By: Sampan Bansal & Carter Morrison
Gamification is the process by which firms integrate the typical elements of a game into products or services. The idea was first introduced in 2002 when Nick Belling–a British-born computer programmer and entrepreneur–brought his idea to the marketplace. In the early stages, many neglected investing in gamification due to a lack of historical data and large upfront expenditures; however, many firms promptly switched gears when Foursquare’s mainstream app became a hit in 2009. Consequently, many corporations started integrating their own gamification processes. By 2011, gamification had been added to Gartner’s “Hype Cycle,” making it the biggest “buzzword” in the tech industry.
Today, gamification is becoming increasingly popular across global firms’ platforms, as it allows companies to build customer loyalty and increase user engagement. Typical characteristics of games include competition, rewards, and challenges; however, each firm looks to take its own unique approach to integrate into its platform. Ultimately, the goal of each firm is to create a fully immersed experience for users, enabling firms to monitor their emotional responses and intrinsic motivation.
One of the most notable examples of gamification was when Nike released NikeFuel in 2012. It was revolutionary as it enabled users to compete against each other, achieve rewards, and take part in timely challenges. One of the big selling points for NikeFuel was their point system. Essentially, the system was one where Nike tracked the movement of each user and assigned them a certain number of points according to a standardized universal system. The content was uploaded to the NikeFuel app and shared will one’s friends (given consumers uploaded their information). As a result, Nike created weekly and monthly competitions that consumers could engage in, exponentially increasing both the number of users and app usage. In 2013, Nike reported that slightly under 200,000 users had used their product. At the start of 2017, the number of users had amounted to 45 million. Although Nike made various updates throughout the year, the entire process was predicated on the idea of gamification, exploiting the intrinsic motivation of individuals to want to beat their friends and share their results.
While many firms experienced tremendous success with gamification, there have been recent drawbacks affiliated with the notion. Robinhood, the pioneer of commission-free stock trading, is one of the most prominent advocates for gamification. The firm rewards consumers who invite friends by giving them a free stock (high or low profile). Additionally, the app offers a “plus” feature for users that trade enough while integrating animations to congratulate users after making trades. While the idea has led to massive usage and the IPO of Robinhood, the company has scrutinized, paying the FIRA US$70 million after being accused of misleading clients and lack of due diligence before allowing investors to participate in options trading. Recent studies show that “the top 0.5% of stocks bought by Robinhood users each day experiences negative average returns of approximately 5% over the next month. More extreme herding events are followed by negative average returns of almost 20%”. The Swiss Finance Institute also reported that the app only accounts for 0.2% of the aggregate U.S. market share; however, it contributed 10% to all variation in returns from stock in Q2 2020.
Firms are continuing to innovate and release new personalized games for users. While this is anticipated to yield great success, there is much weary about the privacy of individuals along with abuse of users. Thus, it is in our opinion, that firms continue to develop and integrate gamification on the condition that departments are with federal regulations and do not damage the well-being of consumers.