Book Excerpt: Game Economy Design: Metagame, Monetization and Live Operations

The following excerpt is from Game Economy Design Metagame, Monetization and Live Operations by Charlie Czerkawski. The book will be published October 16, 2024 by CRC Press, a division of Taylor & Francis, a sister company of Game Developer and Informa Tech. Use our discount code GDTF20 at checkout on Routledge.com to receive a 20% discount on your purchase. Offer is valid through January 1, 2025.

What Is a Game Economy?

In real-world terms, an economy is the highly complex set of interrelated systems and activities concerning the production, consumption and exchange of resources, goods and services which fulfil the needs of individuals within a country or region. The word economy, however, can be used to describe inter-related systems and activities, across a vast range of smaller subdivisions including, for example companies or even a single family.

It is generally understood that game economy design concerns itself more with game design than traditional economics. While real-world economic theories and terminology are referenced and used to some extent, the game economy designer’s role, along with other designers, is to create player engagement and, specifically, things for the players to do.

A game economy is a highly tailored, fabrication of a real-world economy, functioning around in-game resources, currencies and virtual goods, along with a system of engagements and activities for players. It is, in essence, a much simpler, controlled version of a real world economy.

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The aspects of a game which fall under the umbrella of game economy can be tricky to define, and different genres of games utilize game economy design in different ways. However, there are a number of components, practices and theoretical tools for the game economy designer to use, which will be discussed in the following sub-sections of this chapter.

What Does a Game Economy Designer Do?

Naturally the game economy designer’s overarching task is to create the interweaving systems and flow of resources, goods and currencies within the game: a game economy. The job itself is a subspecialty within the divisions of game design and can generally be thought of as concerning the design of the systems which relate to the long-term engagement of the player. This contrasts with the other design disciplines which are working on the minute-to-minute action-phase gameplay. Game economy design concerns itself with the areas of the game which include the control for distribution of content and rewards (broadly, a progression system), and the resources, goods and currencies which are used in tandem with these systems. By extension, the game economy designer is concerned with the monetization and microtransaction elements which have become more commonplace throughout games.

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Essential to any role within the game design team is a high level of collaboration with colleagues. Game economy design is no different.  There are certain aspects which absolutely lend themselves to two or more people sitting down in front of a computer screen and discussing the inner workings of a system. This will and should form a key part of the working day. The areas covered by you as a game economy designer will overlap one way or another with the work of a designer covering the many other systems in the game, including user interface and narrative. Beyond this, naturally you will collaborate with developers on the entire team. This is the spirit of game development, and it involves an intricate blend of technology, art, creativity and psychology, all mixed to produce fascinating end products to be enjoyed by millions.

Goals of a Game Economy

A fundamental question: why do we have the need for a game economy in the first place?

The concept of a game economy is utilized to varying degrees across the different genres of games, and it is true that not all genres require a standard game economy. From the early days of the games industry, many titles had little concept of such a game economy. However, as games developed over the years, new trends surfaced, and new types of gameplay experiences and engagement developed, and therefore so did the need for a game economy.

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Game design as a discipline, and by extension the game designer as a role, is there to solve conceptual problems within the development cycle

of a game, leading to an improved player experience. Ergo, game economy typically exists to solve a number of problems often concerned with the overall player journey and long-term engagement within a game.

A game economy facilitates direct player engagement. A game economy in this sense bleeds into the main action phase of a game (e.g. playing a mission in a shooter game, involving combat). As a game economy encompasses the systems related to player resources, goods and in-game currencies, these are used to give a degree of value and context to the goods that a player utilizes while playing.

A game economy provides long-term player experience. One of the key aspects to a game economy is to provide a motivation for long-term engagement within a game. The controlled distribution and usage of resources should keep players coming back over an extended period of time and allow the player to establish a routine of play on a regular basis.

