OK. Let’s say that you’ve decided to make your game. You got all of the mechanics sorted out and your prototype is working well. It has to earn money in order to sustain you and your team, though. You have some budget provided by an investor, but the game will have to be released someday and then it has to be economically viable. How to make money on players, though? I was supposed to talk about two main distribution models – F2P and P2P, however, after putting a few hours into writing about the F2P model, I’ve decided to publish two articles, since it gets pretty long and I don’t want my posts to be bloated. The post about the P2P model will come a few days after this one. Enjoy!
What the F2P model is?
Free 2 Play is one of the two most popular video games’ distribution models. The main characteristic is that the F2P model doesn’t demand a purchase of your game in order to play it. If it were like 10 years ago, I’d say that F2P has microtransactions (which is not the best possible term – we’ll talk about IAP, in-app purchases, a bit later).
Distribution model often bears a huge effect on both the revenue generated by your title and on the way you’ll work on your title, so let’s talk about some details.
The F2P model has its roots deep in the times when the software market was getting some traction and it originates from the freeware model – the piece of software could be acquired and fully used by the customer with no monetary cost on their side. However, this model quickly evolved into the freemium model, which main principle is to deliver a piece of software with its basic functions to the customer, while making additional features, such as more content, better performance and whatnot accessible after a purchase of said features. The term „freemium” was coined in the 80s and the first video game distributed in this model, according to Wikipedia, was Achaea, Dreams of Divine Lands released in September 1997. It was a MUD (multi user dungeon), representing a genre preceeding MMORPGs, so it’s no surprise that the model was strongly embraced by MMOs in the early 2000s, the most well known of which is probably RuneScape, released in 2001 and played to this day. Later, this model was embraced by other types of games as well and was adopted en masse by the mobile games market after Android and iOS emerged. Switch from physical to digital distribution also was a big case for freemium games, since they could be downloaded easily. Nowadays, there’s a ton of games which operate in this model and my two most favourite have to be Paladins (a hero shooter) and Soul Knight (a mobile action rougelike). All of the games I work at operate in this model as well.
How to earn money?
The basic way of earning money in the F2P model is by the use of IAPs (in-app purchases; they’re not called „microtransactions” anymore, because some of them are not „micro”), display ads or by using a mixed model. Let’s quickly go through all of these models.
IAPs – the entire revenue is generated by purchases made by players in the app. Things that are often bought:
- Hard currency – there are usually two types of currency in F2P games: soft currency, obtainable during gameplay and hard currency, obtainable mostly or exclusively via purchases; hard currency can be used to enhance gameplay, f.e. allowing players to easily buy OP items, maybe I’ll write an article about types of currencies in the future,
- Perishable items directly influencing your gameplay: buffs, spells, extra ammo and so on,
- Vanity items: skins, cosmetics, additional soundtrack, emotes and other stuff which is accessible in the game but doesn’t really influence the gameplay; such stuff is usually bought by players who want to distinguish themselves from other members of the community.
- Permanent gameplay content: expansion packs, exclusive character classes, new characters, new gameplay modes etc.
Games operating under this model are rare on mobile, but pretty popular on PCs/consoles. On mobile, they are often made for middle-aged or elder people, such a target group usually doesn’t want to play extremely complex games and they appreciate simple mechanics and uninterrupted gameplay (they also have money to spend) so match-three games and simulators may perform well. On the other hand, MMOs, especially MMORPGs available on PCs and consoles, also may utilize such a monetization strategy, because players would often have nothing against making a purchase in order to improve their experience or to play as Hattori in Brawlhalla (been there, almost done that, but she was available for soft currency as well). An example of a game in such a model which I enjoyed a lot is Paladins (600+ hours on Steam, one purchase made for the sake of having all of the characters and as a sign of gratitude towards the devs; I’ve talked to a bunch of Warframe players and they say they often buy stuff in the game not because they need it, but wecause they are thankful for the game). Also, two top esport titles, League of Legends and Counter Strike: Global Offensive operate in this model. And there’s Fortnite.
Display ads – ads are displayed in the game and they generate revenue. Your game effectively becomes a poster pillar. There’s a distinction between dynamic ads and static ads – first ones are banners, video clips and so on, while the other ones are embedded in the assets, f.e. Capcom kind of used static ads to advertise their esport events in Street Fighter V (technically they were static ads, because they weren’t promoting any 3rd party, so they aren’t the ideal fit in this case, but that’s the case I’m the most familiar with). Static ads are usually used by big brands, so we won’t be talking about them here.
Most popular types of dynamic ads:
- banners – a piece of the screen is covered by a banner on which a player can click; very popular in mobile games,
- „interrupting” ads – they usually occur when the gameplay loop comes to an end and has to begin again; they usually take a form of a video clip with a static image at the end or only an image (there can also be buttons with CTAs encouraging people to download the advertised app); you can put them in many places, but people are NOT going to like this, so I’d rather recommend inserting them when there would be a naturally occuring pause,
- rewarded ads – let’s say that you die in a game, but you have a chance to continue playing it if you watch an add; that’s pretty much what rewarded ads do – they reward the player for watching them; they usually can trigger in places like in-game shops (get a rare item for watching an ad), at the game over screen (extra life), when using a special skill (watch an add to make the skill twice as strong)… Basically, in all of the places in which you can easily scale players’ rewards and when they may crucially need some type of a scarce/limited resource.
