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On Trials & the “Drug-Dealer” Model of Hard Currency
August 8, 2021
If only he were around to experience hard currency today.

One of my favorite folk-lore design positions is the notion of giving away free hard currency. Without hesitation, every product manager I’ve worked with will off-handily assert the “drug-dealer” model. Supposedly, after experiencing the wonders of hard currency, players will be more likely to spend real money on hard currency rather than just enjoying the free stuff. While free giveaways may sound nefarious, it’s a common strategy in nearly all walks of commercial life: streaming services, cars, software, and Costco all employ trial mechanics without moral confusion or controversy.

Despite strong priors displayed by PMs, I’ve never seen empirical evidence supporting the claim. But more importantly, I’ve never seen the argument entirely fleshed out. For example, does the theory suppose I’d maximize conversation if I gave players $100 worth of hard currency? Or will a mere $1 of free hard currency suffice? Should I send players hard currency on a regular schedule, or is an initial allocation sufficient? In true freetoplayeconomics.com fashion, we need a model!

There are three critical variables at play:

  1. The amount of free HC
  2. The rate of HC sourced
  3. What the HC can purchase
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Why I’m a Supply-Side Game Economist
June 28, 2021
Robert Mundell often remarked getting to tier 100 in the Battle Pass is harder than getting a Nobel Prize

Game monetization discussions tend to focus on what to monetize broadly (gameplay or cosmetics) as well as how to price it. As someone might imagine, these are crucial and foundational discussions to have. So naturally, therefore, it makes sense to invest a lot of human capital into optimizing them. Increasingly, however, I’ve become convinced that just making lots of stuff trumps all other optimizations. Instead of being an afterthought, supply-side considerations deserve to be front and center.

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“Community” Leads Us Astray
June 25, 2021

A few months back, a member of Biden’s campaign team appeared on CNN. The team member describes how the campaign managed to stay politically center: staying off social media. I tweeted at the time this was great advice for game devs.

The vocal members of any community tend to dominate the feedback. And as we know, this minority is not representative of the whole. Most anyone I’ve talked to will freely admit this, but we commonly ignore it when referring to the “community” of a game. For example, job postings for Community Managers emphasize social media management. 

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Why Virtual Currency Exists
June 5, 2021

A recent Twitter thread highlighted a popular Gamer™ belief:

Even within gaming studios, I encounter a similar sentiment. Proponents of this position claim “firms use virtual currency pricing as a behavioral trick!” With virtual currency, there’s a disconnect between the real-world price and the virtual currency (VC) price. While true, there’s no intentional trickery going on. Instead, the reasons for VC are quite straightforward:

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The Creator Economy Is for Anyone but Not Everyone
May 31, 2021
Ladies and gents. Israel Kirzner, the Avatar.

UGC platforms have hailed the rise of the Creator Economy™. Roblox, TikTok, and Youtube have democratized the creation of content, abstracting the costs of getting content to market. But we’ve assumed UGC cuts out content gatekeepers in favor of entrepreneurs. Everyone gets a warm glow when “the little guy wins”. And by all means, this appears to be true! Creators can single handily craft and distribute TikTok videos in seconds, not days or months. The barriers to Roblox creation are higher, but it’s a far cry from the rigamarole of traditional game publishing. The effects of UGC are profound: despite easing requirements with Early Access, Steam hosts 50,000 games to Roblox’s 40 million. It’s such a gap I made this handy chart to underscore the difference:

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