Gaia - Managing Dual Currencies

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Managing Dual CurrenciesDavid Jesse, Gaia Online

Confidential – Do Not Distribute

2 Confidential – Do Not Distribute

Gaia’s economist

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Quick Tour of Gaia



Gaia overview

Shopping

Friends/

ProfilesGames

Forums/

Chat

Avatar


14.4 million shopping transactions per month / 9 B gold spent


4.8 million monthly marketplace transactions / 88 B gold traded


25 million posts per month / 1.8 B cumulative


6 hours spent in “hang outs” per active user per month


2 ¾ hours per active user per month in casual games

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Managing Dual Currencies



The challengeGetting value from different users

Pro

pen

sit

y t

o s

pe

nd

Site activity level

Low

High

Low High

Different segments different needs and opportunities

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Engagement vs. cash currencies


* Also known as reward, attention, action currency or points.

Overview

Engagement Currency* Cash Currency

Target • All, but particularly non-paying

customers

• Paying customers

Purpose • Reward majority who

can’t/won’t buy

• Incentive for all users to be

more active

• Offer additional benefit for

those able/willing to pay

• Pay to run, grow business

Sources • Regular site login

• Specific feature usage

• Direct funding

• Completion of ad offers

Sinks • Basic site interactions • Gameplay advantage

• Higher status

• Premium access

Dual currency system addresses needs for multiple segments


Influencing user behavior

Pro

pen

sit

y t

o s

pe

nd

Site activity level

Low

High

Low High

Dual currencies can help make users more valuable

Engagement currency

Cash

cu

rren

cy

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Example: Gaia’s dual currency system


Gaia Gold Gaia Cash

Type • Engagement currency • Cash currency

Sources • Daily one-time activities

• Posting to Forums and other

site usage

• Participating in sponsorships

• Sale of items won

• Direct funding

• Third party offers

Sinks • Buying basic virtual goods from

Gaia

• User trades

• Entering contests

• Creating private forums

• Buying most coveted virtual

goods

• Attain wealth faster

• Level up faster in MMO


Monetizing non-buyers

Pro

pen

sit

y t

o s

pe

nd

Site activity level

Low

High

Low High

Cash poor

BUT

points rich

Cash rich

BUT

points poor

Opportunity to make both groups better off through trade


Example: Gaia’s marketplaceUser to user trading

Cash buyer

purchases

premium item

Non-buyer

earns gold via

activity

Item traded via

marketplace

Trade provides gold to buyers, exclusive items to non-buyers

Both are happier

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Monetizing non-buyers

Trade has to serve both parties

Clear need for non-buyers to trade for exclusive items

Need for buyers to trade stronger without direct sale

Encouraging user trades has other positive effects

Some buyers become distributors, contributing to sales

Additional supply of items to ecosystem

Higher perceived value of engagement currency

Likely to be perceived as unfair

Devalues investment of time by non-buyers, who may feel second class

Transparent advantage might be considered cheating


Should you sell engagement currency directly?

Consider carefully before selling engagement currency directly

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Maintaining control over currencies

Implied value of currencies likely to attract fraud attempts

Botting of site (“gold farming”) to earn engagement currency

Payment fraud to gain cash currency

Allowing conversion/trading increases costs to manage

Trades increase difficulty of tracing source and reversing transactions

Direct conversion raises consequences of any exploits/bugs/errors

Accounting difficulties for cash and revenue

Legal questions if attention currency is convertible to cash


Set systems to prevent and manage fraud/botting

Consider restrictions to granting/trading if necessary

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Controlling abuse on Gaia

Controlling cash currency

Set limits on conversion for new purchasers

Amount minimizes exposure

Trade delays allow for review of transactions

Log trade activity, with ability to reverse

Managing engagement currency

Select use of Captcha to limit automation

Mass registrations tracked and banned

Extreme usage blocked or reviewed

Negligible fraud, limited black market availability of Gaia Gold


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Managing inflation

Importance of a budget

Consistent rewards and standards for progression

Currency loses perceived value if granted too freely

Set desired level of inflation: investment versus accessibility

Elements to balance in economy

Amount granted (including rewards converted to currency)

Sinks that will counteract inflation and add to perceived currency value

Supply of goods available for purchase and trade

Other things to consider

Approximate proportions by type of activity

Relative “wage” of rewards (e.g. amount per activity, time or value)


Maintaining value of engagement currency

Manage budget to maintain value of engagement currency

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Gaia’s gold budget

Budget set based on expected usage

Scale with site usage

Adjusted to achieve controlled inflation

Amounts set to direct site usage

Decreasing “gold curve” to have diminishing returns to grinding

Encourage trial of diverse site features

Premium on community/social activities

Gold grants across multiple categories

Once a day rewards

Engagement activities

Revenue generating sources


Getting the most out of engagement currency granted

Revenue

Engagement

Once a

day

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Other suggestions

Balance uses/sinks of each type

Cash currency uses pay the bills

Engagement currency uses keep your site active

Maintains perceived value of each and increases benefits of trading

Engage users before pushing monetization too aggressively

Could be turnoff if they aren’t yet committed users

More experienced users become easier upsell

Set expectations and manage commitments carefully

Manage exchange rates

Set fixed official exchange rate for consistency, implied fairness

Monitor implied market exchange rates for signs of over-inflation

Watch offsite trading as sign of exploits and fraud



Pros and cons of dual currencies

Pros Cons

• Flexibility to engage different

user segments

• Added complexity of user

experience

• Separate virtual economy from

real money

• Investment to manage and

balance interactions

• Can indirectly monetize active

but non-buying segment via

trade

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Thank you!


Gaia - Managing Dual Currencies

Economy & Finance

Transcript of Gaia - Managing Dual Currencies