Acquisition, Retention, Monetization: Final Report

Today’s HIIT Gamification of Services Seminar in Helsinki also doubles as the final seminar of a research project called ARMS: Acquisition, Retention and Monetization in Virtual and Social Spaces, in which I’ve had the pleasure of working during the past couple of years. We are publishing the final report of the project here on VERN. Enjoy!

ARMS: Project Final Report – Introduction

The ARMS research project – short for Acquisition, Retention and Monetization of Virtual and Social Spaces – started in fall 2009 as a part of Tekes’s (The Finnish Funding Agency for Technology and Innovation) Spaces and Places research program.

The mission of ARMS was two-folded. First, Tekes’s program called for projects that would study the cross-section of three sorts of spaces: the virtual space, the physical space and the social space. ARMS did exactly this. The scope of our project ranged from virtual hangouts, to social networking services and to media companies. On a conceptual level, it even spanned brick and mortar businesses. The second mission was an internal one, set by ARMS’s project proposal in summer 2009: to investigate how strategies drawn from the virtual space could be used to enhance customer acquisition, retention and monetization in other contexts. In hindsight, this goal setting was timely: the term gamification became popular in the latter half of 2010, resulting in a surge of interest in the topics that ARMS was already studying.

The project was implemented in three phases. In the first phase, we began with an exploratory investigation of virtual design patterns used in virtual worlds, social networking services and games. The second phase consisted of identifying theories behind these patterns from social sciences, economics and marketing. In the third phase, these patterns were investigated in case studies of multiple services.

In terms of publications, the project produced nine articles in scientific journals and 11 conference and workshop papers, in addition to some that are still in review. Comprehensive internal technical reports were also created to serve as tools for subsequent research and as brainstorming documents for the project’s company partners. The cooperation with the industry partners was very positive and insightful throughout the entire project and the feedback we have received leads us to believe that the cooperation was likewise regarded as valuable by the companies.

This document summarizes the project’s results through 12 short essays, each describing one research area that resulted in one or more publications. The essays introduce the problem area, summarize some of the key results and highlight implications for business and design. At the end of each summary essay, there are links to relevant publications and presentations that interested readers can use to delve deeper into the subjects.

The ARMS project had a strong international dimension. Vili Lehdonvirta worked as a visiting scientist at the University of Tokyo’s Interfaculty Initiative in Information Studies, and Kai Huotari worked as a visiting scholar at the University of California Berkeley School of Information. We forged important new links, collaborating closely with the Virtual Worlds Observatory, a consortium of U.S. social scientists led by professor Dmitri Williams at University of Southern California. We also collaborated closely with our long-standing partners at Waseda University, Japan, lead by professor Tatsuo Nakajima, as well as with the project’s Iceland-based partner CCP Games and Sulake’s California office. These international exchanges continued our tradition of working with top research institutes in Japan and in the United States, and allowed HIIT to further strengthen its position as one of the global leaders in virtual economy research.

We would like to thank Tekes as well as our industry partners CCP Games, Frosmo, Ironstar Helsinki, Maxisat, Nokia, Palmu and Sulake for their financial support and for their curiosity. We would also like to thank the University of Turku, our co-research partner in this project, for seamless and insightful cooperation. And last but not least let us thank our brilliant colleagues who have worked with us on this project: Veikko Eranti, Juho Hamari, Matti Nelimarkka, Matti Näsi, adj. prof. Olli Pitkänen, professor Pekka Räsänen, Outi Sarpila, Juha Tolvanen, and professor Marko Turpeinen.

Kai Huotari                                                     Vili Lehdonvirta

Project manager                                               Report editor

Helsinki Institute for Information Technology HIIT
Aalto University / Univerity of Helsinki, Finland

Read the complete report here


Seminar on gamification and virtual economy

Date & time: April 25th | 10:00 – 17:00
Place: Arkadiankatu 28 – Class 4 – 3rd floor – Aalto School of Economics

Helsinki Institute for Information Technology HIIT with cooperation with Aalto Service Factory ASF is organizing a seminar on “Gamification” of services on 25th of April at the premises of Aalto School of Economics.

The seminar approaches the phenomena of Gamification from different inter-related perspectives: playfulness, game design, virtual economics and service marketing. The sessions will seek answers to questions such as how Gamification can be understood in the context of service marketing and what can explain its effectiveness as well as give in-depth insights into designing persuasive game mechanics for both Facebook games and more utilitarian services. We will also take a look into virtual economies, goods and currencies.

The seminar has a limited number of seats.

Morning session (10-12)

  • Kai Huotari (HIIT/Berkeley/Hanken School of Economics): “Gamification from The Perspective of Service Marketing”
  • Juho Hamari (HIIT/Aalto School of Economics) – “Gamification and Behavioral Economics”
  • Konrad Markus (HIIT) – “Saving is Fun! – EnergyLife, a Conservation Game in Households”

12:00 Lunch

Industry insights (13-15)

  • Aki Järvinen (Digital Chocolate): “Game design in Facebook games”
  • Marjoriikka Ylisiurua (Sulake): “TBA”
  • Juho Makkonen – (Avoin interactive Ltd / Kassi) – “Badges in peer-to-peer trading service”

Evening session (15-17)

  • Kai Kuikkaniemi (HIIT/Aalto School of Arts, Design and Architecture) – “Playification”
  • Pekka Räsänen / Matti Näsi (University of Turku): “User acquisition and positive user experiences. What implications can be drawn from population surveys?”
  • Vili Lehdonvirta (HIIT/London School of Economics): “Designing virtual currency for serious and playful purposes”

Designing Virtual Currency by Breaking (Almost) Every Rule in the Economics Textbook

I’ve neglected to post my Game Developers Conference presentation slides here. The talk was about designing virtual currency. Not how to design sources, sinks or markets, but how to design the actual objects that are used as money in a virtual economy, and how users interact with those objects. There is much room for innovation in that area, as a couple of historical examples show.

The slides themselves are mostly pictures. To get the full story, click through to SlideShare and check out the Notes tab, which contains an almost full transcript of the talk.

Abstract: Many games today feature virtual money of some sort, whether a “hard currency” sold for real money or a “soft currency” earned through play. The question that this lecture answers is, how do you design money? Not how do players obtain money, nor how do they spend it – but how do you design the money itself. Economists have identified around a dozen attributes of a good money – the kind of money that makes an economy efficient. These attributes make a great guideline for designing serious digital currencies. But in game design, we don’t always want things to be efficient – we might want them to be challenging and fun instead. In this lecture, we therefore turn the economists’ advice on its head and come up with a guideline for designing “bad money”! Both historical and virtual examples are included.