Written by Kevin Jennings
With the dawn of the internet age, society as a whole decided to make a deal. While obviously a person needs to pay for some form of internet connectivity, beyond that we all chose to have almost entirely unfettered access to the content available online. Some sites keep some or all of their content behind a paywall, but by and large you can browse just about anything without needing to pay for additional access. In exchange, we collectively agreed that we would be the products. In addition to being bombarded with ads, though thankfully the days of obnoxious pop-ups are mostly behind us, we would allow companies to harvest our data which they could then use and sell.
It was a short-sighted decision, and one that people are beginning to regret. However, it was a system that we all became accustomed to. As internet speeds and technology developed to allow for easy development and distribution of simple games, both on web browsers and smart phones, a consensus once again had to be reached.
Originally, developers tried the traditional model of video games, whereby players would purchase the entire game upfront and have unlimited access to it. However, even with these small games only costing $5-10 on average, this was still too much for most people to commit to and developing these games became unprofitable. With consumers unwilling to buy these games outright, the new “free to play” model was created.
Types of Free to Play Games
There are a few different ways to monetize a free game, some more predatory than others. The first is “pay to win” games such as Raid: Shadow Legends and traditional Hearthstone. These games generally allow you to play as much as you want for free, but good luck accomplishing anything. The tools available to you as a free player pale in comparison to those of paying players, and accomplishing anything becomes nearly impossible. While Hearthstone has introduced other play modes that can truly be played for free, remaining competitive in the traditional game without spending money just can’t be done. Building a top tier deck to compete with could take months, and even then it will only be useful for a limited period of time until new cards are released.
The next variety is “pay to play more” games like Candy Crush Saga or Pokemon Shuffle. These games only give you a limited amount of play time, normally one life per 30 minutes, and you have to pay if you want to keep playing. Candy Crush also employs a pay to win strategy, allowing users to not only spend money to continue playing, but also by allowing players to purchase items and power ups that will help them complete difficult levels.
The final main type of free to play games is “pay to look pretty” games like Fortnite and League of Legends. These games are generally free to play as much as you like, and there is absolutely nothing you can purchase in the game that will improve your odds of winning. They are skill based games where any purchases are purely cosmetic, such as different costumes for your characters or different dances in Fortnite. Technically, in League of Legends a new account is not fully unlocked and you can purchase characters or experience boosts to unlock the ability to play ranked matches sooner, but this is a very small portion of the game and realistically a player can unlock characters faster than they can adequately learn to use them anyway.
It may seem counterintuitive, but by letting players download and play games for free rather than making them purchase the game upfront, revenues skyrocketed. In 2018, over 75% of app revenue came from in-app purchases from mobile games. In 2019, revenue from free to play games had increased to the point that it made up 50% of all revenue in the global gaming industry. That means the revenue from games like Candy Crush Saga and Pokemon Go was equivalent to the combined revenue of X-Box, Playstation, Nintendo, and traditional PC Gaming.
As for where that money is coming from, only about 4.2% of free to play gamers actually make any sort of in-app purchases. Broken down further, about 5% of women and 3.3% of men make these purchases, with women representing 55% of gamers in this space. One contributing factor for women being more likely to spend money on free to play games is that they tend to play longer and more frequently than men.
There does not seem to be any definitive answer as to why there is the gender disparity in free to play games. The most logical answer would be that people, all people, regardless of age, race, or gender, love games, but that the traditional console and PC gaming space is generally considered more hostile towards women, pushing them towards the more casual free to play market.
While only a small percentage of these gamers make any in-app purchases, most of them are $1-5 microtransactions in limited amounts. The real revenue comes from what are referred to as whales, a name aptly taken from the gambling industry. These users make up around 0.25% of all players, but they account for over 50% of all sales. And while women may be much more likely to spend money on free to play games than men are, it is men that make up two thirds of the whale population.
In Game Currency
Now that we have an idea how different types of games want players to spend their money, the next step is to make sure they forget that they’re spending real money. Every successful free to play game uses some form of in game currency, such as hearts, gems, and gold, and they try to price them in such a way that conversions cannot easily be done. For example, if one dollar gets you 100 gold, it can be very easy for a person to figure out the real world cost of what they’re purchasing. However, if one dollar gets you 7500 gold, suddenly things become a bit more murky.
