Examining the effects of network externalities, density, and closure on in-game currency price in online games

Abstract

Purpose -Massively multiplayer online role-playing games (MMORPGs) create quasi-real social systems in which players can interact with one another, and quasi-real economic systems where players can consume and trade in-game items with virtual currency. The in-game currency price, an important indicator of a virtual economy, is highly contingent on players' behavioral interaction in MMORPGs. The purpose of this paper is to adopt a network perspective to examine how topological characteristics of social networks in an MMORPG, namely, network externalities, density, and closure, would exert impacts on the in-game currency price. Design/methodology/approach -Players' behavioral data were collected from a popular MMORPG in China on a weekly basis for 52 weeks. With a time series analytical approach, the empirical model for the price function of in-game currency was estimated with vector autoregression. Findings -The results show that the number of core avatars and network density are positively associated with in-game currency price, while network closure has a negative effect on in-game currency price. However, in-game currency price is found to have no significant relationship with the trade volume of the currency. Originality/value -This study fills in an important research gap by investigating factors influencing the in-game currency price of MMORPGs from a network perspective, which contributes to the existing literature of network effects and advances our understanding about how players' interaction will influence the dynamics of a virtual economy. The findings could offer useful insights for online game companies to better understand their players' social interaction and consumption behavior.

Online customer-to-customer interactions, customer–firm affection, firm-loyalty and participation intention

“…According to prior research about MMORPGs (e.g. Xu et al, 2017), the density of social networks in MMORPGs can enhance the network's value to users. However, the findings of this research raise questions about the generalizability of Xu et al's (2017) findings.…”

How avatars create identification and loyalty among online gamers

“…Main avatars are important in forming gaming perceptions (Xu et al, 2017). Hence, the participants were also asked to nominate their main avatars in the nominated games and rate the study items based on the nominated avatars.…”

Consumers’ Adoption and Use of E-Currencies in Virtual Markets in the Context of an Online Game

“…There has been research carried out on games' virtual currencies such as empirical analysis on currency stability [3] or cash-trade methods in online games [4]. These studies were conducted on virtual currencies by collecting data from user comments, studying the exchange rate of virtual currency or collecting players' behavioural data [5]. However, to the best of our knowledge, no studies directly asked consumers about virtual currencies using an adapted TAM method and partial least squares structural equation modelling (PLS-SEM).…”