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Category Archives: Monetization

I wouldn’t buy that for a dollar

08 Oct

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In late February, Hong Kong hedge fund manager Seth Fischer called on Nintendo to start developing mobile games and to “just think of paying 99 cents to get Mario to jump a little higher.”

Now, one thing I’d like to make clear ahead of time is that I don’t actually think that there should be a Mario mobile game where you pay 99 cents to make Mario jump a little higher. That’s a horrible idea that would taint the brand and reeks of an exploitative attitude. This entire post is a thought experiment.

For the sake of argument, let’s take Mr. Fischer up on his suggestion. Let’s think of paying 99 cents to get Mario to jump a little higher. Let’s start by dissecting his sentence. His idea is made of three parts:

  • Pay 99 cents
  • Mario
  • Jump a little higher

Pay 99 Cents

99 cents is not a lot of money. Adding additional moves to a Candy Crush Saga level costs 90 cents worth of hard currency. This is the price you charge for for something minor or temporary, like a convenience feature.

Mario

Everyone knows Mario, but more importantly, everyone knows what Mario does: Run and jump. Mario’s been in games that don’t involve that, but for the sake of the thought experiment, let’s assume Mr. Fischer is talking about a platformer where Mario runs and jumps. Those are the two primary verbs.

Jump a little higher

This is self-explanatory. Mario can jump a little higher. Maybe a block or two of height, with a block being defined as half of Mario’s height.

Putting it all together

When all three sections are placed next to each other, the game design implications start to get complicated. Platformers are all about traversing levels, and jumping is one of the tools players use to get around. When you’re giving Mario jump height, what you’re really giving him is access. You’re giving Mario access to higher platforms with powerups or access to new routes to progress through the level.

What this means is that when you sell users additional jump height, you aren’t selling them anything with inherent value. The only benefit that players get out of additional jump height is whatever benefit comes in the level design. Every single level has to be designed for someone without that jump boost and for someone with that jump boost. There has to be level design effort directed into creating content that is inaccessible to non-paying players, which I must emphasize will make up at least 90% of your audience.

Let’s say you start trying to solve that by making those parts of the level accessible to people without the boost, but only if you do some tricky platforming challenges. Players with the jump boost can bypass this. Now you end up with another problem. Challenges are fun. What you’re doing now is asking players to pay money to skip the fun part. The game is now more engaging if you don’t pay money. On top of that, players will now be able to burn through your content more quickly, which is bad in a business model where you want to keep players playing as long as possible.

Some might suggest that jumping makes Mario better at fighting enemies, but in over 20 years of playing Mario games, I struggle to come up with examples where additional jump height would be a valuable asset. There are enemies that fly or are hard to reach, but I certainly don’t feel any particular need to be able to jump higher to hit them. Being able to take additional hits or having ranged projectiles, sure, but jump height is not high on my list of demands unless we’re talking about Lakitu. Lakitu is best used in levels specifically built to include ways to climb up and fight him, so then you run into the problem of users paying to skip the fun part again.

There are also issues of a more mechanical nature. Mario can correct his jumps in mid-air, but how much extra leeway does he get with this extra jump boost? If Mario can jump higher, is his air time the same? Does this mean he goes up and lands faster? If not, how do you deal with hazards like giant Banzai Bills where you want to be back on the ground as quickly as possible? Is the extra jump height dependent on how long you hold down the jump button, or is it just a flat multiplier to jump height that permanently increases your minimum jump height?

I could go on and on about these all day, but you get the idea. Mr. Fischer wanted people to “just think of paying 99 cents to get Mario to jump a little higher,” and I did. A 99 cent jump boost introduces a major split in design work, forcing levels to be designed around boosted and unboosted players. It’s like introducing a power in an MMORPG that would allow a character to phase through walls. It provides an unclear and inconsistent benefit to players who buy it. These are just the practical problems associated with his notion. There are a host of game design problems that probably don’t even begin to make up for the revenue brought in by that dollar. As bad as all of this is, it doesn’t even get into broader problems like the immediate ridicule it received when the idea was first introduced.  How much angrier would people be if they saw it in an actual game?