This is similar to how casinos use chips or how people with credit cards are more likely to spend money than people who carry cash. The more degrees of separation between the purchase and any actual money, the harder it is for our brains to process it as real money being spent, even if it’s something that we fundamentally understand. Another key element is to offer bulk discounts. By pricing in game currency with very clear discounts, as well as including banners for those unable to do the simple math, the higher purchase options become much more desirable as they are seen as a better value. While anyone with the ability to do basic arithmetic, something our brains understand at a young age, is able to identify these deals, very troublingly it is children that are more likely to fall victim to the bulk currency purchases.
Free to play games also will allow players to slowly earn in game currency. While obviously this allows a mechanism by which free players can progress in the game, it also serves to further confuse the minds of those players spending money, as the additional currency they earn from the game makes it difficult to track real world spending relative to any individual in game purchase. Having a one-touch option for purchasing in game currency inside the app itself is also very important. The longer it takes a person to spend money on in game currency, the more time they have to think about what they’re actually doing and if they want to. The one-touch option is like having an ATM on the casino floor, something that it is illegal in the United States.
The concept of allowing players to earn in game currency for free is also a major factor for getting players hooked on a game. When first downloading a game, a new player will often receive lots of free rewards very quickly. This will allow them to try out all of the features that normally cost money, and ideally make them take a liking to these things. Once the rewards dry up after a day or week of playing and the slow grind to progress in the game begins, they will be more likely to want to purchase the perks or items they have previously used to accelerate their progress back to a point they were comfortable with. Bombarding a player with free rewards, especially ones that are random, also affects our brain chemistry.
Exploiting brain chemistry is the most fundamental part to how free to play games work. Dopamine is the chemical in our brain that makes us feel good, and is released during pleasurable activities or events. Most importantly for things like predatory loot boxes, surges of dopamine levels are present in the moments leading up to a possible reward. In short, our brains are programmed to make us feel good about gambling and the possibility of winning.
Dopamine does more than just make people feel good, however. It is crucial for habit forming, and it is fundamental in learning, exploring, and seeking out novel experiences. It is an extremely powerful chemical in terms of controlling a person’s behaviour, as triggering the brain to release dopamine is addictive, something that free to play games prey on. Because dopamine also makes our brains want to seek out novelty, it increases the likelihood that a person would engage in riskier behaviour. For example, drugs that treat Parkinson’s disease by increasing dopamine levels have the potential side effect of causing compulsive gambling, the exact sort of behaviour these game developers are seeking out.
Developers use the random nature of rewards to keep players hooked in an effort to get them to spend more money. If everything is predictable, it becomes boring, especially as many free to play games have extremely simplistic gameplay. By introducing random elements, it suddenly becomes exciting with our brains releasing dopamine in anticipation of these rewards, and again upon receiving them. Of course, random is random, and sometimes a player could have a string of bad luck. In such an event, that person’s brain might suddenly realize that, much like buying a lottery ticket, they aren’t actually going to earn anything good from their random rewards. Companies want to avoid this from happening, so they take steps to ensure good rewards will eventually come.
For example, a pack of cards in Hearthstone will always contain at least one rare, with a chance at epic or legendary cards. While on average those cards would show up in every 5 and 20 packs respectively, they are genuinely random so sometimes that doesn’t happen. To ensure players don’t get too discouraged, they implemented what is colloquially known as a “pity timer”. No matter how unlucky a player is, they cannot open 10 packs in a row without getting an epic card or 40 packs in a row without getting a legendary. This is cumulative over time, and they do not need to be obtained or opened all at once. While that rate is still well below average, without the pity timer there would be people who had an unlucky streak and went over 100 packs without opening a legendary, and those players would never buy a pack again. That is something that developers want to avoid at all costs.
Our brains work logarithmically when it comes to comparing things. If you were to close your eyes and someone played a 20 gram weight in one hand and a 40 gram weight in the other, you would easily be able to tell which was which. However, do the same thing with a 200 gram weight and a 220 gram weight, and it will be impossible to tell the difference. Even though in both instances the difference in weight is 20 grams, in the latter case because that 20 grams makes up a smaller percentage of the total weight our brains are not able to identify the difference. This is exploited frequently in the food industry with companies either raising prices a few cents at a time or decreasing the net weight of a package’s contents slightly, with most people unable to notice a difference. One of the most well known examples is the half gallon of ice cream, which over time has shrunk from 2 quarts (half a gallon) to only 1.5 quarts without any decrease in price.