A game economy acts as the access to and the control of distribution of content. Closely related to the motivation for long-term engagement is the need for control and by extension safety measures over the distribution of content. A game development team can only create a finite amount of content with the time and budget allowed for any project. If the pacing of the content is incorrect, players can potentially burn through this content far too quickly, ultimately causing the player to leave the game; i.e. if the player acquires the game’s most valuable content with relative ease, what reason would they have to continue playing? The game economy and, in particular, the progression systems (see below) can act as metaphorical brakes on content distribution, ultimately preventing a potentially damaging content burn rate. Aside from preventing content burn, a game economy concerns itself with session control.  In other words, the game must provide the player with just enough content: not too little, not too much during any given play session. The details of how long a play session should be will vary depending on the game itself, the genre, platform and target audience.

The concept of giving utility to players is achieved by this access to content. Think of an open world game, which opens up more as the player plays, giving access to more quests, side quests, collectables, skills and surprises along the way. Alternatively, a collectable card game gives the player an expanding pool of mechanics to use, thus creating strategic depth.

A game economy itself provides engagement and should generate fun. Often, the game economy is something which is generally “felt” by the player, as opposed to being noticed in the same moment to moment fashion as core gameplay mechanics. Naturally, creating a game economy interaction which features the same emotion, sensation and buzz of action gameplay would be an impossible task.  However, the concept of an economy generating intrinsic fun for the player is an important design consideration. The narrative design and the nature of the project can also have an impact on this. For example, if a game features fly-by-night black market trading, this could provide some inherent intrigue to otherwise relatively mundane elements.

A game economy provides adaptability and growth. Many video games must be sustainable long after their initial launch, and postlaunch operations continuously update the game after its initial launch.  The game economy must be built in such a way as to allow it to be expanded and modified. These updates can take many forms, such as new currencies and features which “plug into” the main game economy systems.

A game economy provides access to monetization, and depth of player spending. Monetization in the context of game economy design typically refers to the in-app/in-game purchases (microtransactions) that occur after the main game purchase or free download. These give the player access to premium (premium will be synonymous with “costing real money” throughout this book) features and content. With a strong game economy design, there will be a synergy between the regular economy and the premium (costing real money) content. One caveat is that the individual business model and game genre is a major determinant of how the game economy relates to monetization. Monetization will be covered in more detail within Chapter 4.

Key Components of the Game Economy

With the goals of a game economy in mind, what are the actual building blocks and theoretical components/elements which the economy designer has at his/her disposal?

Currencies are a natural part of any economy, both virtual and real world. However, currencies do not necessarily need to exist in video games. There are many games which do not require currency and, by extension, do not have a typical game economy. This does not prevent these games from containing a progression system, and other resources for players to collect. For games which have a currency – that is, a medium of exchange – integrated into their design, the common convention is to design a soft currency, which is a currency that the player obtains from playing the game. The soft currency is used for purchases within the game that have a direct link to the gameplay and the player’s engagement. For example, soft currencies are used as a charge for upgrading weapons and equipment used by the player. Many games take the design approach of having a single soft currency with a variety of uses spread across the game’s features. This soft currency works in synergy with other more specific resources within the game, and free-to-play games typically often introduce other new soft currencies into their design, especially as these games adapt and evolve with updates post release.

Many games typically also introduce a hard currency. This is a currency that is acquired through real money microtransactions and can have a variety of applications. The most noteworthy use of a hard currency is for the purchase of purely cosmetic vanity items. These are often used for character customization such as items of clothing and accessories, but can also be special commands known as emotes, which players use to convey emotions or perform greetings to other players during a multiplayer game. Economy design does not preclude a hard currency from being dropped in small quantities through the gameplay. This is often used during the early stages of a game to teach the player the usage of hard currency and to help to drive potential further monetization.

Goods

Goods are items in the game that are tangible to the player. A good in this sense can be difficult to define. Broadly speaking, these are the major items that the players owns. Not all of these may relate directly to the game economy, although from a theoretical standpoint they do.

The items which are easily recognizable as goods tied to the game economy are weapons, armor pieces, cosmetic apparel and similar content tied to the in-game currencies. For example, a loot focused roleplaying game will involve repeated cycles of buying and selling these items. Other items that can be viewed as goods are, for example, tools and gadgets which many action or stealth games often incorporate into their design. These items may simply be available to use, without significant links to the game economy, and are therefore of more concern to system designers. However, the game economy designer must be a stakeholder within their design, as the use of these items will have an impact on player performance and can have a knock-on effect on other aspects of the game economy, for example, the rate at which players progress and acquire currencies and resources.

