Twofish Elements Helps Developers Price Virtual Goods for Fun and Profit

twofishlogoHappening upon virtual items for sale in the games you play is now as common as a dentist handing you a new toothbrush after each visit. It is expected that online games will hawk some form of virtual wares to players.

But most social and casual game makers are carelessly tossing virtual swords and daggers into their games — hoping they’ll stick into the mystical loot-buying psyche of their players. Lisa Rutherford, president of the Palo Alto, Calif.-based Twofish, says there’s a smarter way to manage virtual economies. Track and analyze the buying history of each individual virtual item to identify what is valued in each game’s virtual economy, in order to improve user experience — and maximize profit.

That’s what Twofish Elements — the company’s virtual economy data platform — does. In addition to allowing game operators to mint and manage currencies, Elements records each transaction within a game. Developers can track the purchasing history of each player, as well as the purchase history of each individual item as it exchanges hands. All this data can then be used to optmize prices, manage scarcity and curb inflation.

Today, Twofish is announcing a push into the social/casual gaming and virtual worlds market with five new partners — Pocketville, Star Fever Agency, RevNjenz and Pagaea, and the developer Ignite Skill Gaming. Each partner will share a slice of revenue with Twofish.

Rutherford isn’t the only one helping social game makers manage all their virtual items. Live Gamer and PlaySpan, among others, offer marketplace solutions for virtual currencies, but Twofish is among the few emphasizing analysis alongside management.

Virtual currencies depend on player engagement. People only spend virtual dollars because they want to — not because they have to. Ruthorford says understanding players’ buying habits can help game developers optimize the play experience — and revenues.

For example, the creators of a car racing game like Revnjenz might instinctively put a high sticker prices on virtual cars, since that’s what players are most likely to buy. However, as Rutherford points out, high prices could prevent players from making ancillary purchases. Perhaps the racing game could have a far more lucrative business selling cheap, high volume customization options. Tracking purchase history can help companies optimize prices for long-term revenue potential.

“There’s so much data that people aren’t collecting,” says Ruthorford. She hints that it will be the people who pay attention to the metrics and the data who are going to be the most successful in the social games space over the next few years, pointing out that the most well-established players happen to also be the ones who collect the most data.