How to Build a Video Game Economy
Like reality, games need an internal resource allocation mechanism during gameplay.
This system is known as a video game economy. The game economy creates balance in the game, allowing the player to earn and spend resources as they progress.
Game economy design can vary from game to game, but the core principle remains unchanged: it encourages users to play more by earning resources (such as energy, gems, and in-game currency) and incurring losses, creating a cycle of endless gameplay.
In the long run, this helps the game studio earn money by encouraging players to keep playing.
How does it work?
For example, let's take a farming game. The player plants free seeds, and after a few minutes of waiting, the crop is ready to harvest. When the crop is harvested, you "sell" it to buyers or trade it for other assets with other players.
This action gives you access to additional resources such as animals, extra farmland, buildings, etc., which help you progress in the game. Currency or resources help you progress through levels faster and determine your position in the game.
This in-game currency may or may not be tied to real money. But before creating an efficient and well-structured economy, you need to define the game's currency.
How to create a well-structured economy
Defining in-game resources/currency
Using the same farming game as an example, games, seeds, animals, and buildings are assets. They indicate the player's progress. On the other hand, "coins" earned from completing tasks are currency. They can be used for in-game purchases — seeds, animals, and buildings — or even for boosters.
In other games, your lives or energy serve as "currency." Anything that depletes quickly and dictates the pace of the game is its currency.
Soft and hard currency
Soft currency can be found in free-to-play games. For example, players receive a certain currency after completing an objective or level. They use it to buy other resources, lives, or assets. In other words, it does not require real money from players.
Hard currency is harder to earn, motivating players to spend more time in the game. Think of it as "gems" found in farming games. They are rare, so to get them, the player will have to spend real money. However, some games give you a small amount of hard currency to start. This helps players get familiar with the game mechanics, understand the benefits (such as skipping wait times or levels), and encourages them to buy it with real money.
Hard currency is usually available through in-app purchases.
Creating a cost system
Players should enjoy the game. To optimize this, a game designer must set fair prices for assets and other purchases. Simply put, it's the process of determining how much everything costs.
For example, a farmer gets 100 coins for harvesting carrots. But will they get 100 coins every time they harvest carrots? What makes them earn money? These are some questions that help structure a point or cost system.
Understanding sinks and sources
Sources are the currency earned after completing levels and other player rewards. At the same time, "sinks" are mechanics used in gameplay to spend resources. For instance, buying extra lives or boosters.
A well-structured game will have proportional opportunities for sources and sinks so that the game evolves and doesn't end abruptly.
Defining progression
As mentioned, in-game currency can define player progress. Depending on how the currency is earned, it will either motivate the player to progress or simply make them leave the game. Therefore, it's crucial to determine the right way to use currency.
A game may have a perfect economy, but if it's not very engaging or enjoyable, players won't play and buy resources. On the other hand, a video game may have appealing design, but if the levels are too easy and there are no in-app purchases, players may not have the motivation to play long enough.
Similarly, if the game is too difficult and lacks a reward system, the player will quit.
Hence, it's absolutely necessary to define game progression. Most game studios include primary and secondary goals in the game. For example, after level 20 in a farming game, players gain access to a specific part of the farm, can mine gold, etc.
Balancing scarcity and surplus
Just as progression is important to maintain interest, the balance between scarcity and surplus is also crucial. As players progress through levels and surplus increases, the prices of resources and other in-game purchases should rise. At the same time, the number of rewards decreases, creating scarcity and making the gameplay more challenging.
If a level becomes too difficult, the player can use a booster from the surplus to pass it. This requires careful planning, so balancing scarcity and surplus becomes an engaging task.
Determining player motivation
Not all players engage in games for the same reasons. Some seek exciting experiences, others social connections. Similarly, some may strive for exclusive wins, while others want high competition.
Understanding the game's players and their motivations can help designers achieve the right economy by better defining sinks and sources. This will create a holistic economy that encourages players to continue playing.
Accounting for player behavior
Many casual players want to pass the time and may not actively seek validation or rewards. Such players may not be very interested in spending their currency on resources or boosters, thus stopping their progress.
On the other hand, there are those who are highly engaged. They tend to play continuously and complete many levels at once. To prevent players from breezing through levels and finishing the game too quickly, game studios can create obstacles such as time locks, limited lives, or periodic rewards.