Resources

Resources can also be difficult to define, as there is often an overlap between goods and currencies, but there are typically differences to note. Resources are often collected for a specific purpose and combined or utilized within one or more of the game’s systems. They are typically precursor items used in the production of other items and are collected in abundance throughout a game environment or via core gameplay.

A common type of resource which many will encounter includes crafting materials found in modern action role-playing games. For example, the player must collect the resource called “metal fragments”, which can be taken to a blacksmith non-player character, who will use these metal fragments to craft a new sword for the player. These types of resources are usually distributed in abundance and can help to provide a method for designers of large scale – particularly open world – titles to extensively populate the game environment with numerous amounts of minor rewards.

Although not generally thought of as a resource, experience points which are awarded through gameplay would be broadly classified as a resource for the player. These may not be used in the direct sense, but they contribute to other systems, unlocks and rewards. They would differ from a currency, as they cannot be spent by the player. There is a similarity here with professional sports leagues, where teams accumulate points from winning matches.

A word of caution regarding terminology. The term “resource” will commonly be used as an over-arching term for all elements of a game economy, from currencies to content. Keep context in mind while researching.

Sources

A source can also be called a faucet, or a tap in British English. A source is defined as a means within the game by which players receive in-game currency, resources or goods. In the context of a virtual game economy, the currency, resource or good is created from nothing and injected into the economy. With a source created, the game economy designer has the task of adjusting how much currency (or resources/ goods) this source provides to the player.

Typically, the most prominent source within a game economy is that which generates in-game soft currency. Sources for soft currency are used as a method for providing the main reward for the player’s engagement with the core gameplay. As the currency is generated from everyday engagement by the player, this can often generate a large amount of currency simply by existing, in turn creating the main balancing task for the designer. An example would be an amount of soft currency which the player receives for completing a level in a mobile puzzle game.

The source for resources is another type which you will encounter within a game economy. Designers often use more bespoke means to generate resources for players, entirely dependent on the type of game and the business model, to solve problems in the design or guide the player to playing the game in a specific method or pattern.

Consider a system where the player must upgrade weapons, and after reaching the maximum level, the player can begin levelling up the weapon again from zero, but this time with new powered-up features on the weapon permanently available. In order to reset the weapon, the player must use a rare resource only acquired from completing specific weekly missions within the game. The use of these therefore guides the player into a weekly engagement with the game, controlling the means by which the player can upgrade weapons.

Sources for goods can be more difficult to define and are not to be confused with traders (see section below). Sources for goods, like resources, are often used to solve specific design problems, but can be a main part of the game’s core engagement. For example, many roleplaying games function around the collection of loot; items dropped by enemies. An example would be a sword dropped by a monster after the player kills it, within a fantasy role-playing game. Sources for goods can also provide the player with certain rewards for regular engagement with the game, to aid retention. An example would be a consumable health potion which is given to the player for returning to the game a specific number of times within a set period (though in practice, currency is used more predominantly in this instance).

Sinks

A sink (sometimes called a drain) is a way or object/element within the game which removes currency, resources or goods from the economy. A sink destroys the currency, resource or good, removing it permanently. Sinks are used to combat currency inflation and work in conjunction with sources. It is also the task of the designer to balance the sinks to remove sufficient currency, resources or goods relative to the rate at which the sources are generating.

A sink for currency can initially seem obvious to design but can quickly become tricky to add to a game while keeping a sense of credibility within the experience and the established narrative of the game.  Definitions become more obscure with currency sinks relative to the type of game. Take the example of purchasing a store item. Within the context of a single player game without player-to-player trading, this can act as a currency sink, with the currency being taken out of the economy. We should note that this currency is being replaced by a good. In essence, this behaves more like a converter (see below).  Naturally, the player must get something in return for spending their hard-earned currency, so finding intricate ways of removing the currency while giving something in return which is continually needed and desired, something moreover that can be given repeatedly over the player’s lifetime with the game, is a key design challenge. Within a game which involves player trading, buying items from other players would not act as a sink at all, as the trader (see below) would exchange the currency and the good between the two parties. Given the fact that soft currency is readily printed by playing a game, it naturally

tends to be in abundance, with designers left straining to find ways to remove it. A few examples of currency sinks would be: an amount of soft currency charged for upgrading a piece of equipment, or an amount of currency charged to begin a new match, which may be used for certain game modes in multiplayer titles.

