Social Influence and Monetization of Freemium Social Games

One fundamental economic challenge in social gaming is how to monetize players. We address this problem from the lens of social influence. Specifically, we examine how players’ paying behaviors in a social game are associated with their pure friends and Simmelian-tie friends. Analyzing a comprehensive social game dataset provided by Tencent.com, we find that the cohesion effect emanating from players’ direct connections in the social gaming network exhibits positive impacts on players’ willingness to pay. Surprisingly, the cohesion effect of pure friends is found to be significantly stronger than that of Simmelian-tie friends, contrary to the common findings in the literature. These new findings have direct implications for companies tasked with designing social games or gamification systems and, more broadly, to help better understand the mechanism behind the microscopic economic behavior of individuals in a virtual economy.