged options
  • 5 stars for $2.49
  • 10 stars for $4.99
  • 25 stars for $9.99 (20% off Sale)
  • 50 stars for $19.99 (20% off Sale!)
  • 100 stars for $34.99 (30% off Sale!)
The credit card is stored online much like how does it. As soon as you select the amount of stars you want, you can select ‘purchase’ using the stored credit card. You can also select a new credit card at this point and tweak your various account options. In general however, purchasing new stars is an in-game activity that happens in two simple clicks.

There is some fun sales psychology that going on here.
  • With one basic system, we can hit the player at several different price points. Some players will only want to dip their toes in the water. Paying $2.49 is rather painless. Other players are driven by discounts and will go for the bigger packages.
  • By having smaller purchases, people are less likely to get upset when they review their bank statements. A $4.99 reoccurring cost is likely to go unnoticed.
  • The money is transferred to the developer as soon as the stars are purchased. Getting cash upfront is an important financial factor for a new business.
Power ups: A brief description
Now we come to Power ups, the most risky and potentially the most financially profitable portion of the system. So far, the subscription based system I’ve described has a built in revenue cap per user of $4.99 per month. In order to make a profitable business out of that, I would need 8,000 subscriptions to pay for a staff of 3. (I have a little financial model I used for these calculations that I’ll share in future posts).

This may be a small number for a retail title, but it is large amount for an independent title. The more money I can get per user, easier it will be to break even with a lower number of users. This is where the power up system comes in handy by providing an additional uncapped incremental revenue source.

Power ups are simple tokens that change the game in some way
  • Aesthetic Power up: These can change the color of your ships, replace the head of your avatar, make flowers come out the exhaust instead of flame, etc. In general they do not affect the game mechanics, but instead act as a social statement by the player.
  • Meta-game Power up: These change the rules of the game in some fashion. Typically they give players more power or the power to do new things that were previous not possible. Ideally, the player sees value in these because they offer him a strategic advantage. An example of a power up might be a Nuke, which automatically wins one battle, but destroys both the attacking and defending ships.
Purchasing Power Ups
: Power ups in Space Crack are somewhat unique in that each player shares their power ups with all the other players in a game session. Remember, we are trying to promote spending time with friends, not competition. The user’s collection of power ups is spread throughout the map (with a higher concentration of their collection located closest to their home planet). Any player in the game may stumble upon another player’s power up and use it if they own that planet. All power ups are tagged with a notice of whose collection it came from.

Thus, even a relatively new player can play a rousing game with even an advanced player. In fact, the system encourages newbies to play with high level players since they get to play with all the various cool toys that the advanced players possess.

Power ups are divided into two categories: Trial and Advanced. If the user is still in the first few games of their trial account and does not have a credit card on record, they can only use the trial power ups. However, as soon as they get make a commitment to the game, they gain access to the universe of advanced power ups.

Paid: Paid power ups are purchased at a store and added to the player’s collection. Power ups can range in cost from a few Stars to several hundreds Stars. We have a variety of ways to increase the joy of buying new power ups
  • Rarity: Some power ups are rarer than others. How much would you pay for a nuke that you can use twice instead of once? Only 20 exist in the entire game and you friends will be in awe if they find out you own one. Be aware that it will cost you.
  • Intermittent rewards: Some “mystery power ups” are unlabeled in the store. You only get to see what they are after you purchase. But the joy of paying a small amount for a great item is hard to beat. In short, players can gamble. Also, the store has only certain power ups available for purchase each day. Unless you check in daily, you never know what you might be missing.
  • Volume discounts: Players who purchase multiple power ups in a day get bonus discounts. Heck, if you spend enough, we might even toss in a couple of uncommon power ups just for fun.
  • Bundling: Want to buy a 5 pack with one guaranteed rare? Want to buy a pack of fire upgrades? By bundling, we create packages that capture more customer value and increase the unit price of each purchase.
  • Cost increases with popularity: Costs of power ups increase with their popularity. If everyone and their mother are using nukes, the price of nukes rises proportionately. This way, we make more money from popular items.
  • Periodic expansion packs: Interest in the game can be renewed by releasing periodic expansion packs that include new sets of power ups.
Purchasing through Retail
Most distribution channels still sell packaged goods. In order to reach a large number of potential players, Space Crack will need to form relationships with both online and retail distributors. Both groups expect an executable that provides a valuable experience for a fixed price.