The concept of sinks for resources may be used for specific cases within the game. Resources tend to have controlled distribution relative to the game and are given very specific uses, so their need for blatant sinks is not the same as for currencies. Resources function effectively with converters (see below), for example where they can be transformed into goods. This would effectively be a sink for the resource and a source for the good.

Sinks for goods can take different forms, and game designers often come up with quite innovative ways to remove items from a player, again specific to the genre and business model of the game. Roleplaying games often allow players to sell unwanted items to non-player character vendors, in return for small amounts of currency or resources.  While this is theoretically a trade, the good is being destroyed by the vendor, and the amount of currency given back is typically a fraction of the amount that the good was purchased with. In certain cases, games may feature items or weapons which are permanently lost, for example if the player character is killed during a mission.

Converters

Converters are mechanics which transform one type of good, currency or resource into another within the game. A useful way of thinking about the converter is that it is acting as a source and sink simultaneously, producing one element in return for instantly destroying another. While this can be applied in many ways within games, the most obvious use of the converter lies within the design of crafting systems, or the harvesting of resources or similar mechanics within strategy, or construction and citybuilding simulation games. For example, players will collect certain raw resources deposited from the game environment and will use these in conjunction with a nonplayer character (e.g. a blacksmith) to create a new tool or weapon. The use of converters can be applied across many genres of games and can be used as part of puzzle solving within games, or indeed any system whereby players collect multiple components and then combine these into a single whole item. The behavior of the converter should not be described as a variation of a sink. Although the number of elements can be reduced, the converter does not totally destroy anything without replacing it with something else. It is a theoretical tool at the disposal of the game economy designer, to be utilized in various situations.

Traders

Traders are mechanics which exchange goods, resources or currencies between different entities within the game. As a definition this can seem overly technical, but in practice the trader is a theoretical way of describing the behavior of, for example, a player purchasing a weapon from another player, for an amount of in-game money. The trader mechanic transfers in-game money from the account of Player A to the account of Player B and transfers the weapon from the account of Player B to the account of Player A. This is where we can observe the nuances of traders and the overlap between traders and sinks. If the player buys a new item from a non-player vendor character, this is not trader functionality. From the player’s perspective it appears to be the same, i.e. they give away one element and receive a different one in return. But in this instance, the player is interacting with the game which destroys the in-game currency and creates an item out of nothing to give to the player. A trader as a theoretical object must not destroy or create anything, it simply exchanges different existing elements between entities in the game. Even within a game which involves player to player trading, from the perspective of one player, the trader appears to act like a converter on the surface, but in terms of the overall economic balance, and crucially for the designer, the two are different.

Game Genre and Business Models

For those of us who have had a strong passion for video games from a young age, the concept of genre is something from which we derive our main emotional connection to the games we enjoy. As the years go by and we purchase new devices, and their associated titles, we connect to specific types of games and find new favorites, and obsessions.

Over the ever-changing landscape of the games industry, the factors constituting the different game genres have also changed. There is still a lot of ambiguity, with many games breaking trends, and fusing defining elements from different genres.

What defines a game’s genre? Genre is the French word for type, and the term is often heard in the context of films. However, what characterizes the video game medium is that genre mainly refers to the type of gameplay involved, as opposed to the type of story being told. Some of the main video game genres with which I have always associated personally are the following:

• First-person shooter

• Action adventure

• Sports

• Racing

• Puzzle

• Strategy

There are a plethora of sub-genres within each of these, and the list could extend for many pages.

How are these different genres relevant to the game economy?  Naturally, some genres lend themselves to a typical game economy far more than others, but there is a large gray area in between the extremes which includes varying aspects and elements of a game economy. A strategy game such as Clash of Clans features a prominent game economy and metagame, while a story-driven adventure or interactive drama title may feature no game economy in the immediate sense. However, there may be progression systems built into a story-driven game, even if they are not prominent and player facing, so the generic principles and theory within this book should be able to be readily applied whenever the needs arise.

