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Maximizing Profit for Game Companies through Virtual Asset Pricing

This thesis proposal explores setting NTD prices for virtual assets in online games to maximize profits. It delves into user perceptions, pricing strategies, and DD functions of virtual assets to optimize economic benefits. The methodology involves data analysis, finding NTD mappings, and challenges in tuning NTD values for different items.

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Maximizing Profit for Game Companies through Virtual Asset Pricing

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  1. Proposal Pricing Virtual Assets In The Real World Ivan

  2. Outline • Background • Motivation • Problem • Related Work • Methodology • Experiment Thesis Proposal

  3. Background • There are more and more free online games • Ex. 天使之戀、跑跑卡丁車、楓之谷 • However, the game company sells virtual assets in the real market to make profit • Ex. Fashion clothes, items that will improve the players’ ability • “The market for virtual-asset trading could hit $1.5 billion in 2005 and $2.7 billion in 2006” [1] [1] http://www.forbes.com/2005/10/20/onlinegaming-worldofwarcraft-gaming-cx_1021wharton.html Thesis Proposal

  4. Background (cont.) • Use NTD to exchange the virtual coins • Ex. 1:1 exchange (from 天使之戀) Thesis Proposal

  5. Motivation • The game company would like to make maximal profit • But how to set the NTD price of the virtual assets • Set too low is no economic benefits • Set too high nobody will purchase Thesis Proposal

  6. Problem • For game companies, how to set the NTD price of the virtual assets to maximize the profit gained from the free games Thesis Proposal

  7. Related Work • A few previous work show that the different user perceptions or designer strategies of the real-money trade of virtual assets [2][3] [2] Vili Lehdonvirta, “REAL-MONEY TRADE OF VIRTUAL ASSETS: NEW STRATEGIES FOR VIRTUAL WORLD OPERATORS”, Proceedings of Future Play, 2005 [3] Vili Lehdonvirta, “Real-Money Trade of Virtual Assets: Ten Different User Perceptions”, Proceedings of DAC 2005 Thesis Proposal

  8. Related Work (cont.) • Traditionally, price of real assets may be set by • Cost plus expected profit • Market Survey • Competition…[4] • Virtual assets is unusual • Physical cost is implicit (i.e. design cost) • Easy to distribute (i.e. copy) [4]Harvard Business Review Feb 2005 Thesis Proposal

  9. Methodology • Use the data from game company to find the “Desire Degree” (DD) function of the virtual assets - Deeply depend on the data - Direct proportion to price - Inverse proportion to time in market • Find the NTD of the virtual assets, similar or the same ones, in real market - Similar “function” or “attribute” • Use statistic scheme to find the relationship between DD and NTD - Interpolation, Linear regression, Iteration… Define DD func. Data Set Find NTD Mapping DD & NTD Thesis Proposal

  10. Challenge • How to discover the base NTD, i.e. the reasonable NTD of items • Straightforward way DD X (200) Y (300) Z (400) NTD X’ (50) Y’ (20) Z’ (40) # low high medium • Use the correct DD func. to tune the NTD  Maximize the profit Thesis Proposal

  11. Experiment • Verify • DD func. • Mapping DD onto NTD • Confirm if the function can be applied to other games • Trace the profit of the game company Thesis Proposal

  12. Data Set • Get data from the game company (天使之戀) • Choose the items (virtual assets) that are representative (i.e. popular, common) • Characteristics of the chosen items • Transaction record • Between players and Virtual market (time, customer, price) • Between players each other (time, C/S, price) • Quantities of items in game (time, amount) • Attributes (level, attack, armor, restoration…) Thesis Proposal

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