What Is Game Economy Design? A Detailed Analysis

Game economy design is much more than just monetization. An intriguing game economy design is what keeps the game ticking, as it is a quiet yet crucial force behind player engagement that defines how gamers progress through the game. This blog will get you through a detailed exploration of in-game economy design and how to create one that makes your game stand out from the crowd, impacting the overall game revenue and success.

Be it Coins and Gems in Bal Hanuman, Gold, and Dark Elixir in Clash of Clans, or V-Bucks in Fortnite (Battle Royale), they’re a few of the well-designed game economies, making their respective games standout. Game economy design is about creating and managing the economic systems within a video game.

It includes integrating currency, resources, and trade systems that hugely influence the player’s progression, motivation, and overall game enjoyment, often to maintain balance, engagement, and profitability. It fosters a seamless, more enjoyable player experience while ensuring the game remains sustainable down the line.

The key purpose behind the game economy design is to provide players with an opportunity for economic growth and advancements within the game setting while generating revenue for the game studio. This blog will be navigating you through a detailed analysis of everything you need about game economy design and how its benefits.

What is Game Economy Design?

Game economy design is the process of creating and managing the in-game resources, currencies, and progression systems. It ensures a balanced, engaging, and rewarding gaming experience for gamers. Game economy design aligns players’ progression with game monetization strategies, ensuring fairness in the game while fostering player retention and revenue. A tailored economy design optimizes gameplay and encourages revenue while keeping imbalances at bay.

The Goal of Game Economy Design

The game economy design aims to create a balanced, engaging, and rewarding in-game experience for players while promoting the game’s overall objectives which include the following:

• Engagement and Retention: Motivating the gamers by providing them with meaningful progression and rewards.
• Fairness and Balance: The game economy mustn’t feel “pay-to-win”  or refrain for free players completely from advantages. Therefore, striking an appropriate balance is crucial for keeping players interested without frustrating them, or alienating those who don’t spend money.

Monetization: In case a game is free-to-play or has in-game purchases, it is required to create a scenario for the player to trigger investment, and, that too, in a way that feels fair and non-exploitative.

Learning to Use Taps and Sinks

Taps and sinks are mechanisms that control and manage the flow of resources, engagement, and economic balance. In-game economy design, taps tend to determine the rate at which resources such as points, or coins enter the system, whereas, sinks manage the rate at which these resources exit.

The concept of taps and sinks is applied in industries such as cryptocurrency (minting vs. burning tokens), FinTech (cashback vs. fees), healthcare (wellness incentives vs. deductibles), and urban planning (transport subsidies vs. tolls). They balance the resources and their expense in the game economy while driving desired behaviors.

How To Balance Sources And Sinks?

When it comes to balancing sources (inflows) and sinks (outflows) in a game economy design, you need to have a predetermined strategy. When done properly, it prevents inflation, and ensures long-term sustainability, while keeping players players engaged. Here’s how to balance sources and sinks in the game economy:

• Define Core Economic Goals: Determine the type of economy you need in your game, for example, open, closed, or hybrid. Also ensure if you want slow progression (grinding) or fast-paced rewards, and whether you want resources to have scarcity, or be easily available.
• Control Inflation (Too Many Sources): Ascertain the availability of the currency, as too much availability of currency might cause it to lose value. You can introduce soft caps on earnings, for example, a daily rewards limit. Limit rewards over time (diminishing returns). You can also increase sinks proportionally, for instance, by higher upgrade costs, taxes, and auction fees.
• Prevent Deflation (Too Many Sinks): Prevent deflation, as when players lose too many resources too quickly, they might feel progression is impossible. Provide consistent sources, such as daily quests, and login rewards. Adjust pricing dynamically as per the economy’s health, while providing recycling of resources like trading old items for partial value.
• Balance Sources and Sinks with Dynamic System: Implement a scaling costs structure in which price increases as players progress, for example, higher-level weapons cost more. Ensure adjustable drop rates by modifying loot probabilities based on the state of the economy. Apply in-game transaction fees like auction house tax. Employ temporary sinks such as seasonal cosmetics, exclusive upgrades, etc.
• Test & Iterate: Make use of A/B testing to check economic stability. Keep track of player behavior, ensuring if they are hoarding resources properly or if they are always broke. Make adjustments to the resources & sinks based on real-time analytics.

