Level 15

Everybody Wins: Monetization

“The main thing about money, Bud, is that it makes you do things you don't want to do.”

—That guy in the movie “Wall Street” who wasn’t Gordon Gecko

SINCE THE RELEASE of the first edition of Level Up! one design system has become increasingly important to the gaming industry: monetization. What is monetization? It’s a series of strategies employed by the developer to try to get players to pay additional money past the player’s initial purchase.

Game developers have always been happy to separate the player from their money. It’s been with us since the dawn of gaming: if you wanted to keep playing, you kept paying (until you got so good at playing you could make a quarter last for hours if not days!¹). Today is no different. Take a look at some of the traditional ways developers could earn a little more cash:

Pay-to-play: Early arcade players fed quarters for additional lives. While pay-to-play faded during the early years of consoles and the decline of arcades, it came back in vogue when players could make financial transactions online. Starting with games on PCs, pay-to-play became increasingly popular with the rise in social gaming, where players could keep playing as long as they had paid for the energy to do so.
In-game advertising: Starting with Pepsi and Canon billboards in Pole Position (Namco, 1982), developers have been happy to sell space to advertisers. When free-to-play games appeared on computers, so did advertising—in the form of annoying pop-up ads. When pop-up ads started to clutter up mobile device games, the developers came up with a new trick: an offer to remove the offending ads for a fee!
Virtual goods: The earliest virtual goods were sold to players of multi-user dungeons who realized that it was sometimes cheaper to pay for an item than to earn it. With the success of World of Warcraft’s virtual economy, the eyes of developers were opened to the possibilities—and profitability—of virtual goods. Virtual game sales in some games were so profitable that the developers were able to offer their core games for free. How much can virtual goods set you back? Anywhere from 49 cents for a (discounted) weapon in Team Fortress 2 to a virtual planet in Entropia Universe that will only set you back $6 million.
Downloadable content (DLC): DLC allows players to extend their gaming experience past the initial purchase. Early downloadable content took the form of promotional codes but soon developers learned that players wanted everything associated with the game, and started charging for it. Costumes and skins, new weapons and vehicles, levels and gameplay modes, brand new storylines … every type of content was fair game in this new marketplace.

Some designers (and many publishers) feel that a monetization system is necessary for a game to be competitive in today’s market. Other game designers feel that monetization systems ruin a gaming experience and run screaming from them. You’ve heard about the success stories: Candy Crush Saga, Bike Race Free, Simpsons Tapped Out, CSR Racing … . How hard could it be to monetize a game? Just add some hats, charge the player for energy, sell them some boosts, and voila! They’ll be sending you money by the truckload, right?

But I’ve also seen games cancelled due to monetization systems that were poorly thought through, as in the case of Supercell’s 2012 Battle Buddies—a shooter where you had to buy your guns! Or even worse, look at developer MikenGreg. Despite achieving 200,000 downloads with their game Gasketball, the developers ended up homeless and had to borrow money to survive. The cause? A poor monetization plan.

If these examples have taught me anything, it is that monetization systems require a lot of work to create, demand a lot of attention to get right, and can ruin a game experience if applied too heavily or lightly. Sounds scary, but not to worry; we will navigate these tricky waters together. Let’s start with a couple of questions you should consider when approaching these systems:

How important is the system to your game? For example, some games lean heavily on monetization and won’t let the player progress without it. Other games will make it optional, letting the player choose when to spend money … if at all. Making this decision at the start of the design process will impact the rest of your design.
How dependent on the system is your game? Batman: Arkham Origins (DC Entertainment, 2013) is a free-to-play download—which allows players to watch a motion comic—but won’t start the game unless players pay its 99-cent unlock fee.

Give monetization systems lots of attention early in the design process. Don’t leave them to the last minute. You can exploit some aspects of these systems to your benefit in all aspects of your entire design. For example, the Card Hunter’s Club in Card Hunter (Blue Manchu, 2013) allows paid members to gain a third treasure upon the successful completion of a level.

Now that you’ve asked the big questions, let’s consider what kind of business model you are going to follow to make your money. You have plenty of models to choose from:

Trial—A free version is severely limited in scope—it’s usually just a few levels—just enough to give players a taste of the game in the hopes that they buy the “premium” version.
Freemium—Freemium is the best-known monetization model. This unlimited trial or “velvet rope” model lets players play without paying. While the players can play most of the game, key features are missing. At a certain point, players can pay for a “premium” version of the game.
The freemium model has been in the running ever since Nexon made a splash with its freemium game KartRider in 2005, but it really gained steam with FarmVille (Zynga, 2009), where players could pay to speed up game processes that required friends—recruited from the players’ Facebook lists—or time to complete. Why wait when you can pay to build your farmhouse immediately? When FarmVille gained 50 million players and $100 million in profits,² the industry took notice and monetization became the new model.
Free-to-play (F2P)—These games are free to download, but if players want to avoid grinding or to progress faster, they can pay for more currency, power, or time. Smurf Village, Simpsons Tapped Out, and Zynga’s –Ville series all follow this model.
Downloadable content (DLC)—The game offers content that improves or enhances the experience. Players can still advance in the game, but they just might not look as cool doing it. DLCs can be vanity items like Team Fortress 2’s hats or LittleBigPlanet’s costumes or full-blown play experiences like Grand Theft Auto IV’s Ballad of Gay Tony or Borderland 2’s Zombie Island of Dr. Ned.
Season pass DLC—Most commonly found in more traditional console games, the “season pass” offers a bundle of content ranging from new episodes to weapons to vanity items offered as a reduced cost package deal. Season passes are increasingly offered on the first day of a game’s release, ensuring that players will have plenty to play after they finish the core game.
Membership—Membership grants players benefits not available to regular players. Players gain access to special treasure, costumes, minigames, or other experiences. Often, these experiences are shown to non-member players to entice them to join. Memberships often offer to remove annoying ads that interrupt or obscure gameplay.
Premium—The full version of the game is often sold at a “premium” price. Even when players pay full price, the game can still sell them DLC, memberships, and other in-game purchases.
Subscription—Subscriptions ask for a regular payment—usually month-to-month. The challenge to the subscription model is to make sure you continue to add content so players feel as though they are paying for something worthwhile. World of Warcraft is one of the largest subscription games.

