Monetization models in Farmville and The Sims 3 DLC

I. User loyalty

The Sims, as seen in its last instalment (The Sims 3) builds upon a combination of
different monetization models: retail sales of the game (about 40 € per unit) and expansion
sales (based on the huge critical mass of players), downloadable content and even
product placement. All of these, along with the support to user created content and the
fostering of an exchange economy between players, helps to create a multidimensional
world with different entry gates, a network of game experiences that support each other,
giving consistency to its 'virtual' value. When selling goods that exists only in screen, this
tangibility becomes very important.
Let's focus in this idea of helping users create and share their own content. Here, the
clever move is to make players invest in the game. They stake their time and creativity,
thus adding value to the game and helping to expand its multidimensional aspect. Playing
the game may be easy, but if a player wants to engage in a 'creative mission', then she
needs to invest much more time, looking for tutorials and being in touch with other, more
experienced players. Now, that is a good way to foster user loyalty. Specialized forums
and social networks will be the meeting points. EA does well in providing some of those
socializing tools via the official site of the game, side by side with the online store, but
that's not enough. Extra value is added with helping players to create and, overall, publish
their stories in the official site (in video or 'story' form). Given the 'doll house' metaphor
which is at the base of the game, the narrative aspects of it are very important. People
play stories with their dolls, so let's help them to share it with others. To tell others about
what happened to you in a game is yet another way to expand your gaming experience.

II. Expansion

Of all the players that may indulge in a casual game, only a small percentage will actually
spend money on it. But, what if 'all the players' means millions of them? Then, this small
percentage may well be spending millions of € to play. Thus, FarmVillle puts all its stakes
in the virality factor. It's not that 'if I like the game I'll invite some friends to join.' I need to
invite some friends in order to play.
My comment here will focus on the use FarmVillle does of the gift culture. It is part of a
social contract printed somewhere in our cultural dna: whenever someone gives
something to you, you must give something back.
The designers of FarmVillle take advantage of that:
– All the game is built upon the gift mechanism. Giving is a regular, intrinsic part of
gaming in FarmVillle, not a peripheral mechanism.
– Gifts are short lived: you have only a limited period of time to accept the present,
otherwise you lose it. Thus, the virality cycle gets shortened.
– Daily available gifts encourage the regular engagement with the game.
– Bouncing mechanisms: to give back is at only 'one click' distance. You have all your
Facebook friends at a click!
 – Gifts have value. The economy FarmVillle constructs is based on the scarcity and
uniqueness of items. Some of the most expensive and valuable items in the game
can be accessed through gifts. So, when you are giving something, you are not just
annoying your friends, you are actually helping them with their farms.
– Giving is a nice thing to do. The game is apt for all ages. So, the potential gamer
base is the 500 million Facebook users!
– The average number of friends a user has in Facebook is 130, so let's imagine that,
in every cycle, one gamer invites only 6 of its 130 friends to join the game. And let's
assume that of them, only 20% accept the invitation. The virality coefficient (n.of
invitees per cycle x n. of conversions) is over 1 (1.2 to be exact), allowing the
growth to continue over time. Not bad. Another important variable is the fact that
most users will continue sending invitations beyond their initial engagement with
the game, since it's an important requirement to continue playing and growing. The
viral cycle time is very short: Facebook is visited by most users at a daily basis,
so the chances to see the invitations in a short time are high. Then, you only need a
few mouse clicks to start playing. Finally, inviting some friends is a matter of a few
more clicks, since they are already 'collected' in your Facebook account. Shorter
viral cycles multiply virality exponentially.

III. Comparison of the monetization model

The Sims FarmVillle

Monetization model
'Real vs. Virtual' money
- Retail sales of the game and
expansions.
- Downloadable content sales from
The Sims 3 store.
- Product placement. Eg. New
Renault car featured as an item
advertised in-game and on TS3
website.
- Simpoints are used at the store
as virtual currency. Simpoints can
only be buyed with real money.
Sales of virtual money to buy
virtual items.
2 virtual money types:
- 'coins'. Easy to get, fostering the
game 'abundance' experience
- 'cash'. Difficult to get, necessary
to buy the most valuable items.
The only way to have plenty of it is
to buy it with real money.

Exists outside website
Control of scarcity of content
Estimate number of players
Estimate % of players that actually % unknown
spend money
(Now on I'll focus on the DLC No, depends totally on the
Store) existence of the app site.
Yes, can be copied and shared
between machines. An actual data
transfer from the EA to the player
takes place when she buys it.
There are other sites offering The Total control, it's an extremely
Sims content, and user created closed system.
content is fostered by the tools
provided with the game.
6 million (unique visitors to TS3 80 million (source: ABCNews)
Store during 2009)
15% (ABCNews), with 5%
spending 20 $ a month
 The Sims FarmVillle
Average product price - 25-200 Simpoints x individual - Pack of 115 Farmcash – 23 $
objects (6 different packs)
- 700-5000 Simpoints x pack

Formulation

Since we are talking about virtual goods, I would not base my model upon the amount of
items to sell (you have to produce only 1 virtual item to sell it millions of times without it
ever withering). Instead, I'd consider a general amount paid by every user at a regular
basis (eg. per month). Still, you need to produce a base catalogue of items and many
novelties coming out regularly. These can be 'daily offers', special 'sales of the month' or
themed products (like 'St. Valentine' themed items). Their mission is to help meet the
company's objectives for a period's sales, boosting them at specific times, and to keep the
interest of the players fresh. No direct correspondence is mandatory between the amount
or price of items and the income. Items, packs and their prices are designed to guide the
player's decisions when he buys: would you purchase 25 Farm cash for $5.75 or the juicy
115 Farm cash pack for only 23 $?

So, taking the example of FarmVille, the variables to take into account are:
Ti: Total income.
P: the total base of players (an astonishing 80 M, let's follow ABCNews numbers)
Pp: the % of players that actually pay to play.
Am: the average amount that players spend at a regular basis, eg. a month. Let's
assume that if the 5% spend around 20 %, the average is about 15 € per month.

Ti= P · Pp ·Am

That is, in theory, if the number of users were constant. In FarmVille, time is a very
important variable. It's a (in principle) short-lived game that needs an explosive virality to
work. The idea is to harvest the most, fast. And virality has its cycles, so the amount of
users will not be a static number (here we assume that 1 cycle will take 5 days):

1rst MONTH 2nd month 3rd month

Cycle 1 Cycle 2 Cycle 3 Cycle 4 Cycle 5 Cycle 6 Cycle 12 Cycle 18
Starting Customers 10,00 22,00 48,40 106,48 234,26 515,36 58.431,83 6.624.995,29
Invites Sent 60,00 132,00 290,40 638,88 1.405,54 3.092,18 350.590,98 39.749.971,75
Conversions to new custs 12,00 26,40 58,08 127,78 281,11 618,44 70.118,20 7.949.994,35
Ending Customers 22,00 48,40 106,48 234,26 515,36 1.133,80 128.550,03 14.574.989,64
Ending paying customers 3,30 7,26 15,97 35,14 77,30 170,07 19.282,50 2.186.248,45
TOTAL INCOME per 5 days 8,25 18,15 39,93 87,85 193,26 425,17 48.206,26 5.465.621,12
Monthly income: 772,61 39.392,40 4.466.306,12

Timing would be the main difference with the The Sims Store model, where we find a peak
of users at the game's launch. The fact that users can find extra content in different places,
not only at the official The Sims store, and that they can even create their own, may be a
handicap when getting players to pay for new content. But, still, the store is not the only
way EA monetizes the game, but only a part in a larger strategy.

carmeromero@aavc.net