Posts Tagged ‘money transactions’

Second Life gets and “F” from the Better Business Bureau

Wednesday, February 25th, 2009

The Better Business Bureau is a US based, non-governmental organization that networks local Better Business Bureau (BBB) organizations together and gathers and reports information on business reliability.  Founded in 1912, the organization alerts the public to frauds against consumers and businesses, provides information on ethical business practices, and act as mutually trusted intermediaries between consumers and businesses to resolve disputes.  In other words, they’re a trusted source many turn to when a businesses operational procedure(s) are called into question.

Linden Labs, creators of the virtual world ‘Second Life’ have recently been granted the distinction of being rated with an ‘F’ by the Better Business Bureau.  According to the BBB’s website:

“BBB assigns grades from A to F with pluses and minuses. A+ is the highest grade and F is the lowest. The grade represents BBB’s degree of confidence that the business is operating in a trustworthy manner and will make a good faith effort to resolve any customer concerns.”

Ouch.

According to the rating, the BBB cited the following reasons for its rating:

  • Number of complaints filed against business.
  • Failure to respond to complaints filed against business.
  • Length of time business has taken to resolve complaint(s).

Of the complaints filed, the two largest issues were ‘Billing or Collection Issues’ (13) and ‘Customer Service Issues’ (12).  Given the inherent nature of how business is conducted on Second Life, whereby Linden Labs actively encourages users to create their own virtual goods based business with real-money transactions happening on the back end (secondary marketplace), the in-game economy is ripe for a virtual fraudster’s picking if adequate and preventative measures are not securely in place.  Virtual economies place developers and publishers in a highly complex ecosystem of millions of virtual (and real) transactions occurring on a daily basis.  If the economic backend is not fully mapped out, including room for unlimited scalability, anti-fraud measures, and the ability to identify and limit known ‘trouble makers’, a myriad of potential virtual world problems can balloon over night.

To be fair, let’s look at this rating with a grain of salt.  The BBB “F” rating was initially reported by (the infamous) Tizzers via twitter.  If you’re not familiar with Tizzers’ story, he’s the guy so knee deep on Linen Lab’s s#*^ list that at one point Linden Labs banned every avatar that had the first name of Tizzers.  As a home for your alter ego, the likelihood of some serious draaaahma  going down on (and sometimes off) Second Life is quite high (love triangle murder, anyone?).  That said, it is entirely possible that some disgruntled Second Life residents may be artificially inflating the numbers by filing baseless claims with the BBB for fun.  And let’s be fair, when was the last time you heard a satisfied customer as or more vocal than the dissatisfied customer?

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How microtransactions have the potential to generate more revenue than subscriptions

Wednesday, October 8th, 2008

The world of online gaming has come a long way since it’s early inception.  We’ve all read articles in the New York Times, Cnet, and VentureBeat, but when Dan Miller, a Senior Economist on the Joint Economic Committee in the U.S. Congress writes up an article regarding free-to-play vs. subscription based fees, I for one sit up and listen.

Dan wrote an outstanding take on RMT (Real Money Transactions) vs. Subscription models last week.  Thankfully, this guy (probably) spends more time reading Law papers than most of us, and happened upon a paper written by Richard S. Eisert and S. Gregory Boyd titled “Virtual Property – Business Models and Pitfalls”.  It originally appeared in the September 2008 issue of The Metropolitan Corporate Counsel.  Both Eisert and Boyd are attorneys at Davis & Gilbert LLP.

Miller is quick to point out that a large majority of the paper is centered around (virtual) property rights issues, Eisert and Boyd make a few statements that are HIGHLY note worthy in the free-to-play/microtransaction industry:

“… traditional subscription models and even advertising are relatively blunt instruments for monetizing online worlds. Both of these methods tend to assign the same value to every customer. A subscription charges a customer a monthly or annual cost and advertising pays per user or per view at a set cost. But, people do not value goods this way. Each person places a different value or ‘willingness to pay’ to be a part of an online community. RMT helps companies extract that value.” (emphasis added)

They then continue on to explain the benefits of RMT if used correctly:

“… RMT allows game companies to satisfy that need and extract appropriate value as well by ‘fine tuning’ the price point so that each user pays the price the service is worth to him individually.”