Cashing In

So you’ve convinced your players to pay. But just what are you giving players for their money? Here are some things your players might want to pay for:

Chance—If players have an opportunity to improve their chances of success, they will pay. A chance might take the form of an item that increases stats or a single-use boost that temporarily changes the game’s conditions.
Customization—Whether it’s decorating their virtual house or wearing a virtual hat, players love to express their identity through customization.
Convenience—Today’s players have less time to play games. And as they say, time is money. So instead of waiting for that pumpkin to grow or for a character to do a chore, why not just pay to speed things up? Some games give players the option to have friends help (what a hassle!) or pay to do it themselves. Make sure the benefits are clear and what you are offering is too good to pass up!
Exclusivity—Rare items and experiences are prized by many players. Appeal to their vanity and status by creating limited or expensive items. Then other players will see these items and want to buy them too!
Progress—Stuck on a level? Want to keep playing? Why not pay to progress! Economist Ramin Shokrizade lists two different gates to progression: “soft gates” and “hard gates.” Players eventually can pass soft gates by grinding. However, they can pay to accelerate the process. With hard gates, the players have no choice but to pay. A common technique is to make players pay to pass a hard gate only to find a more expensive hard gate lies beyond. Because players already paid to pass one hard gate, why not spend for the next one, right?

Money Is the Root of Something Something

There’s a shady side to monetization. Companies want players to play for years, not months, and monetization can keep them coming back because the more the players pay, the more invested in the game they feel. These consistently spending players, known as “whales,” are the targets of coercive monetization—techniques designed to get players to spend even when they don’t want to:

Currency obfuscation—There should be a difference between your in-game currency, which is earned by the player, and premium currency, which is used to buy content using real money. For example, Puzzle and Dragons (GungHo Online, 2012) uses coins as its in-game currency and magic stones (or eggs) as its premium currency. Players defeat monsters to earn coins to pay for items in games and use real money to pay for stones to buy premium (including more coins!). Simple right? Even more confusing are the rates of exchange: 1600 Microsoft points costs $19.99. So how much is each point worth? And if games cost 1200 points, what can you spend your remaining 400 points on? Anything? I’m going to have to buy more points to afford something! See? If you keep prices just confusing enough, buyers won’t be exactly sure how much they are spending.
Bundling—Bundling makes items more appealing and makes players feel as if they’re getting a deal. For example, the antlers hat in TF2 costs $7.49, but if I buy the Smissmas 2012 bundle, for $14.97, I also get the Wreath and the Reindeeracorn—an additional $23.00 value—even though I wasn’t planning on buying them in the first place! A common pricing trick is to list the “actual” cost and then list the bundling price below it so players can see the discount they are receiving. Hmmm. How much do virtual goods cost anyway?
Ramping—Ramp the game’s difficulty to the point where players need to buy boosts to progress. Candy Crush Saga (King, 2013) has an extremely sharp difficulty spike that forces the players to buy if they want to succeed.
Fun pain—While at Zynga, Roger Dickey promoted a concept called “fun pain” to help with monetization. He said you need to provide both fun and pain to the players. For example, in FarmVille, the constant clicking players do to perform tasks is a “painful” action—requiring time and effort but eventually yielding the “fun” result for players. He warned that too much clicking would drive players away too! Designing fun pain is a delicate balancing act!³
Reward removal—Another popular trick is to threaten to remove rewards unless players pay. Placing a big ol’ timer (only three days left!) forces players to decide—to buy or not to buy? (That is the question!) It’s easier to get players to make digital payments during the heat of the game rather than before or after when they have time to think about exactly how much money that bushel of Smurfberries cost. Another trick is to give players so many rewards that they can’t hold them all and so they must pay for more space! Sneaky!

As you can see, there are downsides to all these models. Players feel as if they are being taken advantage of when the game doesn’t let them progress without paying. They are constantly being asked to pay for extras they don’t want or need. They have to pay for access to the full game experience even after paying for the product. These situations can create bad feelings toward the game and the publisher. As a result, monetization and free-to-play have become quite controversial within the gaming community. Some developers have become rich using monetization techniques, whereas others feel that these techniques are taking advantage of the players. However, capitalism isn’t all bad. There are many ethical ways to monetize:

Provide alternative ways to earn. Let players realize there are multiple paths to reach their goal. Paying will provide the quick path, but they can play longer to reach the same results.
Warn players that your game costs money to play. Let players know what they’re getting themselves into from the start. Sometimes you can turn around players’ opinions if they are really enjoying your game and feel it “deserves” to be supported.
If they pay, provide discounts. Use bundling, early player adapters, and membership to give your players benefits and save them some money. They’re more likely to spend if they feel that they’re saving money.
Let the players back out of the pay option. Don’t lock players into paying. Let them back out if they get cold feet or make a mistake. They will be much more likely to spend in the future if they know they aren’t going to regret doing so now.

People can lose their head when it comes to money, so it’s always best to treat others the way you’d want to be treated. If you think your monetization method is taking advantage of your players, perhaps it’s time to rethink that plan. Your players will appreciate it in the long run.