Trial: We provide the online retailers with promotional code and an exe just like any other retail package. They can wrap it in their trial software as desired.

Paid: The promotional codes can only be used once and automatically give an account two months of game play for free and include 25 stars.

Of course, this isn’t just any other retail package. As soon as the Space Crack file is launched, it hooks up to the internet and acts as a full online account. This hybrid model is similar what is used by MMOs and will continue to be a necessity for many years.

Miscellaneous financial systems
We are scratching the surface of the purchasing opportunities that can be included in the game.
  • Bonus purchase opportunities: You can also move purchasing systems directly into the game. For example, some planets could be littered with rare power ups that take Stars to purchase instead of Crack. Not only do you get to add a rare item to your collection, but you also are guaranteed to use it in your current game. These “once in a life time opportunities” play the part of spur of the moment purchases. This isn’t quite as bad as raising the price of Coke on hot days, but the economic theory behind it is similar.
  • Match Making: Players can purchase advertisements on a central website with a ‘dance card’ that give their vital player statistics and the type of games that they like to play. There would be a standard listing of players, but if you wanted top billing or you wanted to promote a tournament, you could pay a small fee to get a better ad. This may fall under ‘expected’ features and not be a valid financial game mechanic.
  • In-game advertising: This is another one I’m staying away from. I want to provide a wonderful experience. Being a shill for someone else could easily cheapen the Space Crack experience.
Naturally, none of these systems can be created without first investing in considerable infrastructure. Several core technology elements come to mind:
  • Maintaining customer data: Customer data is king. Players may not be purchasing physical goods, but they are purchasing electronic goods that are stored on your servers. If you screw up and delete their data, trust with the community is critically damaged. In the worst case scenario, the community will punish you by leaving in droves. An effective and reliable backup system is a must.
  • Cost of building online store: The whole ecommerce backend must also be in place. This is another large infrastructural item that needs to be budgeted for.
  • Metrics System: I’m a huge fan of investing in metrics so that you can measure your success or failure in concrete terms. Adding financial mechanics is a very labor intensive activity. As I build out new systems, tracking key metrics helps me figure out if they are feasible or not. Some decent items worth tracking include the total number of active users, the amount of money that each system generates, and the number of players partaking in each system.
Goodness, what a brain dump…I apologize for the overuse of bulleted lists. :-) By now you should have a good idea of how multiple financial game mechanics interact to provide the money making structure for an online title.

We are dealing with a far more complex transaction system than you find in packaged goods sales, or even simple subscription models. We are moving away from the “one price for one product” model that has been common with current games and are instead moving towards a flexible gaming experience that provides players with multiple opportunities to purchase additional game play value.

The results are good for both the players and the game developers.
  • Lower entry barriers: You don’t have to pay $50 up front to play the game
  • Payment for value: If you like the game a lot, the developer gets a bit more money from you. If you don’t like all that much, they only get a little.
  • Niche titles are financially viable: A relatively small population of users worldwide can support a niche title. This means that instead of lamenting the loss of dead TBS games of eras long past, gamers get a constantly updated thriving game that suits their highly specialized desires. Developers, in turn get a dedicated community that will financially support their efforts for years, not mere weeks like they must deal with in the retail world.
Till next time,

PS: Longer posts, such as this one, take longer to write. Feel free to let me know if these would be more palatable split up into multiple essays and posted more frequently.


  1. No, no, no, a thousand times no. If you are going to make people pay to play, have a reason that they can see and understand. Do Space Crack games always take place on a central server that performs all the calculations? Fine, charge per game. If it doesn't, don't: have ranked games that take place on official servers for security and charge for those instead. People will understand and be satisfied they aren't being fleeced.

    Paying for metagame bonuses is also a terrible idea as has been pointed out in comments before. Nobody wants to play a game where the richer you are the easier it is. Don't charge for increased power, charge for different power - play styles or even gametypes. If that makes the game too complex drop the idea instead of forcing it through a square hole in the name of profit.

