Three essays on mobile games

Abstract

The mobile games market has boomed in recent years, but research on the economics of mobile games remains at the nascent stage. The question of how to draw in gamers and produce income is a key issue in the field. Focusing on this issue, this thesis examines how different factors and strategies affect player engagement and expenditure.

The first step in this thesis is to identify key factors that influence the short-term engagement and expenditure of players. Armed with this understanding, the thesis investigates how player retention (long-term engagement) is affected by a specific crucial factor (social network). Furthermore, in order to develop effective revenue-boosting strategies, the thesis explores how to motivate players to spend real cash on virtual objects within mobile games.

The thesis presents the following important findings. Firstly, game-play performance (winning rate) has an “inverted U” shape impact on both play hours and in-game spending the next week. Gamers who do particularly well or poorly one week are inclined to play for fewer hours and make fewer expenditures the following week. Moreover, both acquiring novel virtual objects and connecting with friends are positively associated with play hours and in-game spending the following week. Gamers who obtain new virtual objects, join a “clan” or play with friends more frequently in one week are inclined to play for extended periods of time and buy more the next week. Secondly, social interactions have a positive impact on player retention. Players with a larger social network degree (more in-game friends in the first three months since registration) tend to churn later and exhibit shorter lapse periods. Thirdly, for mobile gaming developers that offer an option for players to purchase virtual objects to enhance their chance of winning prior to the start of the game, compared with the strategy that reveals the rival gamer’s competence level information, the strategy that hides such information is optimal when the price of virtual objects is (i) endogenously decided or (ii) exogenously decided and relatively low.

In summary, these findings can benefit gaming and other industries that commonly employ game design elements and strategies. This thesis provides insights and reveals implications for engaging users and increasing generated revenues.