Pricing of Virtual Goods and Designing Game Challenge Level for Free-to-Play Mobile Games in the Presence of Copycat Competitors

Abstract

In-game purchases, virtual currency, content design for heterogeneous consumers and strong competition are key challenges for mobile game providers. This study addresses determination of optimal game design strategies for game providers in the presence of heterogeneous players and copycat competitors. Moreover, this paper incorporates pricing of virtual goods/currency into the Free-to-Play (F2P) mobile game design via a duopoly model and characterizes the optimal strategies for game providers in terms of pricing of virtual goods/currency and the game challenge level.