    Both of these ideas fit your three closing bullets with a far better consumer image than the ones in the article.

  2. Perhaps two key ideas weren't apparent in the essay:

    - First, it is a server based game. All calculations do occur on a central server that also maintains persistence information of characters, accounts, etc. Think of it as an MMO-ultralite with a focus on casual strategy gaming instead of your typical fantasy strategy game. We'd be offering a service, not a traditional packaged title.

    - Being richer doesn't make it easier for one person. It makes it easier for everyone who is playing with that person. Spending a lot makes you a more attractive person to play with, but doesn't give you any undue advantage over the other players.

    There is a strong communal element at work here. Players will have play lists of friends. If none of the players in a game session buys anything, then people play with just the simple set of power ups. However, people generally like to buy new toys and show them off to their friends. Buy a mega-nuke and toss it into a game. It is labeled with your name so you get social rewards, but the first person who picks it up is the one who gets the gameplay rewards.

    The hope is to create a system closer to the old 'stone soup' ( tale than it is to create a Magic the Gathering-type competative environment.

    These are very flexible mechanics we are dealing with and there have only been one or two examples of public implementations. It seems a shame to dismiss them out of hand.

    MUDs existed long before modern MMO's hit the scene, but no one though they would ever be financially viable. Until someone did it right with Ultima Online. Any concept can be implemented well or poorly.

    Your idea about 'different power' as opposed to 'increased power' is well taken. The final power up system will include a variety of a tools that allow for different styles of game play. For example, I'd love to see a game in which a pacifist could win, or at least place highly if they played well enough. Ideally, this is a game where we can say "There are more things in heaven and earth, Zerg, than are dreamt of in your
    philosophy" :-)

    take care

  3. You're right about the powerups, I really ought to have left that comment until this morning! ;-)

    I certainly don't want to be seen dismissing anything out of hand or otherwise, sorry if it came across like that. I'm all for new buisiness models, I'm just very aware of how badly people can react to them.

  4. This post makes me feel much more comfortable with the overall business model than the previous one did. However, I do have on question. You mentioned that if someone plays well or wins a battle, they could earn stars. What's to keep someone from playing frequently, earning a large number of stars, and using these to renew their subscription and purchase all their powerups? As much as the player might love this, it doesn't help you out very much in the long run.

  5. Actually danc, did you not say that powerups would have a greater chance of showing up nearer their owner's home planet? That WOULD be an in-game advantage, a random weighting that gives higher probability of helping the owner than their opponents. Remove that (so you can toss a few rare powerups onto the board, but it's totally random who will benefit) and you're good.

    But really, why limit yourself to powerups? Really, ANY game mechanic or play token or alternate rule set can be sold separately. Consider some examples: special ship types that anyone in the game can build, but only if at least one player "owns" the "technology" by paying Stars for it; alternate combat algorithms that make the larger ship take more (or less) damage; fixed (and balanced and interesting) game maps, some of which perhaps have some special house rules in effect. Any "enhancements" to the basic abstract strategy game, really.

    I totally get behind the "one player owns it, everyone benefits" style. It gives free advertising to new players -- "I just played against this top-ranked player and saw some really cool stuff on the board that made the game more fun. I want to buy one for myself now."

    WARNING: Do be careful of what you allow players to buy for each other. While gifts are a nice way for people to get their friends in the game, the very existence also enables panhandling. The second you allow players to purchase games for each other, you'll have a pile of kids sitting in the lobby asking every passer-by if they'd like to play a game, "but buy my way in plz". You don't want to have people who aren't interested in spending money, alienating your best customers.

    Also be careful of the retail channel. Having store presence is all fine and good, but try this for a nightmare scenario: your game is reasonably popular online but the store units just don't sell, and now your 25-star physical boxes (normal online retail $9.99) are getting dumped in the bargain bin for $2.99, so now the retail chains are undercutting you and the only people buying the boxes are people who already play the online game and are now getting your goods without giving you money. Ouch. (Yes, this has happened before.)

