Why We Shouldn’t Build a Game Layer on Top of the World
By: Krystle Jiang
June 13, 2011
INTRODUCTION
Game mechanics have been around for thousands of years – the same principles of achievement medals, progression, and status used in World of Warcraft were used in the Ancient Olympic Games. Neither is the idea of gamification, or applying these game mechanics to non-game environments, a new one – businesses have employed appointment dynamics and progression in the form of happy hours and loyalty programs for decades.1 However, it is only in recent years that gamification has become a hot topic in the business and technology world. Gamification experts like Jesse Schell of Carnegie Mellon University argue that it can revolutionize every aspect of our lives, from influencing buying habits to improving education.
Gamification uses game mechanics to increase engagement, loyalty, and fun in a given environment. These mechanics play on different aspects of human psychology such as attention span, social tendency, and loss aversion, and are all basically different types of rewards. Certain dynamics reward players for performing an action at a predetermined time (i.e. harvest Farmville crops after 2 hours and get points); others control the timing and scarcity of rewards (i.e. leveling up, which gets harder as levels get higher). Essentially, game mechanics are based purely on extrinsic motivators. This is great for commercialization and influencing buying habits, but it can be disastrous for motivating students to want to learn and employees to want to work.
COMMERCIALIZATION
In 2009, there were 27.5 million registered businesses in the US alone.2 Every one of those businesses is competing for more sales from a finite consumer base.
People do not intrinsically want to spend money – they need a push from marketing teams that run advertisements, promotions, and engagement deals such as happy hours and loyalty programs. Gamification takes those deals one step further by introducing social collaboration and competition mechanisms and by tracking every statistic. Traditional loyalty programs emphasize the final reward (i.e. free flights starting at 40,000 miles), leaving fun out of the earning of points and putting it all in the burning. However, with the ubiquity of loyalty programs and increased competition, companies cannot rely on giving away products for free to drive traffic. Gamified loyalty programs focus instead on making the earning process fun, adding in game rewards like achievement badges and levels to increase engagement without extra revenue loss.3
Innovative startups that built their business around game mechanics are doing exceptionally well. For example, Groupon’s business model is very simple and
"!
! easily imitable but because it was an early mover in the space and was able to capitalize on its strong game mechanics and convert those to sales, Groupon generated $713 million in revenue in only its third year of life.4 Groupon’s game mechanics include the countdown timer (people will act and buy more when they think they might lose the deal later – same concept as SALE: TODAY
ONLY), the “free lunch” dynamic (where players feel they’re getting something for free because someone else already did the work to tip the deal), and bonuses
(if your friends buy the deal, you get $10 free).5 Almost all successful startups have incorporated gamification in some way – LinkedIn uses the progress bar to urge users to complete their profile; Zynga is built on social gaming and expects
$1.8 billion in 2011 revenue;6 and Twitter appeals to humans’ desire for social status by prominently displaying users’ follower and list counts.7
However, gamification is no longer a startup phenomenon. This year, Ford chose to forgo 30 seconds of precious Superbowl ad time in favor of an interactive game a la The Amazing Race in which participants competed in various tasks for the ultimate prize of $100,000 and a brand