Free to play games utilize a similar system, making rewards gradually take longer and longer to achieve. Going from level 9 to level 10 in Pokemon Go takes 9,000 experience, at which point the player would have earned 45,000 experience total. To go from level 46 to 47 takes 18 million experience, which requires either a lot of time or a lot of in game purchases to accomplish. But the increases happen so gradually, players don’t really notice how ludicrous the requirements become.
This is something the creator of Farmville referred to as “fun pain”. The games interrupt fun with a mildly unpleasant experience, but then offer a tool that can be purchased to solve that problem. In the case of Farmville, it was cultivating land, which was done by clicking a mouse on every individual square on the farm. That’s not very fun and stands in the way of what the player actually wants to do, so they offered a tractor that would cultivate six squares of land per click. With a simple purchase, this tedious task becomes a lot more manageable.
When someone does something nice for a person, that person often feels some sort of moral obligation to do something nice in return. Reciprocity is part of human nature. Much to the benefit of the original party, that reciprocal action does not need to be proportionate. Developers released these games for free for players to enjoy, so it is human nature for the players to want to provide some sort of reciprocity in the form of in game purchases.
The companies that make the best use of this are the “pay to look pretty” games. League of Legends is the most watched eSport. While there are obviously advertisements like any other sporting event, professional games can all be watched for free either live or on demand. And though advertisements exist, there are no breaks in the actual games themselves like in traditional sports.
Because Riot Games offers the players so much for free, both in terms of the game they produce and the professional leagues that they broadcast, it is only natural that players would want to give something back. Every year, the competitors on the world championship team each get to pick a character to have a new costume made for, with 25% of the revenue from those sales going to the team’s players. This allows them to encourage reciprocity both for themselves and for the professional players whose efforts are enjoyed for free online, not that those professional players aren’t being paid well to begin with.
Even for those with iron resolve, the temptation to spend money on free to play games can become overwhelming because of a principle known as ego depletion, a term coined by respected American psychologist Roy Baumeister. Ego deletion posits that each person has a limited amount of willpower, and free to play games will try to wear this down.
One of the tactics employed by free to play games is to constantly show you purchasing options, especially when they’re deals or discounts. Doing this as often and visibly as possible, without being offensive or interfering with gameplay, has a cumulative effect on the person. Your self control is like a muscle, and just like with lifting weights, overexertion will eventually cause that muscle to fail.
While your body has many different muscles, and good workouts will target alternating muscle groups on different days to avoid them becoming overworked, you only have one willpower. Forcing yourself to go to the gym, turning down that second bowl of pasta, or declining that bump of cocaine, while unrelated to your activities in a game, all work together to deplete a person’s limited amount of self control.
Generally speaking, developers who implement predatory gambling practices into their games don’t like to talk about what they’re doing. After all, we used the word “predatory” to describe it. But know who loves to talk, at great length, about their work to those few people who are actually interested in understanding it? Data scientists.
Data science play a huge role in free to play games. The activity of users is monitored, and allows the data to be analyzed to see what players are spending their time doing in game, where their money is going, what sort of special events they respond favourably to, and a myriad of other things. However, data science isn’t just for use on the macro scale.
Ultimately, every individual user has a price they will pay to unlock all the content in a free to play game. For some users, that number is $10,000. For others, it may be as little as $1. Though not every game does this, many games will offer different prices for in game items or bundles to different players based on their activity. That may seem a bit douchey, especially to the higher paying users, but at the end of the day it’s just business. While most game designers do what they do because they want to create a game that other people will enjoy, a company is more than just the designers. Companies have executives, and executives like money.
That’s not an inherently bad thing, either. If someone isn’t there to ensure that a game is profitable, there’ll be no company left for the designers to design their games. It’s not like putting “Designed free to play mobile game from the ground up, lost company $14 million” is going to look good on a resume for future design gigs.
By implemented the psychological and strategic tactics we’ve outlined today, companies will ensure that the free to play model remains as profitable as possible. Their ultimate philosophy can best be summarized by the words of an anonymous data scientist for a large free to play game: “Whether it’s $10,000 or $1, everyone has a maximum price they’ll pay to access all the content in a game. It’s our job to make sure we get that from them.”