    Also be aware that human (and ludic) psychology is a strange and often unpredictable thing. Suppose you charge more for the most popular powerups. Players may accept this as normal and reasonable. Or they may want your head on a pike for obvious price-mongering. You'll have no way of knowing until you try it out, and by then of course it will be too late to regain any lost goodwill of the community. Every method you have of asking players for money is subject to the same danger; it's a minefield out there. I'm not saying you shouldn't do it, mind you, just that it's not quite as simple as you suggest in the article.

    Finally, as soon as you give players virtual "property" (stars, items, powerups, whatever) they will want a way to trade it. If you don't provide a way, they will start selling their accounts on ebay and cut you out of the loop entirely. If you do provide a way, you get the panhandler problem again. Either way, you'll have players trying to scam each other's virtual pants off, and the ones that get scammed will come crying to you to fix it. Because of course it's YOUR problem, because YOU built the system that let them get scammed in the first place, you didn't warn them about it properly (or you did warn them, but it was buried in the list of 476 other important things you had to warn them about, and their eyes glazed over just looking at that much text, so they ignored it, which is ALSO your fault). And either way you lose; if you try to hunt down and squash all dishonest players, BAM, your support costs go up because you have to spend time investigating every player complaint AND you'll have more complaints too, because players KNOW that if they screw up you'll fix it, so they will tend to trust scammers way more often because they perceive it as "safe" since a scammer's credibility is backed by you, personally. If you ignore all such complaints, BAM, you lose every player that gets scammed because it really sucks the fun out of the game, and once scammers realize it's open season there will only be more of them, and you'll STILL have higher support costs because the scammed will still email you and you have to take the time to read these extra emails and hit the Delete button.

    Unfortunately, these sorts of shenanigans go hand in hand with any sort of virtual economy, so your financial mechanics have to take it into account.

    Heh... I seem to have written a lot here too. I guess long posts beget long replies. (I like the long posts though, personally I'd rather have one long post than four short ones.)

  6. Though I'm not sure you're looking for this, Danc, bravo. Once again you took my concerns generated by your prior article and expounded clever ideas to implement them minus the traditional pitfalls.

    Again, I wish you the best of luck (...and again ask to be on the beta testers list. ;-)

  7. Two things that didn't seem like particularly winning ideas.

    1. Subscriptions. If it is to be a casual game, then you'll get people who feel they aren't likely to regularly get five bucks a month of enjoyment out of it, and they won't play at all. It's a double-edged sword, really. They're less likely to quit, having invested so much in it already, but they're also less likely to start.

    2. Dismissal of in-game advertising. Last year I believe it was Anarchy Online that started giving away a limited version of its client and a year's subscription for free, and embedding advertisements in that client but not the main one. A lot of players took them up on it - so many, in fact, that they made it a permanent feature rather than a single-month promotion. There's a lesson to be learned, here - many people consider it less of a hassle to view advertisements in their game, than to pay for that game. "Yeah, the ads kind of suck," they'll say, "but it's worth it 'cause I got it for free." Ad-based revenue models have worked for radio, television, and the Internet at large, and at its heart it's simply giving players more options. A stripped-down client - for example, maybe players who use ad-supported clients won't be able to buy Stars at all, or can't initiate games themselves, etc.; things that actually save you money - with ads in it could be used as an intermediate step between the trial and full versions, or as simply another way to achieve a larger market and set you up for your next big thing.

    I had a few other ideas, as well.

    Another product you could sell is a private server client. For (say) twenty bucks, people get to use their own computers to store the data for a private league of players, data which won't bleed into the main servers, and the owners of these private servers get to tweak game variables, create new powerups, that sort of thing. Since by default you will use a centralized server, you won't put this feature into the game client, and as a result you can justify selling it independently. If it really takes off, a server emulator is bound to appear anyway - circumvent it. It would be the online equivalent of including a map editor with a strategy game. If you encourage people to send you suggestions about what they do on their private servers, you'll essentially have open-source game balancing: not only will glaring flaws be immediately revealed (as is usual for online games), but a solution will quickly follow as bored owners of private servers experiment on fixes.

    Second, I think you'll increase the selling and addicting power of your trial versions if you package it with a simple AI, so that players who are total losers or who temporarily lack Internet access can still get their Space Crack fix by playing an offline game against their own computer.