Test first and foremost
Creating a game economy requires many iterations — that goes without saying. However, it's crucial to test the game economy. All your efforts will be in vain if the player behaves differently than intended.
When developing a game economy, pay attention to the following factors:
- Starting currency (how much currency the player begins with)
- Periodic rewards
- Cooldown time (lives and energy)
- Cost of lives or energy
- Cost of progression
- Rewards and how they will be distributed
Testing the game economy will allow you to troubleshoot its operation while ensuring it is user-friendly, engaging, and easy for gamers to understand.
Designing the perfect game economy
A well-designed economy makes the game interesting. It can help games succeed and become popular. Albion Online, RuneScape, EVE Online, and Guild Wars 2 are just a few examples of beloved games that remain relevant thanks to their in-game mechanics.
If you're wondering how to create the perfect game economy, here are 5 tips that can help.
Start with a positive balance
No game should start with zero currency. That would be too discouraging and wouldn't allow the player to progress. As a bonus or gift for playing, reward players with a bit more currency at the very beginning. This practice will attract "collection-hungry" users, as it prompts them to play and spend resources to progress.
Entice gamers
If the game starts with an in-app purchase right away, players may not have the motivation to continue. It's important to introduce monetization opportunities slowly, carefully, and subtly.
When the gamer is fully immersed in the game and shows interest in completing levels, you can introduce the option of in-app purchases. Once they've tried the game and become more engaged, they are more likely to make a purchase.
Give them access to more than one source and currency
A game cannot have just one currency; it's not enough to motivate players. Moreover, no player wants to pay every time. Instead, use multiple ways to earn resources.
For example, if the game has a limited number of lives, the player can watch a 30-second or 1-minute advertisement to get extra lives instead of making a purchase. This will motivate players to continue playing and keep them in your app longer.
Advertising is not the only way to monetize games. Other options include in-game achievements and user actions. Balancing soft and hard currency will help keep the gameplay interesting and retain players longer.
Focus on player earnings
Who doesn't like being at the top of the leaderboard? Giving players the opportunity to win more resources keeps them hooked. The more opportunities users have to receive rewards and gain recognition, the more likely they are to play.
However, maintaining balance is equally important. Players will quickly get bored if they can get as much currency as they want, so set a limit and correlate progression with rewards.
Make the in-game shop inviting
Players should be intrigued by what the game offers, so make the shop inviting. If done correctly, the player will repeatedly visit the in-game shop to purchase items with game currency that enhance their gameplay experience.
One way to do this is to cultivate curiosity. For example, some items in the shop are only available after a certain level, or certain items are offered only after a specific purchase. Ensure that not everything is always available, as that discourages players from buying. The shop and its items may lose their novelty.
Drawbacks of game economies
Just as there are best practices to follow when creating a game economy, there are also several things to avoid.
Don't focus on selling
While having monetization options is important, don't obsess over "selling" the game. Allow the player to build a base and earn enough currency within the game itself. Let them get hooked before introducing purchases.
When players become loyal, it's time to introduce in-app purchases and ads to stimulate monetization and increase sales.
Avoid offering unlimited rewards
A game cannot constantly give rewards without receiving anything. This will bore players and negatively affect the economy. Consider offering "limited-time" items so that players want more.
These items or resources should have value or expire over time, prompting players to buy them with in-game currency, ads, or real money.
Don't focus exclusively on paying players
Not all players interested in the game will be inclined to spend. Always assume that about 95% of players are non-payers. In light of this principle, the game should find ways to generate revenue even without in-app purchases, such as in-game ads and achievements. Think about smart placement of ads and offers to entice players.
Since some gamers may not be aware of built-in purchases, it's important that these pop-ups are placed organically so as not to annoy users.
Conclusion
In many ways, the game economy is very similar to our real-world economy. Although less complex, it follows the same principles. It's about the relationship between production, resource management, and the player's money.
In some games, virtual currencies can be bought with real money and can affect the player's progress. In others, players must interact with game elements and complete certain tasks before moving forward.
As a result, having free and unlimited resources is not ideal. Players should only receive validation after putting in some effort. A well-structured game economy pushes players to continue playing, subtly encouraging them to make payments using soft or hard currency.
A game economy designer will define resources or currency, build a cost system, determine game and player progression, balance scarcity and surplus, identify player motivations, study their behavior, and actively test and iterate.
We hope this article has helped you understand what a game economy is, how to create one, and the dos and don'ts to follow. Don't focus on selling.