How instability in virtual economies of mobile digital games drives and ruins profit

Abstract

The digital gaming business has changed in the last years. Digital games are no longer just products. They developed into services. People play games not only on a stationary device, but on mobile devices, too. The change of gaming devices also had an impact on game design. Competition between mobile digital games mostly takes place at a download price of zero. Today the Freemium monetization method is the dominant monetization method. Players of digital games often have to go through a core loop by repeating the same tasks inside the game. The stability of the virtual economy inside the game affects the game’s core loop. This paper discusses the role of instability in virtual economies in the context of core loops. A small instability inside a virtual economy can increase revenue of a digital game. Players tend to stay in a game because of sunk cost fallacy. If instability inside a virtual economy happens for a too long time players will quit playing and revenue will decrease.