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Free-to-play games account for about 85% of all revenue in the gaming industry with AAA titles, such as “Fortnite,” “Roblox,” and “League of Legends,” generating billions of dollars in sales every year. How do games that require no upfront investment from players make money? F2P games utilize effectively designed and promoted microtransactions to generate revenue.
Key Takeaways:
Microtransactions are small in-game purchases that often cost less than $1. In-game offerings include a variety of items and experiences such as:
In-game resources, such as currency, that allow players to progress through the game more quickly are one of the most popular types of microtransactions.
In-game transactions drive long-term revenue by capitalizing on the financial resources of a game’s most invested players. In turn, this revenue stream makes it possible for developers to continue to add fresh content to games, resulting in a longer shelf life for many titles.
The dominance of F2P games means that even developers who were initially hesitant to adopt the free-to-play monetization model are now building F2P games to stay competitive. Because players do not need to pay anything upfront to access F2P games, the majority of their revenue comes from microtransactions and in-game ads. Just over 48% of revenue in F2P games comes from in-app purchases.
Consumers make in-game purchases to satisfy one of six main desires.
Players motivated by the desire for unobstructed play want to advance more quickly or easily through the game. These may be casual players who do not enjoy struggling with difficult game challenges or more dedicated players who want to quickly move on to the next element of the game without having to wait around to obtain game resources through the natural course of playing the game.
In-game hints, power-ups, extra lives, and in-game currency may appeal to these types of players.
Players motivated by social interaction may make purchases that enhance the social aspects of the games they play. The opportunity to purchase access to unlockable characters and new interactive episodes or quests and items that help players express their personality or customize their experience may motivate social players.
Economic rationale as a motivation leads players to complete microtransactions when they perceive the purchase to be a good value compared to similar offerings by competitors or previous offerings in the game. Creating the perception of low prices by pricing items at $0.99 instead of $1 appeals to this motivation. Offering sales, discounts, and bundles can also drive economically motivated players to purchase.
This motivation is unique in that it can apply to the players themselves or to a non-player who makes or approves purchases for a player. Players, parents, partners, or others may purchase in-game items simply as an indulgence, rather than because the player has a strong in-game motivation. These types of transactions could be anything, but this motivation may particularly drive the purchase of items that do not help players advance in the game.
Most players have some level of desire to unlock new content. This is particularly true of players who have played long enough to begin to grow tired of the game’s base features. Unlockable content, such as new characters and levels, helps keep the game fresh and improves engagement and retention.
Simply adding things to your game for players to buy will not usually result in substantial revenue and can even backfire if you take the wrong monetization approach. Instead, you must carefully design transactions to maximize revenue and minimize player pushback.
While players are generally more accepting of in-game purchases than they once were, many still resent what they perceive to be “play-to-win” monetization structures. Focus on value-adds that improve the player experience without being necessary for players to fully experience the game.
Electronic Arts’ much anticipated Star Wars title “Battlefront II'' became a cautionary tale in the industry when the publisher planned to release the game with many of the game’s most popular characters accessible only by completing microtransactions. The controversy led to EA canceling the planned microtransactions.
In spite of the last-minute change in plans, EA’s stock lost about $3.1 billion in value due to the controversy. While players are more tolerant of paying for gameplay elements in a F2P game than in a game that comes with a $60 up-front price tag, charging players to access your game’s basic functionality can result in player churn and negative publicity.
Developers of F2P games need to create reasons for players to make purchases. Many popular casual games, such as “Farmville,” rely on mechanisms, such as timers, to encourage players to buy resources so that they can continue to play the game without waiting for the timers to expire.
However, this type of artificial limitation can drive players to quit playing or cause your game to develop a reputation as existing only to addict players and then drain them of their money to feed their addiction. Using artificial limitations effectively requires a careful balancing act that leaves players feeling like the tradeoffs are reasonable. The best way to accomplish this is to make limitations feel like a normal gameplay element instead of a paywall.
Pay careful attention to how players respond to microtransactions in your game. Analyzing player data and feedback can give you insight into how to tweak your offerings to make them more enticing. It can also help you identify any issues that poorly designed transactions are causing.
Use this analysis to drive future monetization efforts by replicating your successes and avoiding your failures. It can also be useful to scope out the competition and copy what they are doing right and avoid what they are doing poorly.
Even though a large percentage of microtransaction income comes from the most dedicated players, most games still need a large, engaged player base making lots of small purchases to generate significant revenue. Your in-game offerings can help you keep players engaged by being a continuous source of fresh, new content.
All games that include microtransactions must overcome negative public perceptions and potential regulation. Stories about children using their parents’ credit cards to make outlandish purchases or addicted players spending their rent money on their favorite games make headlines.
Psychologists have compared the behavior of players who overspend on in-game purchases to gambling or addiction. Failing to take steps to prevent these kinds of headline-grabbing transactions could not only damage the reputation of your game and any future games you make but could lead to lawmakers enacting cumbersome legislation to protect consumers from unscrupulous or careless developers.
Designing high-quality in-game purchases is not enough to get players to spend their money. You also must effectively promote them. These tips can help:
The team at Sonamine can help you design and promote microtransactions that encourage non-paying players to become paying players. Our advanced analysis, reporting, repeat purchase campaigns, and ongoing tweaks help you continuously improve your monetization strategy, and our engagement and retention services ensure you have a large, active player base to monetize. Contact us today to get started.
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For a limited time until December 2024, Sonamine is offering a 60 day money back guarantee to OneSignal customers. Come experience the ease and simplicity of the First Time Spender Nudge package and watch your conversions soar.
For a limited time until Sep 2024, Sonamine is offering a 60 day money back guarantee to Braze customers. Come experience the ease and simplicity of the First Time Spender Nudge package and watch your conversions soar.
