Virtual Currencies in Gaming Industries and Social Networks

Many games and social media apps today are free. You might be wondering how developers and publishers earn profits if they let users download them without a cost. While ads make up a portion of it, they make a lot of money out of these free apps with virtual currencies – a trend that has received a lot of love and lots and lots of hate from the end users. They also use in-game purchases at runescape prices which set by game developers.

Before virtual and in-game currencies, games (especially online games), as well as some social media apps must be purchased with real money as you download. Every download is an instant profit. This discourages users from downloading the app as they risk paying the full price up front and end up not enjoying the game.  With in-game currency, the app can be downloaded by the users for free. This allows them to get most of the app without paying, and let them have the option to purchase in-app items using virtual currency or sometimes real money.

Free-to-play games and social network apps may either have a single currency model or multiple currency models. In many games, these in-game currencies can be received by the player in many ways such as a daily login or objective accomplishment reward. This encourages them to keep on visiting the in-game store and spend the currency, and in turn, it encourages them to spend real money on items or in the case for games, with multiple currencies, on a “premium” in-game currency.

The demand for a game’s in-game currency is extremely high that it is traded with real money. However, Mark Methenitis, a Dallas attorney and a blogger, wrote in his blog called “Law of the Game” that virtual currencies are “completely unregulated”, making them dangerous for trading. He added that there is a possibility for fraud, and it is easy to cause an enormous hyperinflation. More experts also stated that virtual economies can also suffer the same problems that real economies currently have. To remedy this, some games and social media apps such as Hi5 has enlisted an economist.

Moreover, in-game currencies can be exploited by publishers to earn more money. Many games today employ loot boxes and pay-to-win micro-transactions. This encourages players to spend “premium” in-game currencies or even real money for loot boxes that may or may not have items that give them an advantage over other players. For most gamers, this takes out the fun gameplay element out of the game where players can win by skill, making the game unbalanced. Many game publishers are being criticized for producing pay-to-win games – not only are they making the games unbalanced, but they are also breaking gambling laws in some countries.

Does this mean that virtual and in-game currencies are really that bad? When done right, it is a win-win situation for both the users and the app publishers. It allows the publishers to earn lots of money while letting the users try the app first before spending. Players can enjoy earning in-game currencies as they progress through the game.

Virtual currencies will never be as valuable as real money, but when you spend time, effort, and money, real or virtual, the joy and satisfaction you get will always be worth it.