In-game currencies: Between game mechanics and monetization

You've probably often wondered how game developers can offer titles like Fortnite, World of Warcraft, Clash of Clans or League of Legends for free, even though the games cost millions to develop? A large part of the answer to this question lies in the virtual currencies used in these games.

This is how in-game currency works

But what are in-game currencies? In-game currencies are virtual money used in video games. They can be earned by completing in-game tasks or missions, or they can be purchased directly with real money.

There are two types of currency in many games: a "soft" currency that you earn through playing, and a "hard" or "premium" currency that you can only acquire by purchasing it with real money. You can then use these currencies to buy new game content, improvements or cosmetic upgrades.

These currencies play a crucial role in retaining players in a game. They allow players to measure their progress and reward their achievements, which helps keep them engaged in the gameplay.

Historical overview: How it started

In-game currencies are not a new invention. They've been around since the early days of video games. Just think of the coins you could collect in Super Mario Bros. But in recent years they have evolved a lot and become a central element in many games.

You can find in-game currencies in virtually every genre, from action games and shooters to strategy and role-playing games. They have also found their way into mobile games where they are often used to support the freemium business model.

Many gamers who first experienced video games in the era of titles like Super Mario Bros. marvel at the evolution of these concepts and how they have become a central part of so many games today. The collection of coins in an early game like Super Mario Bros. has morphed into complex in-game currency systems in today's games.

Advantages and disadvantages of in-game currencies

In-game currencies bring both advantages and disadvantages. On the plus side, they can greatly enhance the gaming experience. They offer players the opportunity to measure their progress, reward their achievements and customize their game characters or environments according to their individual ideas. The personalization of game characters using in-game currencies can make the game a lot more entertaining and motivating for many.

On the negative side, using in-game currencies can also cause problems. A common problem is the so-called “pay-to-win” problem. Some games allow players to use real money to purchase perks that can improve their in-game performance. This can severely impact the game experience for those unwilling or unable to spend extra money.

Benefits of in-game currencies

• player retention: In-game currencies can help keep players in the game by providing rewards for playing and progressing through the game.
• monetization strategy: For game developers, in-game currencies are an effective way to generate revenue from free games. They allow players to pay for virtual goods and services.
• Player progression and customization: In-game currencies allow players to measure their game progress, reward their achievements and customize their game characters or environments to their liking.
• Economic gameplay: In some games, especially MMOs, in-game currencies can add an extra layer of gameplay by enabling economic systems and bartering between players.

Disadvantages of in-game currencies

• Pay-to-win problems: Some games allow players to use real money to purchase perks that can improve their in-game performance. This can create an imbalance in the game and severely impact the gameplay experience for those unwilling or able to spend extra money.
• addiction risk: The mechanics using in-game currencies to reward and motivate players can be addictive, especially when combined with gambling-like elements like loot boxes.
• Cost control: Although many games are free, the cost of in-game currency can quickly become high. This can be particularly problematic for younger players who are not good at managing their money.
• Legal and Ethical Concerns: The use of in-game currencies may raise legal and ethical issues, particularly in relation to gambling laws, consumer protection and the protection of minors.

economic aspects

The use of in-game currencies also has significant economic implications. They are an important source of income for game developers. By selling in-game currency, they can generate revenue even though the game itself is free. This business practice is particularly prevalent in mobile games and massively multiplayer online games (MMOs).

A well-known example is the game World of Warcraft (Wow). players can Buy wow gold – the in-game currency – to gain access to certain game content or benefits. This generates significant revenue for developer Blizzard Entertainment.

Selling in-game currencies has enabled us to make our game accessible for free while maintaining a sustainable business model.
– anonymous member of the Blizzard Entertainment development team.

psychological aspects

Finally, psychological aspects also play an important role. In-game currencies can have a major impact on gameplay and player purchasing decisions.
"The prospect of earning rewards with in-game currencies motivates me to play the game regularly," says Tom Schmidt, an avid gamer.

However, there is also a risk that players will be tempted to spend more money than they actually want. Children and young people in particular can be susceptible here.

Legal and ethical considerations

There are also some legal and ethical issues that arise when using in-game currencies. One of them concerns the protection of minors. Since children and young people can be particularly susceptible to problematic gaming behavior, many consumer advocates are calling for stricter regulations on the sale of in-game currencies to minors.

A balanced approach is of great importance so that players are able to enjoy the benefits of in-game currencies without falling into problematic behaviors.

Another legal problem concerns the gambling law. Some games use mechanics very reminiscent of gambling, where players can spend in-game currencies for random rewards. In some countries, such practices are regulated or even prohibited by law.

Future of in-game currencies

What will the future of in-game currencies look like? It's difficult to make accurate predictions, but one thing is clear: in-game currencies will likely remain a permanent part of the gaming landscape.

On the one hand, we could see increased regulation and self-regulation in the industry, especially with regard to youth protection and gambling laws. On the other hand, we might also see new, creative uses for in-game currencies as game developers are constantly looking for ways to make their games more engaging and fun.

In the coming years, the development of in-game currencies could take some exciting turns. The ability of these currencies to enrich the gaming experience in many different ways holds enormous potential.

My conclusion

In conclusion, it can be said that in-game currencies are an exciting and complex topic. They offer many opportunities, but they can also bring challenges. It is important to be aware of these challenges and to promote responsible use of in-game currencies.

FAQ

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Jen Kleinholz( Founder & Sir Apfelot )

Jens has been running the blog since 2012. He acts as Sir Apfelot for his readers and helps them with technical problems. In his spare time he rides electric unicycles, takes photos (preferably with the iPhone, of course), climbs around in the Hessian mountains or hikes with the family. His articles deal with Apple products, news from the world of drones or solutions to current bugs.