Free to Play: Monetization

With the upcoming change of Star Wars: The Old Republic from its subscription model to free to play, the increasing interest in this business model from game developers outside the social and mobile segment and the ongoing success of titles like Riot’s League of Legends or Valve’s Team Fortress 2, it is time to analyse the underlying monetization of virtual goods.

Team Fortress 2 Vanity Item and Steam Cross Promotion

The rise of free to play emphasizes flawless and innovative game design. When beginning a game is as easy as leaving a game, it becomes crucial to retain users, keep them interested and offer them variation on a constant basis.
While the game design and retention draw the player in and deliver fun, the monetization should amplify and reinforce this, never deter from it.

Virtual goods might still baffle non-gamer or even AAA developers, but they have become a billion dollar business and a major part of the mobile and social game design.
The idea of “buy to win” quickly comes to mind and there are still many games, especially in the social space, which have a poor, boring and robbing monetization.
So, let’s ask some questions.

Zynga’s revenues

Q: When should you take care of the monetization in your game?

Deciding to make a game that will generate revenues via the sale of virtual goods is an essential decision. This decision will be made before designing the game and rightly so.
The game design needs to plan and understand as early as possible what will be sold and how it will affect the game balance and experience.
If the monetization via selling virtual goods is added to a nearly finished game, it will feel tacked on and like extracting money out of the players without improving the game play. The best way to avoid this type of design afterthought is to carefully identify which parts of your game design could reasonably rely upon the sale of virtual goods, and which parts need to remain untangled from the influence of microtransactions.

Q: What categories of virtual goods are there? 

The best types of virtual goods are those which fit nicely into the game world, and act as a core component of each and every move. In a city-building game, each different building the user interacts with could be considered a virtual good. In an online driving game, the subcomponents of the user’s car can be the basic building blocks of the virtual goods system. For a first person shooter, each gun or bullet could be a purchasable item, and so on.

Spend time analyzing other games in the market and take advice from there; would Monopoly be as much fun if you could just throw a dollar on the board every time you wanted to buy a hotel? Determine what you’re going to sell for real money, and carefully integrate that plan into your overall game design.

You can separate virtual goods into two categories.
There are goods that tap into and alter the game play, the “Functional Advantages” and there are the purely aesthetic goods that don’t interfere with the game play and mechanics but which are often no less important, the “Vanity Items“.

Functional Advantages

Q: What are Functional Advantages?

There are many types of goods that can grant a Functional Advantage in a game. In a shooter you could buy a gun that simply does more damage or fires faster than the guns that are for free. In a role playing game you could buy gear or spells with special abilities or in a city builder you could by a bulldozer that lets you build faster or more efficiently than the cost-free one.

Game balance is always an important factor when selling items that grant a real advantage in terms of game play to the player. If rich players are overpowered, those players who spend less or as much will be disenfranchised and leave the game frustrated.
If the game is too easy or too hard, players will also abandon the game.

Q: Are there general issues about Functional Advantages?

  • Selling functional items in Player vs. Player (PvP) games can easily destroy the game balance. If players, who are willing to spend, simply can put in a few dollars in order to create such a powerful advantage that players who are not spending money cannot compete then they will move on and quit the game. This sensibility is particularly strong in North America, though less so in Asia based on the popularity of games like Crossfire and ZT Online.On the other hand the risk of frustrating players in the way described above can also become a major selling point. Players tend to get emotional and plan their revenge, using any means necessary. Still, using rage and revenge as revenue stream might not be the best idea, since it will build a nasty and unfriendly community.
  • When selling functional advantages in games where players fight against the environment, the so called PvE (e.g. AI, Bots, Monsters, etc.) the players might quickly feel like there is no skill needed to overcome the challenge. Plugging in money will always be a guaranteed victory.
  • However items that create a new variation of the game experience have the opportunity to become significant sellers in the PvE space. Offer the player new ways to overcome the game’s challenges but be sure not to take the challenge or the needed skill away. Items that save a little time, increase the player’s chances or add a new layer to the game play are items that vary the player’s already positive experience.

