Virtual Collectibles

As micro-payments rapidly become the mainstream model for most new online games,  there is a massive rise of business models offering collectible items. From games where the collectible elements are at the very center of the gameplay, like Magic The Gathering Online, PoxNora, Urban Rivals, Bella Sara, all the games from ChallengeGames,   the recent UpperDeckU and the upcoming BattleForge, to games having a “Gachapon” , lottery ticket or “Lucky box” feature offering collectibles added as an afterthought (MapleStory, ShotOnline, etc…), collections of items acquired through a random factor are flourishing and are on the way to becoming a must-have in any micro-payment system. SOE has invested in the model even before having micro-payment games, by acquiring Worlds Apart TCG studio in 2006, before launching an EverQuest 1 & 2 in-game CCG, Legends of Norrath. More recently, they acquired PoxNora developer Octopi, and seem to be introducing collectible elements in all their new games. It’s still a mystery why Nintendo has not released a truly online Pokemon game yet.

A “Lucky Box” in Shot Online

Collectibles are very well adapted to micro-payement systems because they allow to solve certain problems in the goal of maximising revenue and making it as recurrent as possible. The main characteristic of micro-payments compared to subscription is that it lets the audience decide how much they want to pay. Although the metric mostly used is the ARPU,  when looking at data from micro-payment games, it almost always shows that most of the revenue comes from a small fraction of high spending users. It is therefore very important when designing the business model, to make sure that those who are willing to spend hundreds of dollars per month can actually do it, and in a recurring way, that they have the “space” to do so. It is very surprising, but still it happens, to see micro-payment based business models plans which are “finite”, where there is no incentive nor interest to spend more than a couple dozens dollars at best, and with little incentive for recurring purchases. Such a model will fail to monetize enough, and often enough, the most committed fans.

To avoid this problem, consumables and items rentals are useful, but collectibles are a particularly great answer. Collectibles generally revolve around 3 elements : randomness, collection, and trading.

Each of these features is interesting in itself : The randomness is a useful tactic to boost frequency of purchases and volumes (for instance, in MapleStory you can buy random hairdresser or plastic surgery coupons). The collection works very well even if the components are acquired in a non-random way (à la Warhammer Fantasy Battle). The trading increases the primary value of the item (knowing that it can be exchanged on the secondary market makes the purchase price less a problem) while developing the community and providing a compelling economic meta-game (expect a fraction of players to be playing the auction house more than the game itself).

Still, the real power of the traditional collectible model comes from combining the three aspects together.  This usually results in very high ARPUs , from 30-40$ to as high as 80-100$, which is apparently more in line with online gambling ARPUs (Worlds Apart ARPU before SOE acquisition was $75), but sometimes at the expense of a wide user base (Magic The Gathering Online represented 30-50% of the total MTG business in 2007, but with only 300,000 registered players – compared to the 6 millions offline players. Of course it is also probably due to the demographics of Magic Online being adults rather than teens, with more disposable income), as online raises the general expertise level and brings the competition further, compared to playing with friends at school, for instance. It also makes the trading market instant and efficient compared to trading in your local community. For new entrants, it would probably be wise to balance the pay vs free balance for the game and make sure it is healthy for the free players.

It’s interesting to note that the real-life CCG industry is also trying to solve that paradox, as the random-collect-trade model makes being competitive fairly expensive and thus favours a lot the most played games at the expense of smaller, niche products (since the cards are more liquid and the secondary market is more crowded, it is perceived as a better investment to invest in the most played games). Fantasy Flight Games has been relaunching two of its big franchises CCG, A Game of Thrones and Call of Chtulhu, under a new model called Living Card Game, which removes the random element (and thus most of the trading, we would guess), and replaces it by releasing every month some new expansion packs of cards, thus making it a fixed investment for the player. The main reasoning behind their move was that the traditional CCG model favours blockbusters too much and leaves very little space for contenders. We don’t have any data on how successful the move was for them, but it would be interesting to find out. Of course, such a move is especially intresting for them as a physical product, since they can’t aggregate niche audiences as an online product could, but can still be worth noting for niche online games struggling with reaching critical mass.