Relationship Between Game Economy Design And Monetization

Game economy design plays a vital role to influence spending behavior across industries like FinTech, eCommerce, Retail, EdTech, healthcare, and the like. It also plays a significant role in video game monetization, specifically in free-to-play games or mobile games. One should design a game economy in such a way that encourages interest and spending with no counterproductive impact on engagement.

Game economy design and monetization tend to be closely linked together. It impacts how users, customers, and players interact with the service provider (game, banks, educational institutions, etc.), and how spending is encouraged. A well-designed game economy ensures the right balance between rewards, progression, and engagement. It leads to the natural flow of monetization, such as in-app purchases or premium content in games.

When there is a rewarding and fair game economy, users are more likely to spend for convenience customization or user experience enhancement, eventually giving a boost to revenue and success.

Key Components of Game Economy

Game economy design involves several components and the following are some of them: 

• Resources: Resources refer to those specific items or materials that gamers need to collect, trade, and use to progress in the game. They are likely to be finite or replenishable, and their scarcity drives the in-game behavior.
• Currency Types: Currencies tend to be the primary medium for transactions that include both soft and hard currencies like “energy” and “gems,” and premium currency, which gamers use for in-game progression.
• Progression Systems: These include experience point levels, or skill trees, using which players advance like upgrading characters, leveling up, and unlocking new content or achieving milestones. Game designers should intertwine the game’s progression system with the economy to deliver a rewarding experience.
• Rewards & Incentives: These are achievements, loot boxes, and daily rewards to keep players engaged in the game and foster incentivized purchases.
• Marketplaces and Trade: There are games with player-to-player trading or auction houses providing in-game goods for game progression.
• Monetization Methods: They involve in-app purchases, subscriptions, ads, or battle passes, needed to generate revenue while keeping the players’ engagement maintained.

Types of Game Economies

Choosing the type of game economy is essential before you move on to the designing. Look at the pointers below to see the types of game economies: 

• Open Economy: Open economy allows for real-world transactions like purchasing in-game items or currency using real-world money. Free-to-play games are more likely to have open economies.
• Closed Economy: Closed economy allows all in-game transactions to happen within the game itself. No player can trade currencies and resources for real-world money. The very model is common in premium, or pay-to-play games.
• Hybrid Economy: A hybrid game economy includes both open and closed economy elements. For instance, a game may have in-game purchases, allowing players to earn currencies through gameplay. Some games like EVE Online and World of Warcraft allow players to even sell items to other players for real-world money.

Best Practices to Keep the Economy Balanced

As discussed above, the game economy is one of the crucial elements of game monetization, however, balancing is significant to a successful game economy. The key challenge here is to create a game environment wherein the player experience is motivated to spend money while avoiding making non-paying players feel kind of left behind. Here are the core principles of a successful game economy balancing:

• Implementing Soft Currency and Hard Currency Appropriately:: There are games out there that use either soft currency, hard currency, or both types of in-game currencies. Players earn soft currency by playing while grabbing big hard currency by purchasing in exchange for real-world money. Game development companies should ensure that there is an appropriate relationship between the two types of currencies to encourage spending.
• Ensuring a Sence of Agency: There should always be a sense of agency in game economy. For example, in a video game, players must feel they have appropriate choices for how they spend in the in-game economy. Be it spending grinding for resources or in-game purchasing, game economy designers need to make sure players feel a sense of agency while interacting with game economy.
• Making Microtransactions Optional: Items that foster progression should be purchased using real-world money, however, the game owners should make sure these microtransactions are optional, delivering value but not locking essential content behind paywalls.
• Rewarding Non-Monetary Progression: There should be meaningful rewards but not money for players who invest time in the game, keeping the game fair and enjoyable for everyone.
• Avoiding Pay-to-Win: It’s crucial to create a game economy design and monetize the game, however, excessive favor should be avoided for players who spend real money and outpace those who fail to do so. That’s because it might lead to frustration, and hurt the game’s long-term health.
• Soft Caps and Time-Based Progression: Game owners should introduce soft caps, or time-based progression to keep players from feeling pressured to pay for fast progression.
• Resource Scarcity: If there are more than enough resources, they might lose value, while if they are too scarce, players are likely to feel stuck or forced to spend money. Hence, managing resources appropriately is essential for a smooth game economy design.
• Transparency: Ensure players understand the way the economy works and what they are spending on. Because if the reward is done right, players feel they are getting valued for the money they spend.
• Earning Opportunities: Game owners should offer diverse ways for players to get resources or currency like daily rewards, special events, and achievements to ensure there is always a sense of progression in the game.
• Frequent Testing and Iteration: The game economy should be tested and tweaked continuously based on players’ feedback and analytics to avoid a lack of scalability in the game.

