Waiting for the Virtual Ponzi Scheme to Collapse

Here’s a recent headline that caught my attention: Gamification Hits the Middle East.

It struck me due to the juxtaposition of its wording related to a region in constant turmoil and conflict. “Hits” sounds violent. The headline evoked in me a feeling of digital bombardment – virtual artillery shells scouring the-until-now non-gamified landscape, prepping it to accept all things games. Cue the foreboding music: gamification’s forces have established a beachhead and the Middle East will never be the same!

In other words, it sounded way too over done.

Yet this over-the-top reaction is how I’m starting to feel about the pervasive nature of games and gamification – not just in the Middle East but everywhere. Barely five years into the term’s common usage and gamification is already achieving buzzword status – or worse. Score one for marketers, zero for the rest of us.

Before I dig deeper, however, what is gamification and why do I believe, as this blog’s title suggests, that we’re looking at a type of Ponzi scheme in the works?

Game On or Game Off? The Jury is Still Out

Let’s start with the good news. At its best, gamification is a construct, a framework for improving business and customer engagement strategies. This is achieved by incorporating elements of game play, including point accumulation, scoring, virtual currency, leaderboards and levels into non-game scenarios. The logic is simple: if something is fun and engaging, more people will use it. Effective gamification builds a sense of camaraderie, encourages feelings of accomplishment, strengthens character and fosters healthy competition.

For brands, this means heightened ROI. As a result, gamification has cropped up in areas as diverse as financial services loyalty programs, employee productivity improvement, retail-entertainment partnerships and even corporate physical fitness as ways to incentivize the “right” behaviors.

According to a new survey by MarketsandMarkets, the gamification market is forecast to reach $5.5 billion by 2018. In addition to that, Gartner predicts that by 2016 gamification will be an essential element for brands and retailers to drive marketing and customer loyalty. And by 2015, some 50% of companies will be using gamification in some capacity.

But it’s interesting to note that, while many studies forecast how much funding and resources people are willing to pump into gamification, data is scant when it comes to direct ROI. How much has gamification truly augmented user spend and loyalty? The reality is, gamification isn’t the digital Holy Grail it’s purported to be. And if your loyalty program or brand at large is in trouble already, gamification will not necessarily save it.

Think about gamification within the airline space. How likely is it that passengers will be willing to play games with other passengers and bid for a seat with extra leg room? I also don’t envision passengers chomping at the bit to utilize social gaming, competing against fellow passengers for some kind of reward toward a future discounted flight or other travel perk. These are loyalty schemes that really are being considered. It may come as a surprise to some marketers, but there are still a few passengers who simply want to be left alone when they fly. They want to read that paperback (yes, paperback) book they brought on board or they want to quietly watch some free seatback TV.

Turn on, tune in, zone out. It’s that simple.

Loyalty program designers speak about the need to minimize the number of hoops members must jump through, increase feedback and make rules transparent. But too often, poorly designed and poorly executed gamified loyalty programs suffer in these regards. This is exactly why Gartner, as if hedging its own bets, also predicts that 80% of today’s existing gamified platforms will fail by 2014. How can an industry be forecast to grow so swiftly with such contradictory data?

The answer comes back to my Ponzi scheme analogy. Ponzi schemes work, at least for a time, because they attract new investors by promising high returns. And the money subsequent investors see is not profit from the performing portfolio, but rather money paid into the organization by new converts. The only way to maintain high returns and keep the illusion of profit alive is to dupe more and more new investors as their payments fuel the entire fraudulent operation.

You Got Game?

Gamification’s proselytizers and pontificators peddle the illusion that gamification will change the world as we know it. But when true ROI doesn’t materialize (or isn’t as robust as predicted) or loyalty program membership and engagement are still lacking, the only solution left is to aggressively convince others to join the gamification bandwagon anyway, in effect “selling” more gamification garbage so that others will come to its defense. This is how fads and passing trends begin and end.

Does gamification have its place? There’s no question about it. Gaming is central to the human condition and simulated experiences that teach life-building skills are as old as life itself. Gaming is in our blood. And it’s also part our digital screens. Just as Ponzi schemes co-exist with legitimate operations, gamification has its responsible and irresponsible players.

Let’s just hope the former group steps up their game and helps the successful, legitimate gamification industry mature for the brands that decide it’s worth their time and effort.

Otherwise, it really will be game over for gamification.

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Is It Game Over for Gamification?

About The Author
- Roger is an internationally recognized expert on airline loyalty, alliances and ancillary revenues. He commands a consulting portfolio of top airlines and Forture 500 companies. Roger is also a professional photographer and cinematographer and works as a photojournalist for LoadFactor TV.