Virtual Commerce Part 2: How MMOGs are Pushing E-Commerce Forward

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This is Part 2 in our series about virtual commerce. In the first article of the series, we looked at The Role of E-Commerce in MMOGs, how virtual currencies and virtual worlds develop and interact with e-commerce and how the gaming industry has used e-commerce in new and innovative ways. In today’s article, we are going to have a look at how the gaming industry’s approach to e-commerce has spread beyond that and into the retail industry and our day-to-day lives.

Shopping isn’t what it used to be. In today’s digital economy, commerce has become reliant on the internet even in the brick-and-mortar retail setting. And this phenomenon is not limited to commerce – it’s taking place in all industries, including video games. This is visible in the now-widespread popularity of Massively Multiplayer Online Games or “MMOGs”.

MMOGs are virtual environments (VEs) with their own communities and, in some cases, their own currencies, populated remotely by internet users anywhere in the world. The popularity of virtual environment across all demographics has allowed game developers and publishers to enjoy a very healthy marketplace.

Of course, marketers, retailers and developers have taken notice – the gaming industry is forecasted to surpass a value of 86 billion USD by the end of this year – and their scrutiny of this business model has resulting in a phenomenon called gamification.

The Gamification of E-Commerce

Gaming is no longer a niche activity and the influence of e-commerce on gaming is not a one-way street. As “gamer” habits spread among general consumers – now “everyone’s a gamer” – the same tools that the gaming industry use to attract and retain their customers are being put to use by businesses of all kinds.

Gamification is a term used to describe the application of game-like features or mechanics, such as points, levels and badges, in a non-game context. Businesses, just like developers, use these mechanics to encourage user engagement and repeat customers. In the US alone, businesses invested 100 million USD into gamification in 2014.

Some examples:

  • Teleflora: US online florist Teleflora developed a social loyalty system that awards points for a variety of user actions such as customer reviews, posts to Facebook, comments and responses to queries. As users accumulate points, they are awards titles and badges, and top performers are listed on the Teleflora leaderboard. After launching this system, Teleflora’s Facebook referrals increased by 105% and their conversion rate by 92%!
  • LinkedIn: LinkedIn rates your profile based on how complete the information is. In the competitive job-hunting environment in which LinkedIn operates, it’s only natural for their users to strive for 100%. By rewarding users for doing so, LinkedIn encourages more thorough profiles, which in turn improves the quality of the service it provides for businesses.
  • Foursquare/American Express: Foursquare, the “check-in” app, partnered with American Express to provide redeemable credits as a reward for consumers checking in at participating locations such as H&M and Whole Foods. As a result of this rewards scheme, participating customers spent 20% more at these businesses.
  • Perrier: In order to increase awareness and attract a younger audience to its brand, Perrier took gamification to another level by actually developing a game, Secret Place. The goal of the game was to locate a “secret” bottle of Perrier in a virtual environment, complete with live acting and over an hour’s worth of content. Finding the bottle gave players the opportunity to enter a sweepstakes for a free trip to any number of vacation destinations.

First and foremost, e-commerce gamification is designed to increase user engagement. The goal is to make the experience of interacting with your brand more entertaining for customers and to add hidden motivators for your customers to be exposed to your sales channels more frequently. In other words, gamification is the act of creating a virtual environment around your brand.

One of the reasons why this is such an effective marketing strategy is due to another contemporary phenomenon among consumers: FOMO, the Fear of Missing Out. One of the great drivers of customer loyalty is the public’s need to feel like they’re a part of something. Businesses can leverage this by creating a sense of community around their brand, a virtual world with real communication and interaction not just between the business and the consumer, but within the customer base as well.

  • Reward your customers: Gamification is a logical successor to personalisation. Consumers now expect any business to know their name, so a personalised email isn’t going to cut it anymore. Offer your customer some kind of reward for interacting with your brand, such as achievements they can unlock or points they can use to level up. Prominently display their progress so they are encouraged to interact with you or make more purchases just to reach the next reward.
  • Leverage social media: One type of interaction you can reward your customers for is sharing your brand content across social media channels, however we recommend going one step further and developing your own social media game, even if it’s something as simple as an image puzzle. People are naturally competitive and will want to share their high scores.
  • Encourage visitors to explore your site: Bonobos was an early pioneer of gamification in e-commerce when in 2011 they launched a scavenger hunt encouraging people to find a man wearing their signature pants hidden somewhere on their website, rewarding the first 50 successful participants with a gift card. This and other techniques, such as rewarding visitors for “taking the tour”, allow you to share more of your content and features with consumers.

Using gamification to increase user engagement has a wide range of beneficial side-effects, such as growing your brand awareness, increasing your conversion rate, encouraging repeat customers, building loyalty and trust, and gathering invaluable user data. The gaming industry has honed these techniques for decades to keep their customers coming back for more, isn’t it about time you did the same?

For more about how DalPay can help your business whether you’re expanding into international markets or just getting off the ground, visit our website and follow us on Facebook and Twitter, and subscribe to the DalPay Blog for more in-depth articles about this and other industry trends from around the world.