At this point, it becomes necessary to address the two major business models that dominate the games industry: Free-to-Play and Premium.

Free-to-Play

A game which follows the free-to-play business model is available for players to play without any upfront real money cost and is the dominant business model for mobile games. Monetization is built into the game via the use of non-compulsory microtransactions, which the player can carry out from within the game. The microtransactions provide the user with some benefit(s), closely related to the game’s design, such as content, or some other more optimal experience for the player to enjoy.

Monetization should be built into the game from the ground up and be considered during development as part of the process of building the game’s economy. Tagging on a monetization strategy at the end of a project will inevitably lead to a more mediocre result.

A pattern of effective design for free-to-play games tends to involve a single core method of play, which takes place in consistently measurable play sessions, and from here the player builds an expression around this core experience, with engagement, retention and ultimately monetization features wrapped around this. A good example of this would be the game Rocket League, which shifted business models to free-to-play, from originally being a premium title. The game centers around multiplayer matches, with other features such as tournaments, customization and live events all complementing this single user experience (Figure 1.1).

Figure 1.1 Typical gameplay loop for a free-to-play game.

Premium games are games in which the player must pay an upfront cost. Many of the most popular franchises on PC and console are premium products.

As a premium experience demands that a player part with real money before beginning to play, there is more leeway for the game to be a self-contained journey, which combines different challenges, rhythms of engagement, types of gameplay and experiences (Figure 1.2).

A single player, open world, story-driven game could be considered an archetype for this, with a narrative that changes, progresses and adapts to context, combined with a mixture of combat and problem solving gameplay, and many other surprises along the way.

There are exceptions to this, with some sports and racing games being genres which could conveniently lend themselves to the free-to play type of engagement. It is worth bearing in mind that these games are often high budget, yearly iterating franchises, with licenses from sports associations, and often in themselves contain expansive career and season modes, requiring a large time investment from the player.

Paymium is a term that can be used to refer to the practice of a premium game also including the opportunity for further in-game microtransactions.

I feel the need to make a small qualification in relation to the detailed chapters which form the remainder of this book. It is certainly true that a great deal of game economy and monetization design has its heart in the free-to-play model, and this should be taken into consideration. However, bearing in mind the readership for this book, 

Figure 1.2 Player engagement diagram for a typical premium product.

and the changing nature of the games industry, I have attempted to generalize the concept of game economy to systems which can be applied to solve meta design-related problems within different games. These potential solutions will be largely independent of the business model the project is using, but will also allow for the perception that some genres lend themselves to game economy more than others.  Often, there is overlap between free-to-play and premium design, and the methodologies can be readily applied across different projects. By extension, game design can be boiled down to a series of problems to solve whatever interconnected systems are present. Therefore, it is very relevant as an economy designer to think of and apply the theory to whichever project-specific problems present themselves, and to be able to, for example, use and reapply free-to-play best practices in a premium game where relevant and whenever the needs arise.

Now we will begin the deep dive, by first looking at the high-level driving force behind the game economy, in “player motivation”.

Player Motivation

As a prelude to going into the specifics of building the game economy, it is important to start asking the most high-level questions about the overall design of the game, which is, in essence, part of the game’s overall direction. This is something which must happen before preproduction fully starts, and is usually handled within a small team, including the game director who sets the creative vision for the project. To get to the bottom of player motivation, and with the business model being already decided, there are a series of questions which will help set the scene for the metagame.

The first question is who is the target audience for the game? Every game needs a target audience. Different titles appeal to different people, with varying life habits and character traits. Keeping the game’s meta features in line with the overall creative vision is part of the economy designer’s role, and identifying the target audience helps with this. The target audience guides everything about the game, from the type of content and features to the pacing of progression, and the multitude of decisions that will be made along the way. For example, if you are building a game for a more casual audience, it would not be sensible to spend a lot of development resources building an incredibly deep series of meta systems which are not going to be discovered by the majority of players. Likewise, an economy which is too simplistic would not appeal to the audience of a more hardcore game.