 
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Posted by on October 8, 2014 in Game Thoughts, Monetization

 

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Dungeons & Dragons: Content & Consumables

03 Oct

Yesterday, I talked about how monetization is best when a player wants to spend money. Before you really sell something to someone, though, you need to understand what you’re really selling. Let’s have a look at this GDC Vault presentation on D&D Online: Stormreach.

Quick history lesson: D&D Online: Stormreach started as a subscription-based MMORPG. They went free-to-play, and their monthly active users multiplied by 10 and their monthly revenues multiplied by 5. On top of that, they managed to monetize 20% of their players, which is an incredible conversion rate.

Now, let’s have a look at their top-selling items from September 2009 through February 2010.

Top Sellers by Units Sold

  1. Siberys Spirit Cake (Consumable. Resurrection item)
  2. Major Experience Elixir (Consumable. XP booster)
  3. Moderate Heal Potion x50 (Consumable. Health potion)
  4. Copper Sigil of Leveling (Upgrade. Raises level cap)
  5. Medium Jewel of Fortune x5 (Consumable. Loot booster)
  6. Best SP Potion x10 (Consumable. Spell Potion)
  7. Greater Siberys Spirit Cake (Consumable. Resurrection item)
  8. Greater Experience Elixir (Consumable. XP booster)
  9. Bell of Opening (Consumable. Unlocks locked chests and doors without need of a rogue)
  10. +1 Full Plate (Equipment. Survivability)

The biggest trend that jumps out to me is that all of these items, with the exception of the +1 Full Plate and Copper Sigils of Leveling, are consumables. Two of those items are resurrection items, two are XP boosters, and two are related to getting more treasure.

(As an aside, the Copper Sigil of Leveling has since been removed from the game. Previously, its function was to raise a character’s level cap from 4 to 8. The designers wisely decided that it was better to retain a free player than effectively tell them to stop playing if they didn’t convert after a certain level.)

The biggest lesson we can take from this is, in retrospect, obvious. The items that sell the most units are ones that players will frequently use and are consumed upon use. You can sell these items multiple times to each player, they’re often cheap, and they save the players some time.

Now let’s have a look at the biggest earners.

Top Sellers by Revenue

  1. 32 Point Build Characters (Power. Character stats.)
  2. Major Experience Elixir (Consumable. XP booster)
  3. +2 Tome of Supreme Ability (Power. Character stats.)
  4. Siberys Spirit Cake (Consumable. Resurrection item.)
  5. Favored Soul Class (Content. New class)
  6. Drow Race (Content. New race)
  7. Character Slot (Upgrade. Additional player options)
  8. +1 Tome of Supreme Ability (Power. Character stats.)
  9. Monk Class (Content. New class.)
  10. Veteran Status Characters (Convenience. Higher starting level)

When you look at this list and compare it to the previous one, you’ll notice that this list only has two consumables: An XP booster and a resurrection item. The other eight items are comprised of three content unlocks, two power upgrades, and a convenience upgrade. There’s a lot more diversity here, but the general trend I’m noticing here is that the top revenue earners are dominated by permanent upgrades.

You can charge a lot more for permanent unlocks, and they bring in a lot of revenue, but you do need to be a little cautious with them. For one, their effects are permanent. If a permanent upgrade provides paying players with an extreme advantage, you face the risk of alienating other players. This is especially risky in the case of games with a heavy player versus player element. Every time that permanent unlock is used to the detriment of another player, it’s creating a negative experience. That permanent unlock won’t just be used once. It’s going to be used dozens of times. Hundreds of times. You need to make sure that unlock makes the game a more interesting experience for everyone, even the person it’s wielded against, or the price of your revenue is going to be the lifetime of the game.

The other big thing you need to watch out for with permanent unlocks is that you can only sell them so many times per player. If a player pays to unlock a new class, they can’t unlock it a second time. This is obvious, but it is something to consider. In order to sell it again, you need to convince another player to buy it. Not everything is going to appeal to everyone, so if you want to monetize through unlockable content, you need to release more of it. I want to be clear that this isn’t a warning against using permanent unlocks. Not everyone is willing to buy consumables, and adding new content in particular adds to your game’s value and feature set. Every time League of Legends adds a new champion, the game gets a little deeper and people start talking, and with 27 million daily active users, they have to be doing something right.

