A Hacker’s Guide to Monetizing Free-to-Play Games
The Free-to-play Revolution
Free-to-play games are growing in popularity and quickly taking over the Top Grossing app spots on both the App Store and the Android Market. It makes a lot of sense, especially for social games that need to achieve critical mass for the best gameplay experience. The user adoption rate of a free product is 5 to 6 times higher than a product that costs even $0.01, and that viral spread is a great way to get users to refer you to the customer that will make that free-to-paid conversion later. This option also drives strong category rankings because it drives more installs, which makes it especially valuable now that Apple has prohibited incentivized installs to a certain extent.
That said, converting users in your game from free-to-paid can be difficult, because you have to provide the initial value for free to drive user acquisition and then provide additional value to convert a user from free-to-paid. As we listened to TapJoy’s first Game Monetization webinar on Wednesday, we picked up some great tips for game developers. While TapJoy covered a number of different monetization methods, their tips for Free-To-Play games were definitely our favorites. They were so good, in fact, that we wanted to share these tips with you all below:
The vast majority of ad driven games are free-to-play, and while we believe in-game advertising has some flaws, it can be icing on the revenue cake for developers of all sizes. That said, advertising is often best suited for smaller developers that can’t afford to continuously develop paid content or build out a virtual goods inventory. One suggestion that TapJoy made for small developers was to build arcade-style games. These are typically light on content since the gameplay focuses around one screen, and small developers can turn these games out quickly while searching for a model that sticks. They typically see an ARPDAU of $0.005-$0.15, so having mass market appeal is a must if you want to rely solely on advertising to monetize your game.
TapJoy was also straightforward about how these games monetize: for most games with banner ads, they typically see $0.30-$0.90 eCPM, but the upper end can range as high as $2.00 if the advertising is well implemented. They recommend placing ads in inactive, non-gameplay spaces such as inventory screens to provide a better experience for the player and also make it more likely that they click on the ad.
Free Trials and Paid Content
With a game that is free-to-play, one great way to monetize it is through paid content, which usually consists of level packs. As always with a free-to-play game, you want to create a compelling case for getting a user to part with their money. A great way to increase your free-to-paid conversion rate is to upsell players when they are most engaged. Two good times to attempt this is after they beat a level, or after they have been playing for a certain amount of time in that session. This ensures that the player already sees the value of buying more content. Another big tip is making your new levels unique relative to the game. This can and should include everything from the types of weapons available to the environment that the player is in. This creates a compelling case that the new content is like a new chapter in the game that adds more to gameplay.
If you are making your game free-to-play but want to make users pay for more advanced content, it is helpful to think of it as a “free trial” for the player. However, when you create a game with a “free trial”, you essentially have to ask yourself how you want to limit the user experience between free and paid versions. This needs to be done in such a way that maximizes free-to-paid conversion while also ensuring that there’s enough free content to attract new players.
The two most common ways of doing so are limiting content, so that the player needs to pay for more levels, or limiting features, so the player is playing with a limited toolset in the free version. The rule of thumb here is that you need to preserve enough features in the game that players coming back, or give them enough content that the trial is meaningful so the player can become engrossed in the game. Balancing this is tricky, but the rewards can be substantial: 3-5% of users typically buy into level packs, and with the best-in-class games, that rate can be as high as 8%. That game’s 8% free-to-paid conversion rate was made even more impressive when TapJoy mentioned that of the 8% who monetized the first time, 84% bought the second level pack and 49% bought the third level pack.
Virtual goods is the big kahuna of the free-to-play monetization methods, and TapJoy had a lot of great insights and data to share on the matter. First and foremost, you should give your for-pay items Featured placement in your in-game store and when the player logs in. This highlights the items that users can pay for and increases the chance that they will be purchased by 150%!
Also, creating a whale price point for virtual currency purchases that is far overhead of the user purchases you expect is actually a good idea. Doing so helps you figure out who your whale players are because they will be the only one to purchase $50-$100 of a virtual currency at once, and it also had the added bonus of bracketing the lower prices so they don’t seem so expensive.
When enticing your users with virtual goods to monetize your game, it is best to include as many of the following categories as you think fit in your game:
- Customizations – unique aesthetics or characteristics for a player’s avatar or territory
- Equipment – permanent boost to stats
- Power Ups – limited duration boost to stats
- Resources – needed to progress or expand
- Social replacements – a permanent NPC character to replace a required friend
- Fuel & Energy – limits actions over time
Interestingly, a strong indicator for what type of virtual goods would successfully convert players from free-to-paid was the gender of the player: males were much more likely to buy items that gave them a competitive advantage and saved them time, while females were much more likely to buy items that differentiated them from other players. Male users, in particular, are more likely to focus on the PvP aspect of games and play games where battling another player is an option. This shows their priorities and heavily influences their virtual goods choices: 97% of virtual goods purchased by males give them a direct advantage in battle.
Breaking this down, 50% of these purchases were for time savings, with 63% refilling the Fuel or Energy bar for continued play, and 37% of those sales being for a temporary stat boost. This confirms what many are saying in the industry, which is that consumable virtual goods are becoming incredibly popular among players and lucrative for developers. The other 47% of virtual goods purchased by males were exclusively for equipment, or permanent improvements to their character or fighting force. What was most interesting about this cohort is that while 12% purchased a specific item and 9% of them purchased permanent statistic bonuses, a whopping 79% purchased the “Mystery Box”, which is essentially a lottery for in-game items. This essentially means that over 37% of all virtual goods purchases made by males are for a chance to pull the lever of a virtual slot machine.
New Monetization Methods
We think that the fact that 37% of all virtual goods purchases made by males were to play a virtual slot machine is a pretty strong indicator that integrating gambling into games has serious moneymaking potential. Betable’s platform makes it so that game developers can legally integrate gambling into their games, giving players an exciting new way to engage with their favorite games: for real money. We believe that gambling mechanics married to social games will create an entire new genre of games. If you’re interested, subscribe to our blog to get more updates on how we plan to revolutionize gaming.
If you found this post helpful and would like to learn more about Game Monetization, join our meetup group, San Francisco Game Monetization! And be sure to check out TapJoy’s next webinar, they did a great job and gave us a lot of great information that we used in this post.