Proposal

Pricing Virtual Assets In The Real World

Ivan

2007/2/13 Thesis Proposal 2

Outline

• Background

• Motivation

• Problem

• Related Work

• Methodology

• Experiment

2007/2/13 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 player

s’ 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

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Background (cont.)

• Use NTD to exchange the virtual coins

• Ex. 1:1 exchange (from 天使之戀 )

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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

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Problem

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

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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

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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

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Methodology

1. 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

2. Find the NTD of the virtual assets, similar or the same ones, in real market

- Similar “function” or “attribute”

3. Use statistic scheme to find the relationship between DD and NTD

- Interpolation, Linear regression, Iteration…

Define DD func.

Find NTD

MappingDD & NTD

Data Set

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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

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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

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Data Set

• Get data from the game company (天使之戀 )• Choose the items (virtual assets) that are repres

entative (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…)