In-Game Economies: How and How not to do it. Week 1

With recent outburst over Electronic Art's system of micro transactions in their games, most notoriously in their mobile apps, I felt that it would be good to look at a model of micro transactions that works. Valve's three flagship games, Counter Stike: Global Offensive, Team Fortress 2, and Dota 2, are the shining examples of how good customer service can expand player base, maximize profits, and keep users happy. In early 2014, Valve hosted an event called Steamworks, whose aim was to advise game developers who want to publish their game on the Steam distribution service. Among the many topics talked about, the one concerning in game economies and micro transactions was the most prolific. Here is the video of that presentation; it is long, but very informative:

Kyle Davis, the presenter, focused on five main points throughout the video:
1) Focus on persistent customer value: "Making sure that customers will be happy about making a purchase and make sure they stay happy." Valve's model wants players to be confident about the purchases they make and continually be happy with them over the long run. To avoid regret, Valve makes sure they describe clearly the products they're selling to avoid ambiguity and they keep the value of such items through their trade system.
2) Positive Externalities: Making sure that the purchases people make do not negatively effect  someone else's experience  is key. Including purchases that remove barriers in the game and give an advantage to a player over those who didn't invest money only hurts the consumer. Valve's outlook is to make purchasing opportunities that benefit the players in the game as well as improving the game overall.
3) Make everything tradable: As Kyle Davis puts it "Trade makes every item that is tradable to be worth more. It makes the trading system more valuable, and makes users more valuable to other users." Cross-trade between different games encourages players to invest more money into the system and makes everyone happier overall.
4) Random distribution: Random distribution of in-game items through "drops" is superior to static distribution, because it allows game developers to have more flexibility over wealth and power distribution. Players will have an incentive to play more in order to hopefully receive a drop that is worth a lot.
5) Let users make value for each other: Prices of tradable items are not dictated by the game developer, but by the players themselves. They will take an active attempt to make improve the quality of the game they play by creating new items, new updates, and new communities alligned for a particular goal. This allows the product to grow in ways that "couldn't be possible with just people at the office," as David explains.

After listening to the the multiple examples that are given in their case examples, I believe that any game should include an in game trading system that models Valves' in order to receive longer term customer satisfaction. In the case of EA, many people were outraged over their business models of putting artificial boundaries in their game that could only be surpassed by investing into the game. The term "free to play" gives a bad taste in the mouth of the gaming community, and rightly so; they are, in most cases, very limited in their features unless money is invested. In the end, they end up not being "free to play", but rather "pay to win."

In my experience with playing Counter Strike, the in game trading system is what keeps me coming back and investing my time in playing. The insane amount of hours that I have in both Team Fortress 2 and Counter Strike is a monument to that hold that Valve has over their customers. By maintaining a good relationship with its player by way of its trading and micro-transactions, both those who spend money and those who don't end up benefiting each other, and Valve is able to make a huge margin of profit. If every appropriate candidate for an economy was given one, companies would be able to sell more and have a higher customer appreciation rating.

In-Game Economies in Team Fortress 2 and Dota 2 [Motion picture]. (2014). United States: Youtube.