Commerce Models in Virtual Worlds and Environments

Commerce Models in Virtual Worlds and Environments

Roderick M. Riensche (Pacific Northwest National Laboratory, USA) and Andrew J. Cowell (Pacific Northwest National Laboratory, USA)
DOI: 10.4018/978-1-60960-762-3.ch040
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Abstract

Operators of popular virtual worlds, online games, and other environments employ a number of models to engage in commerce with users and to facilitate user-to-user commerce. Subscriptions, direct user-to-user transactions, advertising, and sales of premium content are just a few examples. These virtual economies exist alongside and within traditional local and global economies, introducing dynamics related to regulations and currency valuations. Within an active virtual worlds market, content and service providers continually look for more effective ways to derive revenue from their virtual properties, while researchers explore the potential of virtual worlds as experimental environments. For both proprietors and researchers, the implications of commerce models are important considerations when defining business or research strategies.
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Background

Virtual worlds and environments are an increasingly popular and prevalent part of life, and as such, there are significant efforts by service providers to monetize the virtual world experience and by providers and users alike to carry out commerce activities. When we discuss virtual worlds and environments, we note that there are different types of these environments in operation, including online games with tightly scripted content, “sandbox” virtual worlds that allow and encourage users to develop their own content, and web-based environments in which the state of an evolving virtual environment persists between visits. A commonly used system of acronyms efficiently describes and categorizes virtual environments in a hierarchical fashion. The top-level term of the hierarchy is that of the Massively Multiplayer Online (MMO) environment. Within the realm of the MMO, additional descriptive terms are added to the name to further describe the purpose of an environment. Massively Multiplayer Online Games (MMOG) are MMOs specifically geared toward playing games (as opposed to unstructured socializing), and are often further categorized as in the common example of the Massively Multiplayer Online Role Playing Game (MMORPG), which has in recent years emerged as a ‘mainstream’ form of entertainment on a grand scale. These distinctions are important, because the type of environment being considered directly influences the types of commerce models that may or may not be appropriate or acceptable (for example, users are more accustomed to making direct payment for access to an online game than a web-based community environment).

Key Terms in this Chapter

Subscription: Subscription models involve payment of a recurring fee for access to a virtual world. Typically, subscription models include tiered pricing, providing lower fees if access is purchased for longer than the minimum subscription period.

Gold: Many online games (particularly in fantasy genres) use precious metals to represent their virtual currencies, typically measured in gold pieces. Gold is sometimes used as a generic term referring to virtual currencies in online games.

Microtransaction: Another term for RMT, typically applied to the specific case of purchasing individual virtual items.

Gold Farm: A physical operation in which workers are paid to log into an online game and undertake tasks to earn gold. The in-game currency is then sold for real-world cash.

Real Money Transactions (RMT): Non-subscription purchases of goods or services related to a virtual world. These include things such as cosmetic upgrades to avatars, special virtual items, or specific account maintenance services (for example, changing an avatar’s name).

Freemium: A “freemium” game is similar to FTP in that a game may be played for free, but includes specific “premium” content that is only available for paid subscribers.

Free-To-Play (FTP): A commerce model in which a game can be played without any financial cost. FTP models are generally used in conjunction with some form of RMT to derive revenue.

Commerce Model: In the context of this chapter, “commerce model” refers to a technique by which operators of virtual worlds derive income.

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