Optimal strategy of in-game items with conspicuous consumption: whether to provide the grinding version?

Abstract

In the virtual world, whether or not to spend money on in-game items distinguishes paying players from non-paying players. Due to the existence of conspicuous psychology, paying players will greatly increase their conspicuous utility after purchasing an item in addition to the utility of the item itself. In this case, whether providing different versions of items can bring greater revenue to the game company is a question worth investigating. In this study, two analytical models considering conspicuous intensity are developed to compare the optimal pricing strategy of the game company providing the single-version item or dual-version items. The single-version item can only be purchased, while a relatively low-quality version that can be obtained by grinding is provided in the dual-version strategy. Grinding means using time in games to get items instead of spending in games. The results suggest that it is more profitable for companies to offer dual-version items when conspicuous intensity is strong. Game companies can also adjust the time needed to acquire the grinding version item and the quality gap between the two versions to achieve greater revenue. The research contributes to providing a theoretical basis and decision support for game companies to decide whether to provide different versions of in-game items.