This model is almost exclusively usedin mobile games. Devs know that some audiences are eager to play their game, but they are pretty much unable to make purchases – kids, especially. This may also apply to some world regions, f.e. people from SEA (South-East Asia) often don’t buy stuff in free games. I’m not a big fan of this model, since it gets very annoying after playing a while. Throwing ads at the player in every moment may make you look bad and people would happily abandon your game for a less intrusive one. I recall playing a game, can’t remember the name, though. It was a simple logic game and it was very easy. I was making progress really quickly, but I had to watch about 10 ads in 10 minutes, so I uninstalled it from my phone and never heard of it again.
tl;dr – having ads as an exclusive monetization model can work, but you gotta be careful with the number of ads you display and when you display them. Also, the model below is just better in every case.
Mixed model – the most popular monetization model in mobile gaming. It combines both IAPs and display ads. Such a mix may provide constant influx of money from both displaying ads and making purchases. Pretty much everything I wrote above applies to this model and one of the most prevalent paid features is an option to remove ingame ads. Some games which use this model are Soul Knight, Among Us, New Star Soccer and Clash of Kings (I detest such „strategy” games, but they are a great example of such a model in action and they seem to be economically viable).
How your earnings may look like
Let’s say that you launched your F2P game after building a fair amount of hype. You may wonder how the revenue is going to be distributed. Because of this I made a figurative graph totally-not-made-in-MS-Paint. Also, a few things to clarify:
- The graph isn’t precise and it’s used solely to represent trends. Fluctuations of revenue may be more violent.
- Points of Losing Interest (PoLIs), yellow dots, represent a time during which the revenue is getting lower and mark a beginning of a trend in revenue generated by your game.
- UA (user acquisition) campaigns marked on the graph represent massive UA campaigns; your UA processes should be working all the time, when it’s economically viable.
- The new content points showcase massive changes in the game. F2P games usually treat introducing their content more like a process than projects, so they may have frequent minor updates with a
- The point of stability is a theoretical point during which pretty much all of your potential players play the game, effectively meaning that the market is saturated and that it will be constantly decreasing; after reaching such a point, you should rather focus on maintaining the game, increasing your retention rates (how many players keep on playing the game after a set amount of time, usually expressed in percents, f.e. 1 day retention rate may reach 60%, which means that every 60 out of 100 players who bought the game will play it the next day), DARPU (daily average revenue per user) and so on.
- In this scenario, I decided that the game would no longer be developed after a while – by this I mean that no new content would be made, aside from maybe some minor fixes.
As you can see, you’re, most likely, in for a slow start. F2P games often take a while to gain traction and to generate revenue, but, as there are multiple examples of long running F2P games, it’s obvious that if they are developed and maintained well, they can provide a lot of money in large spans of time.
What to expect?
There’s a bunch of stuff you need to keep in mind.
- You will most likely have to treat your game as a process rather than a project. It means that it will have to be adjusted, tweaked, fixed and new content will have to be introduced over time. Not just done once and patched once in a while.
- If you decide to go with an exclusively IAP or mixed model, don’t be surprised that usually less than 20% of players will make any purchase and only a fraction of paying players will become big spenders.
- Balance of your game will be crucial, unless you’d like your game to be branded as a P2W (pay to win) or a P2C (pay to compete) title – it’s not a good thing from your community’s point of view and it also may generate bad PR, but favouring paying players may be a viable monetization strategy.
- UA will mostly be easy – after all, your game won’t have to be paid for.
- If you want your game to grow, you will have to expand your team. Start thinking about LiveOps specialists, business analysts, more game designers and so on.
- It’s a good idea to AB test your game’s features in order to see which ones are liked and which one generate more revenue.
- First few months are going to be crucial. You will see if your game is sustainable and you will be able to make a decision whether you should keep it alive, or if you should close it.
- Money will be coming in more fluidly than in the case of P2P games.
Even though distributing your game may seem counter-intuitive at first, it’s proven to be a well working monetization strategy. It has quite a lot of pros, but it demands to be worked on in a specific way, different than when it comes to P2P games, so you need to keep this in mind. Whether you use IAPs, display ads or a mixed model, depends mostly on the platform your game is going to be released on and on your target audience. Most importantly, though, make sure that your game is good.
Feel free to follow me on Twitter and to add me on LinkedIn. I was thinking about doing something more lately and, if you’d like to get me to work as a freelancer on your game (as a marketer, a social media specialist or as a marketing mentor of sorts), hit me up on LinkedIn! I’m sure we’ll figure something out (if I like your game – I’m kinda looking for a passion project I can work on during my spare time).
Indie games marketing 101 Part 3 – coming soon.