Doing what he does best, Miller went on to break it down in everyday terms that not just an economist can understand.  He’s prepared two graphs for us illustrating a player’s willingness to pay.  Based on a flat rate subscription plan, this graph makes it clear to see that subscription based plans are losing money, quite literally, on both ends.  Miller charts out two unique types of players: Those that simply find the game (subscription) far too costly, and those that are willing to pay even more to enjoy their gaming experience.

This second graph shows the same willingness to pay curve, but cuts the flat rate out revealing an increasing scale of willingness to play AND revenue across the board.

Dan does carry on in the comments section of this article concluding that the graphs are meant only as a picture perfect world hypothetical situation.  It’s a duly noted fact that the willingness to pay curve will actually have a much steeper curve at the left side, as there is bound to be a large percentage of players that are simply unwilling to pay a cent, and therefore using up resources without paying for them, making those that do pay cover the costs for all.

In pure economic theory, these graphs make a clear cut case for free-to-play games supported by microtransactions.  Granted, you’ve got to take into account 1001 variables, but at it’s heart, I believe Miller’s principles to be sound and make a solid case for microtransaction based gaming.

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fatfoogoo to Offer Micropayment Software for Project Darkstar

Thursday, September 11th, 2008

Monetizing Software Services Now Available to Thousands of Game Developers in Sun Sponsored Community

fatfoogoo, the leading provider of in-game commerce ecosystems, today announced that it will enable integration of its microtransaction software with Project Darkstar, an open source development environment created by Sun Microsystems Laboratories, that caters to the online games, virtual worlds and social networking industries. In a first step, fatfoogoo’s monetizing software services, such as virtual item trading, subscription management and in-game economic control, are now available to thousands of developers in the Project Darkstar Community.

fatfoogoo is the first company to offer commercial billing and transaction software that is explicitly designed to work with Project Darkstar technology. Project Darkstar simplifies the development of online games that take full advantage of today’s multi-core processors to deliver a new generation of scalability. Pairing fatfoogoo with Project Darsktar opens these games and virtual worlds to real money transactions, by enabling developers to leverage fatfoogoo’s secure and easy-to-use micropayments for in-game transactions.

“The work that fatfoogoo is doing to extend the reach of Project Darkstar exemplifies and underscores the value of open source communities,” said Karl Haberl, Director of the Project Darkstar research initiative at Sun Microsystems. “fatfoogoo has openly shared their expertise with others, enriching the Project Darkstar Community with their code contributions, interactions with game developers, and now with commercial software offerings. We are very pleased with the positive results of fatfoogoo’s Community participation, including the new opportunities they have presented to developers of online games, virtual worlds, and social networking applications.”

“We are bringing microtransactions first to the publishers and developers and, as a result, to the gaming community,” said fatfoogoo CEO, Martin Herdina. “Implementing micropayments into a game is a complex process that needs close attention. We make it easy for game developers to integrate our services into their games, so they can focus on their core competence. The real beneficiaries, however, are the gamers who can now easily make small and secure payments within the flow of the game.”

About fatfoogoo

fatfoogoo is the leading in-game commerce ecosystem for monetizing online games and virtual worlds. fatfoogoo’s solutions allow both publisher-to-player and player-to-player financial interaction, as well as traditional user and subscription management. Publishers can choose white label turnkey solutions or individually configured modules. Founded in 2006 by Daniel Petri and Martin Herdina, fatfoogoo is headquartered in Austria and also has offices in the US and the UK. For more information, please visit www.fatfoogoo.com.

About Sun Microsystems, Inc.

A singular vision — “The Network Is The Computer” — guides Sun in the development of technologies that power the world’s most important markets. Sun’s philosophy of sharing innovation and building communities is at the forefront of the next wave of computing: the Participation Age. Sun can be found in more than 100 countries and on the Web at http://sun.com.

About Project Darkstar

Project Darkstar is software infrastructure designed to simplify the development and operation of massively scaleable online games, virtual worlds and social networking applications. Created by Sun Microsystems Laboratories as a research effort, it is today advanced as an open source project through the Project Darkstar Community. Learn more at http://www.projectdarkstar.com.

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