Q: Are there any tips when using Functional Advantages?

  • Limit the duration a purchased item can be used by any player. For instance players won’t be able to use the fast-firing gun indefinitely but only for a limited time. This lets you resell the item as a consumable and also helps to balance an item what might be overpowering against other players. Even the most vigilant will forget to “re-up” their item, or decide to try to play without it, etc. A set duration also allows your players to see the comparable value of the item. They are regularly reminded that the small expenditure increases the enjoyment of their gaming experience, or it allows them to spend their money on other items you might offer, thus increasing the variety of their game experience.
  • Create indirect advantages that are not obvious for the player’s opponents. For instance, imagine that you let the player buy an item that allows them greater speed in the construct of new buildings; rather than simply decrease the player’s time to build each building, consider designing the item instead to reduce the amount of lumber, or metal, or brick required to construct the building. This way, the increased speed at which a player can build isn’t patently obvious to their opponents, but your player still enjoys the same net effect (more buildings in the same time).
  • Most games that make use of a meta-game loop, like the experience system in Call of Duty or the summoner advancement model in League of Legends, sell accelerators that let players progress faster. It is less obvious than direct consumables that grant an advantage, which are often perceived as “cheating”.
  • Counter-moves or specific defenses are a great way to balance functional advantages. In a sports game, one player might have an item to increase the power of his tennis serve by 25% but the opponent might have an item that reduces all power bonuses to 10%.
    This way the player has still an advantage but the game offers tactical depth and players are able to adapt which reduces frustration and maintains a healthy level of competitiveness.
  • Add active involvement and interactivity to “super-killers”. Don’t limit the player’s action to the press of a button when he uses the nuke to quickly defeat all enemies. Instead use a similar weapon that still needs a little bit of skill or at least active involvement. Aiming and firing can be very easy but it increases the fun and reduces the feeling of buying the win. It is about the player’s credit card vs.the player feeling skillful.
  • Find dull tasks in your game (e.g. backtracking, selling useless loot) and offer an elegant solution. In NCSoft’s Dungeon Runners the player frequently stops fighting in order to head back to town and sell his loot. They introduced a little gnome that is accompanying the player who can turn loot into gold on the spot. The time saving as well as the funny presentation of the gnome made the feature popular.
    Of course you should never design dull tasks just to monetize them.
  • Offer items that slightly vary the game play and also add a visual difference. In a game about world exploration like Bethesda’s Skyrim, the player could choose between several mounts like a horse, a lion or different creatures. The mounts should not only differ in visual appearance but also vary the game experience. The horse could be able to sprint and run faster, while the lion is able to jump or climb hills.Another example is the Downloadable Content for Rocksteady’s Batman: Arkham City, where the player is able to play a new character, Catwoman. The game’s controls and combat system remain the same while Catwoman presents a whole new set of animations, slightly varied combat gadgets and a new way how to move through the city of Arkham.
  • Sell upgrades that make players more flexible, but not necessarily more powerful. Allowing players to carry two weapons instead of one, while others can only carry one weapon is not inherently unbalanced. Again it will bring variation to the players’ tactics allowing for depth and greater flexibility.

Q: How works the balancing of Functional Advantages in terms of pricing?

The game designer has to set the influence of the items. He has to consider how great the degree of deviation from the standard curve of in-game performance is. The greater the deviation from the standard curve the more expensive should the item be.

Vanity Items

We have talked about virtual goods which tap into the mechanics and shift the experience from a game play point of view.
The second category of virtual goods, the Vanity Items, doesn’t alter the game play at all. They bring variation to the visual sensation and allow the player to customize his experience. Allowing the player to customize every detail of his avatar, user interface and other game elements enables a very personalized experience.
As status is important to many people, these items tend to be very popular and big sellers.

A vanity skin from League of Legends

Q: What can be customized?

