Board Thread:Game Discussion/@comment-33586551-20171128022420/@comment-28169398-20181021080835

JEM Racing wrote: Can someone make a clarification for me?

I dont fully understand why some people treat Gold as revenue for FM. I just find that to be redundant, considering they are the ones who distribute the currency, they can make as much fo it as they want. Is it only "revenue" because of the fact that the option exists to buy gold with real world currency? i.e. less in game currency available, equals more real world currency coming in from customers so they can get more real world currency?

Any help would be appreciated, thanks! It is because is how they transfer costs to the players in the Freemium Model.

For the most part the only way you can advance in the game is to buy and upgrade cars. The vast majority of this cost is in the form of Gold Purchase Prices or Upgrades. What we pay in gold to buy and upgrade cars is how FM covers their costs, and rewards and upgrade costs have to be in balance otherwise FM would incur real losses.

There are only 3 legitimate ways to get gold in the game.
 * 1) In-App Purchase: You make a purchase with your credit cards and get Gold (FM Revenue)
 * 2) Watching ads (FM Revenue)
 * 3) Playing the game (FM Subsidizing Players, technically an expense)

So you can clearly see that Gold generates revenue for FM.

What is not so obvious is the third one. This is where balancing the game economics and the psychology of the players in the Freemium model comes into play.

The more Gold that FM makes available within the game through play (Level ups, completion rewards, TT rewards, etc.) the more inflation there is in the game's economy. This is similar to what happens in real world scenarios, such as the hyper-inflation crisis in Venezuela.

Instead of the Government (Venezuela or FM) making currency available through revenue generating activities, they simply print it. Eventually that currency becomes worthless and has no purchasing power left. That is what happened with R$ in RR3.

Grinding (Farming, what have you) also creates inflation in the game, but this comes from the player's side. The more we run Le Mans, the more fame we earn. The more fame we earn, the more Gold we unlock for free. The more Gold that enters into the Game economy for free, the more inflation there is. The more inflation there is in an economy, the higher the prices get.

Both Governments and FM have to balance expectations however. For FM, they need to give players the psychological impetus to continue playing the game. They can do this with new cars and tracks, but they also need to satisfy the players reward centers and they need to award them with things when they complete a task or win a race. These rebates to the actual costs are what keep us coming back for more.

Even in a pay to play model, the game designers need to give players some form of reward, unless the purpose of play is an end, in and of itself, such as those that dedicated countless hours to flying Microsoft's Flight Simulator.

There are other ways of generating revenue. Sponsored events is one way. We saw this with the LEGO Time Trial Competition. LEGO sponsors the event and pays FM a fee. In exchange, they branded a car and added a button to LEGO's website.

Also if you look way back in the Amateur Category, there is HYUNDAI branding, with a Save The Children campaign. Hyundai purchased that ad space on the Catalunya track. If you think about it, there are 8,583 race events in the game currently. All of those have Tracks with Ad space that could be sold on walls and banners. So since there is really only one or two races that are actually Branded with real world advertisers, it appears that ad buyers aren't that interested in purchasing signage on virtual tracks.

Another place that drives inflation in the game economy are gold exploits and hacks. Basically this is the equivalent of counterfeiting, and is dangerous because it can flood the economy with counterfeit gold, making it worth less. FM can close the bugs, but if they don't catch all of the perpetrators, the gold is in the economy now. In order to balance it, they have to increase the gold costs of cars and reduce the rewards they pay out legitimately.

There is more that I could say, but for now that covers a lot of it.