Virtual Currency Monetization- A source of revenue for Application developers

Earlier, I explained how virtual worlds like social networks monetize their web traffic. With monetization defined and how virtual worlds making money through ads discussed earlier, now we will see how application developers can earn revenue by monetizing their traffic.

What is Virtual Economy?

Virtual economy is a way to generate income by monetizing your web traffic. It can be thought of as the real economy with the difference in the purpose of its utilization. Virtual economy is mainly used for recreational activities as virtual worlds are solely for entertainment activities whereas the real economy is generally used for fulfilling the needs of life.
Therefore, Virtual Economy can be best defined as a financial system implemented in a virtual world usually for gaming purposes just as the real economy of the real world.

Virtual Currency Monetization:

Let’s start with an example of a game application “Farmville”.
Farmville by far is the leading social game on Facebook with over 60 million monthly active users. Users play to have a virtual farming experience. They plow, they plant and harvest with incentives of free daily coins allowing them to have a free farming experience.
However, to buy seeds, trees, animals and other accessories to decorate and expand their farm, users need virtual currency which in this application is known as Farm coins and Farm cash.


How does it work?

In general, in all such MMOGs, users buy Virtual currency to earn points to upgrade their level and compete with their friends which is implemented in either of the following two methods. These are the methods through which application developers monetize their applications:

• Purchasing virtual currency via direct payment methods:
This further includes two possibilities:

* Using Credit card Or
* Through PayPal

For those who don’t know, PayPal is an online payment method for making online transactions.

• By completing offers:

This is an alternative method for earning points in a social game. Users complete advertised offers from the available ones. This could include deals from as simple as just paying a visit to a website or registering for an account, online surveys or may even include paid offers.

These offers are from third party services which in turn, earn revenue by driving the web traffic to their websites. Thus, advertisers use these applications for their purpose and pay per offer completion to the offer platforms.


Economical Stability:

The virtual currency monetization is a stable financial system just like a real world economical system. Below is the Virtual Economy model applied for monetization in the social networks depicting the stability and motivation for the application developers.