Games that feature a player avatar have many possibilities for customization. Everything from head to toe can be adjusted and, in common, the outstanding items will cost the player.

Especially items which mind the global marketplace can be successful. Players like to show their affinity with national flags, district insignia, sport team emblems or belief system logos. Items which allow players to identify themselves with interests, regions or other similarities are popular.

Depending on the flexibility of your game’s engine, store and back-end system you can also tailor items for seasonal and special events. Christmas hats will probably never go out of fashion and sports events (e.g. the Olympics, soccer world cup, etc.) become bigger and bigger.
Not only the well-known events are important. Regional events can be just as interesting as they are specifically targeted at a smaller audience and therefore more appealing to that audience.
Keep an eye on the calendar, think of the Chinese new year and the Oktoberfest just as well as the smaller, regional events.

Games that don’t feature player avatars can also be customized. The countless city building social games let the player decide whether to build the football stadium or the funfair. Racing games allow the player to build his own car out of single auto parts. Big MMOs like World of Warcraft let the player customize not only the player avatar but the user interface as well. Even in the Xbox Live version of Magic: The Gathering the players can buy special skins for their card decks.

Q: Can Vanity Items be designed for virality?

One of the big benefits from Vanity Items is that they are viral. Players buy these items in order to show them off. This makes Vanity Items much more visible to other players thus increasing the desire to possess one and reducing the barrier to buy one.

Some games also offer the players the possibility to create their own symbols, icons and skins. The upside of user generated content is a (hopefully) diligent community which is proud of their creations and ready to spend money on extra features to create unique emblems.
Be careful what tools you give your community access to, though. Swastikas, penises, etc. seem to be as tenacious as Christmas hats.

Planning from the start what options your players will have to customize their game experience is important. It is crucial to the look and feel of your game and it might also become very expensive and tedious to add detailed customization late in the development process.

Q: How to optimize monetization?

There are some best practices and marketing strategies in order to improve and optimize the monetization of your game.
Of course these practices are not universal remedies and every genre and game works differently and attracts different audiences.

  • Rarity is a concept often used when selling virtual goods. One example is the sale of an item which is limited in amount and by time. Selling the magical sword for 50 coins instead of 100 coins makes the player feel like he is making a profitable deal. Also adding a limiting factor (e.g. “Only 150 magical swords remain!”) puts a perceived scarcity on top, which makes the item more desirable.
  • Bundle purchases, discounts as well as the old “Buy 1 Get 1 Free” also spark the willingness to buy.
  • Viral promotions work much like the “Buy 1 Get 1 Free” sale but allow the player to gift the bought item to one of his friends which reinforces reciprocity.
  • Two currencies are often used in free to play games. The soft currency can be obtained normally by playing and the hard currency is obtained by paying money or playing the game extensively.
  • Rewarding your players with hard currency for achieving milestones in your game or for retention also increases the probability that they will buy virtual goods. It lowers the barrier to spend hard currency.
  • Discounts on buying currency as well as a payment page optimization are important. It helps to offer the player a best deal option when he is deciding to buy hard currency.
    The best deal option can be selected by default, be highlighted and you can even reward the player with an extra item for choosing the best deal option.
    Keeping the most important interactions (e.g. buying currency, choosing the amount of currency) visible and offering the most convenient paying options is also part of optimizing your game’s monetization.
  • The virtual storefront is just as important as the retail storefront.
    Proper merchandising and the highlighting of a featured virtual good within the interface will increase the awareness of the item and drive sales.

  • Another familiar concept is “Try before you buy“. The trick is to set a limited time in which your players experience the fun of a virtual good become used to it. The fear of losing what one is accustomed to can be quite big and if the item is useful and fun to players the might reconsider and buy it.

Naturally all of these concepts and practices can be combined with each other in order to achieve the greatest performance.
Tracking the monetization of your game and knowing the metrics can be just as important as creating meaningful virtual goods.

If you are interested in this topic, I would recommend these links for continued reading:

Thanks for reading.

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