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Virtual Commerce Part 1: The Role of E-Commerce in MMOGs

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We are living in a digital economy. Commerce as we know it, based on digital technologies, has become dependent on the internet, even when it comes to traditional brick-and-mortar retail. But this phenomenon is not limited to commerce – it’s taking place in all industries, including video games. This is visible in the now-widespread and growing popularity of Massively Multiplayer Online Games or “MMOGs”.

The video game industry is in very good shape at the moment. Thanks to online gaming, developers and publishers have been able to reach a much wider audience than ever before, and MMOGs are the tool they are using to attract and retain these customers.

MMOGs include the traditional “online role-playing” MMORPGs, often considered the domain of hardcore gamers, as well as casual free-to-play games, browser-based games and “social gaming”, which blurs the line between games and social media. All of these can be classified as virtual environments (VEs).

As the popularity of virtual environments balloons, not just among gamers but all across the demographic spectrum, we’re witnessing what economist Edward Castronova has called “a mass exodus to virtual worlds and on-line game environments.” This has led to VEs recreating many real-world activities, including the development of local economies using in-game monetary systems, also known as virtual currencies.

What is a Virtual Currency?

Virtual currency refers to a type of digital money issued by its developers and used and accepted within a specific virtual community, such as the in-game currencies in Second Life, World of Warcraft or EVE Online. This in-game money is used to purchase virtual goods or services within the game world.

These currencies are so important to the experience of VEs that some MMOG developers have employed economists to define and manage the in-game money. For example, EVE Online has an incredibly deep economic infrastructure within which players are free to operate, from trading goods to building their own corporations. However it is explicitly prohibited to exchange the in-game currency for real-world currency. This type of virtual currency is centralised – i.e. control of the money supply is in the hands of the MMOG’s developers.

The virtual currency of Second Life, Linden Dollars, on the other hand, is freely exchangeable with real-world currency, making it possible for players to openly make a living based on a successful in-game enterprise.

A Meeting of Worlds

As fascinating as the development of isolated local economies within these virtual worlds is, what we’re interested in is the way virtual currencies interact with real-world currencies and the places where virtual commerce and e-commerce overlap.

Game developers and publishers are enjoying the fruits of a very healthy marketplace. Online gaming has never been such a promising industry for both long-established MMOG developers as well as new market entrants. There are a variety of different payment models foronline games, such as:

Subscription-based

Typical of AAA games and popularised by MMORPGs such as World of Warcraft, traditionally players would purchase online games from a store the same way they would purchase offline, single-player games. However, for the majority of these games players would have to pay a monthly subscription fee to allow them access to the persistent online world. As MMOGs began to attract a wider population, developers began to create new revenue streams in the form of:

  • In-game purchases: While players can earn money within the economy of most VEs, developers often also give them the option of using real-world money to purchase items or in-game currency; and
  • Downloadable content (DLCs): DLCs are optional expansion packs players can purchase to add content to their game, such as new items, areas, characters, quests, customisation tools, etc.

The success of these additional revenue streams allowed for the development of a new pricing model for MMOGs:

Freemium

A portmanteau of the words free and premium, freemium games get their name from the fact that they are free-to-playbut players must pay to unlock optional “premium” content and features.

This has proven a successful model for many developers, as 50% of all MMOG players only play free-to-play games and because of the habit-forming nature of online gaming, it’s easier to sell premium features to existing players than to sell the complete game to someone who hasn’t played it yet. However, this model has received criticism for encouraging predatory tactics in game design.

Pay-once-and-play

This model is the alternative to freemium. Whether it’s players who are uncomfortable with having locked content in their games or it’s parents who are sick of unexpected charges for premier content on their credit cards, there is a market for games that come with all content included at initial purchase. Apple has recognised this market by implementing a pay-once-and-play section in iTunes.

Needless to say, all of these pricing models require a robust e-commerce platform in place to allow developers to reliably accept payments with as little impact on the player’s gaming experience as possible. In order to provide the best customer experience and in turn maximise your profits, we recommend providing players with:

  • Flexible payment methods: Offering more payment options is proven to increase conversion. DalPay provides support for several payment methods.
  • A localised buying experience: Supporting local languages and locally-preferred payment methods inspires confidence in international customers. DalPay supports 24 languages and over 150 currencies.
  • A seamless buying experience: In-game purchases should be just that – in the game. If players have to leave their game or visit a website to complete a purchase, they will likely abandon the purchase and possibly even the game entirely since their immersion has been broken. Well-integrated in-game purchases encourage players to keep playing and keep buying.

Online game distribution is a healthy, growing market and as it continues to mature more and more players are expecting the seamless gaming experience spearheaded by AAA developers (and willing to pay for it). But even if you’re a new indie developer it’s possible to offer the same experience to your customers, with the right e-commerce service provider.

Read our second installment in this series: Virtual Commerce Part 2: How MMOGs are Pushing E-Commerce Forward.

For more about how DalPay can help your business whether you’re expanding into international markets or just getting off the ground, visit our website and follow us on Facebook and Twitter.

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