So, to wrap things up. Monetized consumables provide a steady stream of revenue because players use them all the time and can buy them over and over again. Monetized unlocks provide bursts of revenue as long as you have players capable of buying them. Consumables provide you with a safe and stable source of revenue that you can always count on, and unlocks are literal game-changing features that can hit those high numbers.

Before we stop for now, though, don’t underestimate consumables! That Major Experience Elixir is number 2 on both lists, and Candy Crush Saga is nothing but consumables. Until next time!

Addendum: I should note that if I had the sales numbers, I’d be able to draw more detailed conclusions (or perhaps entirely different conclusions!). These numbers are also about four years old, but when it comes to publicly available monetization data, you take what you can get.

 
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Posted by on October 3, 2014 in Game Thoughts, Monetization

 

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Ethical Monetization

02 Oct

Lately, I’ve been reading Addiction by Design: Machine Gambling in Las Vegas. I appreciate game design of all sorts, and thought that a book about the design of slot machines would be enlightening.

I’m not done yet, but I’ve been thinking about two big things in the book. The first is less relevant to this post, but I found it interesting, so I’d like to share that. Contrary to my expectations, people who are habitual slot machine players know that they aren’t going to win. Their goal is to play the game itself, keep engaging in the loop, and enter a meditative state of flow that one player termed the “Machine Zone”, where all that exists is the player and the machine. This effect is so strong that the book relates a story where a man suffered a heart attack at a slot machine. Paramedics were called in to take him away, but during the entire scene, no one else on the machines noticed. They were just completely absorbed into the flow.

The second major thought on my mind are the ethics involved, and how the free-to-play game market is facing a similar reaction. The slot machine industry talks about how gamblers need to take personal responsibility to not spend to excess, while simultaneously researching and refining techniques to keep players on the machines for longer periods of time. The cognitive dissonance is concerning. You can’t have it both ways. Players can’t be in full control of their own behavior while at the same time having their behavior controlled by a designed experience.

Game design has the power to shape human behavior. It’s important to be ethical about it. Slot machines have the power to make ordinary people oblivious to a man in need of immediate medical attention, using nothing but flashing lights, spinning reels, and controlled probability. If you’re designing monetization features, you need to treat your players with respect. You want your players to give you money. In fact, you need it. People need to be paid, and the servers need to be kept running. You need to convince your players to pay for the game, but there’s a fine line between persuasion and coercion.

To me, the greatest monetization happens when a player wants to spend money on a game. They play the game, see something they like, buy it, and come away with happy thoughts. The next time they see something they want, that happiness is reinforced. Compare that with a player who doesn’t want to spend money on a game, but feels that they’re forced to. “Ugh. Fine,” the player says as they roll their eyes. They might pay for the game again and again, but when they eventually stop playing, how likely are they to come back? How likely are they to recommend the game to their friends? What happens to the reputation of the free-to-play space as a whole? Monetizing responsibly isn’t just about ethics. It’s about effective long-term sustainable business practices.

The line between good monetization and bad monetization is difficult to draw, and there are a lot of gray areas. My current mental model is that it comes down to the attitude towards the players when it’s designed. Good monetization is designed to have players asking themselves “If I buy this”, and bad monetization has players asking themselves “If I don’t buy this”.

“If I buy this new weapon, I can do some cool stuff with my friends.”

“If I don’t buy this new weapon, I’m going to get destroyed in PvP.”

“If I buy this kitten, I’ll have an adorable animal companion.”

“If I don’t buy this kitten, it’ll be sent to a kill shelter.”

The best monetization is about selling players something they want, not about threatening the players if they don’t buy something. It’s difficult to draw a line, since convincing someone to buy something is also based on creating a desire for it (which is why I made the examples that I did), but what I’ve laid out here is a general guideline. This is subjective, but it’s a solid starting point, and if more free-to-play games are designed with more respect for their players, then the industry could shed its exploitative reputation.