The second question is what are the main emotions that the game’s design wants to generate in players? You need to identify how you would like your players to feel while playing the game, and how these feelings connect with each other. These involve everything from the waves of emotion that occur during a single round of gameplay, and during a single play session, all the way through to the overarching emotions over the player’s lifetime with the game. Is there anything in particular you are looking to ignite in players? There are many different emotions that are intrinsic to video games, and the design of the metagame and economy can play on these. Satisfaction, happiness and surprise can be powerful positive emotions to generate in players. However, you must also look to conjure up more negative emotions such as frustration and disappointment along the way. A game requires this to complement the positive times. Pride and envy, which are themselves extremely powerful feelings, can also be exploited. With insights gained from the first two questions, the third question is: what are players going to be doing within the game? This will typically adhere closely to the genre of the game. Take a step back into the persona of the player and ask the question, what am I doing in a game? Naturally, the first answer that comes to mind is trivial. In a racing game you are racing vehicles, probably cars in some form. But really, there are sub-genres within this, with their own experiences that cater to different players. There is often one over-arching goal, but there are many different segments of player experience to take into consideration. For example, a game could involve engaging in quick races, to build up a collection of vehicles, with upgrades helping with this collection process. The game could have a story mode, various multiplayer modes and ranked leagues. What are the predominant elements to consider, and how do they come together into a coherent whole?

Developing an Economy

The natural follow-on from the previous questions is to take the answers and put them into more of a context within a system of components which help to build up a working game economy. With the

Figure 1.3 Diagram showing the highest level of theoretical game economy components.

knowledge of the components of the economy, we can now think about the overall experience of the game, and what the player is doing in terms of the gameplay. This can be seen as a hypothetical directional thought process to ignite the game economy.

We can address the highest-level theory of the economy by thinking through and answering questions related to the following topics:  Activities, Intensity, Rewards and User Journey (Figure 1.3).

Activities

What are the core activities that happen within the game, through the different types of gameplay in relation to the game economy?  Ultimately you are addressing the question of what the things are that players are doing. This could be the main story battles that onboard new players and keep them engaged for multiple subsequent play sessions. Other examples could involve quick battles, daily challenges or end-game boss raids.

Intensity

The intensity takes the activities and contextualizes them in terms of how much time and effort they require from the player. This will then be used to define what type of rewards they tie into. For example, an end-game boss raid would require far more valuable, rare rewards compared to a simple daily logon reward, which would require a small amount of the game’s main (and easy-to-acquire) soft currency. This is an important step. It may seem like common sense, but it is important during the course of development to identify and keep a measure of the type or quantity of rewards that are given through different game play modes or features, and how these may potentially change. During the cold reality of game development, it is quite common to be pushed into re-using certain rewards. Economy designers can find themselves not differentiating sufficiently between easy-to-acquire and extremely grind-focused rewards, which in turn has a detrimental effect on the player’s overall engagement.

Rewards

This step requires the designer to define the currencies which will drive the economy. In addition to this, the resources can be considered. In reality, the line between currencies and resources can become blurry. The goods which serve as rewards must also be defined, and in general how these all tie together. This stage involves asking the question “why does the player care about investing in this economy?”

User Journey

At this stage you will be considering the overall user journey of the player. This ties heavily into the overall progression system (regardless of how prominent and/or complex the progression system is). It is this section that will serve as the initial spark for the more complex design of the user journey. At this point you must reflect on how things will change over time from a high-level standpoint.

There is an early onboarding phase, which can be more contrived and designer controlled. The player investment is small at this point and should therefore require minimal effort. There will be a mid-level phase where players are in the system, with less predictability around the player’s experience. Last, although not relevant to all players, an end-game phase for the most experienced and skilled individuals must be considered.

We must ask ourselves, what do we do to keep players going forward? What activities are unlocking, and what types of rewards and currencies are focused on during certain points within the user journey. For example, how are these rewards distributed at the end game compared to the mid-game phases?

At this stage, it will be prudent to roughly map out the stages of the user journey on paper, which will serve as the basis for planning the deeper, detailed design to follow.

Reference

Virtual Economies: Design and Analysis, Vili Lehdonvirta and Edward Castronova, 2014