There's nothing new about fraud. Really. Ever since people walked this planet, I would assume, there has been fraud - more and more as time advances and human kind introduces additional currencies that replace tangible goods. It's beyond the limited availability of tangible goods; being able to control supply and demand through a symbol (call it cash, checks, virtual currency or repackaged subprime mortgages) is the basis for modern economy. But is the fact that fraud isn't new merely a reason for underestimating it? Definitely not; if it were, then why is the Spanish Prisoner scam, better known in its current days' reincarnation as the Nigerian Scam, still rampant on the web?
I'll tell you why: because where's money there's fraud. And when only a handful are being chased and prosecuted - hell, why not try it myself? Being an old story doesn't mean fraud isn't a problem, it only means it's here to stay, and engaging with it is a major obstacle on your way to scaling your ecosystem.
So what have I heard in terms of concrete objections? Two main themes:
- There's not much fraud in social games nowadays, and not many fraud losses. If we start scanning and challenging our customers we'll scare the legitimate ones off, and it's just not worth the risk; so we basically prefer limiting risky actions in our games.
- If we open up to secondary markets we will hurt the primary market - reduce the game's retention and incentivize users to leave the platform.
Now, going gang-ho on user verification and interaction without proper planning will indeed drive everyone off your experience. But who said user interaction needs to be a 5-page nightmare? Users expect to be engaged nowadays. Yes, you need to be an expert to allow a "one-click" experience and a highly intelligent layered friction mechanism to verify the dangerous part of your population - but hey, I'm not selling you the secret sauce, just telling you what kind of dishes it improves. All I can say is that I've seen it happen and I know it's possible.
Second, as for secondary markets: SMs create additional revenue streams. Having SMs external to the developer's platform is indeed a cesspool but compliance, accepted user behavior policy and money laundering are true considerations of a maturing industry. For social gaming and virtual currency to really become "the thing", these need to be tackled sooner or later. Will it kill the in-game purchasing experience? I claim that it won't, because going to a secondary market will be like going to the flee market to find a good deal (or maybe some very special items only very talented players can find). It's not streamlined into the game, and this context shift alone will reduce the risk of players pausing their game to go off to a secondary market to get additional chips. Yes, it will require smarter pricing and better management of supply and demand, but I don't know any single game developer that just throws a game at their users and expects revenue to start streaming - this things are highly planned, why not plan for even higher revenue by supporting a secondary market?
Opening up to more markets and users is very much possible. It requires careful planning and head on tackling of the industry's issues, but as always, it's highly beneficial for those who get it right.