 
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Posted by on October 2, 2014 in Game Thoughts, Monetization

 

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Astral Diamonds: Balancing Hard Currency and MMORPG Economies

27 Sep

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Today, I’d like to talk about a fascinating intersection of MMORPG economies and hard currencies. More specifically, the Astral Diamond system in Neverwinter. Most hard currencies are regularly used by only a minority of players in games, but Neverwinter is designed for a constant flow of Astral Diamonds from players of all kinds, and with a player base of over two million players, that’s got to be bringing in some serious revenue.

So, what is an Astral Diamond? It’s a currency that acts as an accelerant for Zen, the game’s hard currency. This’ll take a little explaining, so bear with me. It’ll all make sense in the end. Astral Diamonds can be earned through play, but there’s a hard limit on how many a player can earn in each day. On top of that, when players do earn Astral Diamonds, they earn them in a form called Rough Astral Diamonds that can’t be spent. These need to be refined into normal Astral Diamonds first, and a hard cap of 24,000 Astral Diamonds can be refined per player per day (Presumably to limit the speed at which Astral Diamonds can enter the economy and keep it from being devalued too quickly).

Astral Diamonds can be used to buy high-value items, but where this gets really interesting is with the auction house. In Neverwinter, the only currency accepted by the auction house is the Astral Diamond, and thus the main currency exchanged between players. Astral Diamonds are the lifeblood of the game’s entire economy. Each player that exists can add a maximum of 24,000 Astral Diamonds to the game’s economy per day, and each transaction in the auction house removes 10% of the Diamonds from the economy. Astral Diamonds can be spent on other goods as well, but my belief is that the auction house is primarily responsible for removing Astral Diamonds from the economy.

auction

Now, let’s talk about the actual hard currency  and how it relates to Astral Diamonds. The hard currency is called Zen, and it’s used by other games published by Perfect World. Players can use Zen to buy premium MMORPG goods such as character slots, boosters, high quality gear, etc. It works just like you’d expect a premium currency to work.

However, there’s one final key feature to this equation: The Astral Diamond Exchange. Players who want those goods but don’t want to spend real money can instead offer their Astral Diamonds to other players in exchange for Zen. Players in need of Astral Diamonds can buy Zen and exchange it for someone else’s Astral Diamonds. Players who don’t pay money can still enjoy items that cost hard currency, but someone somewhere still contributes revenue. I’ve seen this in Puzzle Pirates and a few other games, and premium currency exchanges have always fascinated me, especially since the prices are player-controlled and fluctuate to meet supply and demand.

If you combine the existence of the Astral Diamond Exchange with the presence of the Astral Diamond-only auction house, you get something magical. The auction house is full of desirable goods, and the transaction fee creates a constant drain on the number of Astral Diamonds in circulation (offset by the creation of new Astral Diamonds). Players who want to trade Astral Diamonds for Zen will become very active on the auction house, selling whatever they can and contributing to the game’s community and economy. The value of the Zen is tied closely to the Astral Diamond; if the market has many Astral Diamonds, the value of the Astral Diamond falls and the Zen can be traded for more Astral Diamonds (capped at 500 Astral Diamonds per Zen).

zencost

Some might be bothered that a player can get premium currency without spending real money, but it doesn’t matter if a player can benefit from Zen without personally spending money on it. What matters is that the Zen is purchased, creating revenue, and that the Zen is spent, removing it from the economy. A top-performing free-to-play game needs to have monetization intertwined with the game design at its most fundamental levels, and by creating a careful tie between the premium currency and the economy, Cryptic has built something fascinating.

 
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Posted by on September 27, 2014 in Game Thoughts, Monetization

 

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Let It Flow

03 Sep

I’m a firm believer that in most cases, it’s best for a freemium game to give the hard currency (or items obtainable only through hard currency purchases) away for free every once in a while. At first, this might seem counter-intuitive. Why would players pay money for something they can get for free? Two big reasons off the top of my head: 

Reason One: It gives them a taste.

If you’ve been to Costco or a farmer’s market, you see this all the time. A player is much more likely to make a purchase if they know for a fact that they’re going to like it, and nothing sways a decision like first-hand experience. If a player is on the verge of buying something, a positive memory could be the deciding factor.