Common Pitfalls in Game Economy Design

Knowing how to balance the game economy is right, however, you should also know how to avoid common pitfalls when you design it. Avoide following pitfalls when conducting game economy design:

• Lack of Player Choice: Lacking players’ choices in the game economy may cause them to feel overly exasperated, losing their interest in a particular game.
• Over-Complexity: Avoiding overly complex game economics with too many resources and currencies is crucial. This is because it can confuse gamers and make it tough for them to understand the actual value of what they use.

• Inflation: Denying bombardment of resources and currency is crucial as it can devalue the items and make the economy feel unbalanced.
• Pay-to-Win Imbalance: In case the paying players have a clearly visible advantage over non-paying players, It is more likely to ruin the game’s reputation, leading to a reduction in user engagement.
• Short-Term Monetization Focus: Focusing heavily on monetization can lead to an exasperating experience for players, specifically when monetization tactics disrupt the game’s flow.

Examples of Successful Game Economy Designs

There is a wide range of game economy design examples, however, World of Warcraft (WoW), Path of Exile, Minecraft, and Fortnite are among the top ones. Look at the example below to know the top-notch examples of game economy designs:

World of Warcraft

World of Warcraft features an excellent set of game economy, allowing players to earn gold and trade items. The game economy is created on the player-to-player interaction, focussing on auctions, and creating loot drops. Moreover, WoW’s economy incorporates both free-to-play elements and optional paid subscriptions.

Path of Exile

Path of Exile is a free-to-play action RPG that has a deep loot-based economy, focused on providing gamers with a variety of item types capable of being crafted, traded, and enhanced. It has most tradable items including currency to be used to upgrade or craft gear. It enables players to participate in a highly dynamic marketplace. 

Minecraft

Based on resource collection, crafting, and trading, Minecraft has its game economy designed simply. The very game design has a robust community-driven aspect where gamers trade items and resources. Its open-world design enables players to set up their economies and establish personal or server-wide trade systems. 

Moreover, resource scarcity, for example, rare ores such as diamonds, fosters a sense of value, driving player interaction. 

Clash of Clans

Supercell’s design for Clash of Clans ensures an excellent balance between fair progression and monetization. Game enthusiasts can progress in games through hard work or can spend money to accelerate the process of progress. The best thing is that the game never restricts critical content to the paywall. 

Fortnite

Fortnite operates on a free-to-play model backed by an in-game currency system, V-Bucks. Players need to purchase V-Bucks using real money, which allows them to bury cosmetic items like emotes, skins, and battle passes from the in-game shops. The cosmetic-only monetization model is successful as it doesn’t try to take inappropriate advantage while still providing a rich set of incentives for spending money on cosmetics for game progression. 

Monitoring and Iterating the Game Economy

Designing a game economy that allures gamers and makes the game interesting is crucial, however, only the creation of a game economy fails to last longer. Therefore, owners should monitor and iterate the game economy after a certain period of time. Here is how to do so: 

• Data Collection: Frequently accumulating data relating to the player’s behaviors like current users, in-game purchases, progression speed, and many more intending to better understand the way the economy works.
• Player Feedback: Constantly listening to the community, determining whether they are complaining about game progression being slow or they are getting forced to pay for resources is the key to balance the game economy.

Continuous Adjustments: Make small, and iterative changes to the economy as per the data gathered. They can be event-based changes, resource rebalancing, or making adjustments to the prices for in-game items.

300Mind Crafts Engaging Economy That Fuels Your Game’s Growth

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If you’re someone on the lookout for a game design agency for game economy design, you can simply contact us and we’ll help you get there with all convenience. It will help you take your game to the next level, opening up excellent opportunities for growth and success.

FAQs on Game Economy Design