Reason Two: It creates a mental exchange rate.

This is a little trickier to explain, but here goes. If I’m playing a game and I look at the store, my mind filters the store’s items into two categories: Soft currency items and hard currency items. I separate the game’s items into “Regular items” and “Items for people who pay money.” If there’s no method to gain hard currency for free, and the game has yet to convince me to pay, then those hard currency items don’t even occupy my mindspace as something I could buy.

However, if I do get a slow trickle of hard currency, I can’t really ignore those premium items anymore. Something happens to the way I process that information. The hard currency doesn’t just have a dollar amount tied to it. The hard currency also starts to represent time spent playing the game. 

Here’s an example: Clash of Clans is the number one top-grossing iOS game right now. You can build structures, but those structures take time to build, and you can only have as many active construction projects as you have Builder’s Huts.

Builder_Hut

Buying a third Builder’s Hut costs 500 gems. You can pay $5 for it, but you can also slowly earn those gems over the course of days or weeks. That third Builder’s Hut is no longer something “for paying players.” It’s a thing that anyone can get if they put the time into it. A player starts having to ask themselves if it’s worth spending weeks grinding in order to save $5, and the answer is obvious. 

Would as many players convert into paying players if gems couldn’t be earned and they never had that mental exchange rate? I have my doubts.

 
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Posted by on September 3, 2014 in Game Thoughts, Monetization

 

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Hard Currency

28 Aug

You’ve been playing a game for a while, and you see something that you really want. You go to buy it, and you have a look at the price. Odds are good that the price isn’t going to be in dollars or your country’s local currency. Instead, it’s going to cost you an in-game currency. There are two general types of in-game currency; Soft currency and hard currency.

Soft currency is the type of money you might expect to be in games. This is the money you win after RPG battles. You get a constant steady flow of soft currency as you play through the game.

Hard currency, on the other hand, is tough to get. In fact, in many games, you only start with a limited supply and can’t earn any more through play. The fastest way (or only) way to get hard currency is by spending real life money.  These are things like Riot Points in League of Legends or Gold in Candy Crush Saga. The best items in the game are going to cost hard currency, and this is how the game makes money.

So why use hard currency? I’ll get the cynical answer out of the way first. Converting dollars (or your local currency) into hard currency obscures the value of the real currency. $5 American gets you 650 Riot Points. That’s 130 points per dollar. The Forecast Janna skin costs 1820 Riot Points. That’s $14, but it’s not a calculation people can intuitively perform. It works, though it’s cynical, and to me, it’s the least interesting part of hard currency.

When a game has a hard currency, it opens up a lot of interesting design spaces. If you have a hard currency, you can start the players with some. It’s awkward to tell a user “We’re giving you a 60-cent credit toward in-game purchases”, but it’s natural to say “We’re giving you 100 gold.” You can also have sales and discounts on hard currency, encouraging players to fill up their account instead of making purchases as they go. You can allow players to slowly earn hard currency through gameplay without worrying about them feeling insulted at the hard currency to real currency exchange rate.

I’ll go further in depth on these things you can do with hard currency (and possibly speculate on why Valve and Blizzard don’t use hard currency in their freemium games), but for now, I hope this serves as an introduction to the possible uses of hard currency. 

What do you like or dislike about hard currency?

 
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Posted by on August 28, 2014 in Game Thoughts, Monetization

 

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Making Monetization Fun

19 Aug

Games try to be fun. Games also need to monetize. Do these two needs have to be at odds? Can monetization be fun? Monetization isn’t something people usually think of as fun. At best, it’s like filling up the gas tank: An exchange of money for relief. At worst, it’s like extortion: Nice village you got there. It’d be a shame if something happened to it.

I thought for a while and rewatched the Extra Credits video on the harm that bad monetization mechanics does to the free to play industry. I rewatched it a few times, actually. The video was primarily about how to create monetization that at the very least, does no harm, but they did mention a positive example of monetization: An unnamed Korean MMO with a money bomb item. Players could throw it down, and it would explode into loot piles that everyone but the purchasing player could pick up. This led to money bomb parties and a lot of social attention. I’d write more on that, but I haven’t played the game in question, and searching for that game proved fruitless.

That’s when I realized that even if I didn’t know that game, I already knew a game with a similar fun monetization mechanic: Team Fortress 2.

Welcome to Mann Up Move

Alright, enough reading advice. It’s man-to-man talk time. I am not going to lie to you: I am going to have to lie to you. You men are absolutely prepared to deal with this, and you are going to be just fine. Right. End of lie. Now get ready to absorb some bullets so they don’t hit my factories. — Saxton Hale; TF2 Official Website

You didn’t think this blog was entirely going to be about casual games and self promotion, did you?

A bit of background (Skip this paragraph if you already play TF2 and know what MvM means): Team Fortress 2 is a team-based first person shooter that was originally sold for money, but is now a free to play game. On August 15, 2012, the game debuted Mann vs Machine, a brand new game mode where a team of six players takes on wave after wave of AI-controlled robots. This mode is playable for free. However, players may also purchase Tour of Duty Tickets for $1, which allow them to play MvM in Mann Up Mode. In Mann Up Mode, players play on official servers and can earn cosmetic items. A ticket is required to play, but it is not consumed until you successfully beat the mode.

Backpack_Tour_of_Duty_Ticket

Tour of Duty Ticket

Squad Surplus Voucher

Squad Surplus Voucher

The Tour of Duty Tickets are nice, but this article is about a different item: Squad Surplus Vouchers. These cost $2, and you can choose to activate them when you join an MvM game in Mann Up mode. If you fail, you can keep the voucher and nothing else happens. If you win, the ticket is consumed and every player in the match gets a random item drop. Random items in Team Fortress 2 are normally rationed out; you only get so many drops in a week before item drops are reset, so the voucher is a method of breaking this rule.

Because the Squad Surplus Voucher benefits the entire team, it has significant social value. A player who joins in the middle of a match may be considered a lesser team member because they have contributed less toward victory, but they might activate a voucher as a peace offering and enhance the reward if the team wins. It can also be used as a negotiation chip: A skilled player may be uninterested in replaying a particular MvM map, but the promise of Squad Surplus Vouchers might convince them to change their mind.

The most exciting use of the voucher, however, is the “Full Voucher Run”, when everyone on the team decides to play the mode and activate Squad Surplus Vouchers. Every player involved will gain six items upon successful completion, an entire week’s worth of loot! When someone in a group chat announces  full voucher run, Mann versus Machine transforms from a game mode into an event. Players get excited and buy vouchers so they can join in the fun. All the players are excited and motivated to push through to the end, and upon successful completion, the players get their goodies, and Valve removes $18 worth of consumables from the game economy: Six vouchers worth $2 each and six Tour of Duty tickets worth $1 each.

Even ignoring the considerable revenue, let’s look at the player experience. When a player buys a Squad Surplus Voucher, they aren’t spending money on an item drop. The personal material benefit of the voucher is marginal at best. What a player is buying is the expectation of an enjoyable future experience. The player is buying a social bargaining chip. The player is buying anticipation.

That’s what makes the Squad Surplus Voucher a fun monetization item. With any other item purchase in the game, a player is spending money on weapons for tactical flexibility or cosmetic items to customize their avatar, but the voucher is the purchase of an experience and social gratitude. In the context of a mode like Mann versus Machine, where tightly-knit teamwork is more important than ever, it helps to drive home the feeling of camaraderie. You are a team, working together, and someone just brought something awesome to the table.

The lessons learned from the Squad Surplus Voucher can apply easily to any game that has a play context where players are able to work together. It takes full advantage of human social behaviors. In the context of a single player experience, or a multiplayer experience where players are only comparing or competing with one another instead of cooperating, I admit the lessons are less directly applicable, but it does prove one thing: There is a monetization method that players think is fun! There are people who disagree with the $2 price point, but nobody wishes the voucher weren’t in the game. If one fun monetization technique exists, there must surely be others out there just waiting to be designed.

PS: You have no idea how hard it was to talk about TF2 and monetization and avoid mentioning the word “hat” outside of this sentence.

 
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Posted by on August 19, 2014 in Game Thoughts, Monetization

 

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