Design-Driven In App Purchases: Creating Sustainable Monetization

Oscar Clark   •  June 23, 2015

We are in an era on mobile where Freemium has won; but there are many out there who question whether this is a good or bad thing for the player. Indeed, are the current approaches to Free2Play design sustainable and are some of them even ethical?

Over the last 4 years, the reported ‘typical’ paying player appears to have dropped from 3-5% of total downloads* to a mere 1-2%. This isn’t a smoking gun and there is a lot of conflicting evidence, but when you consider the improvements in data analysis to aid retention and the huge increased marketing spend from games at the top, I believe it’s worth taking another look at how we can develop a more sustainable approach to game monetization.

Let’s agree on three principles before we start.

1. The games business is a leaky bucket

We will always lose players! Games are consumable entertainment and players will inevitably churn. This means we have two options – add more people faster than we lose them or plug as many leaks as we can.

2. Retention has a huge impact

Look at the results of our Unity Ads Survey with EEDAR:

Online Survey Conducted in 2014 with 3,000 paying players

3. Buying (even downloading) is a risk

In The Journal of Marketing, James W Taylor wrote about the four forces which prevent people from making any purchase, be it a game or a pair of shoes. We need to know what we are getting, what we are missing out on, what others will think of our decisions and deal with other things in our lives.

In short, if we are going to make better, more sustainable In App Purchase (IAP) design, then first we have to keep more players for longer and create the conditions where they feel safe to buy things in our game.

The current IAP models typically use:

  • Unlimited Content – Capped by limited energy (such as Candy Crush Saga)
  • Exponential Cost Escalation – Building a bigger base requires bigger stores (Clash of Clans)
  • Time-Limited Events – Special limited editions and timed events (Puzzles & Dragons)
  • Casino Mechanics – Not part of this discussion as it relies on different psychology

These kind of purchases strongly focus on the conversion of the player to spending, rather than on delivering an expectation of value. We don’t get to retain users if we treat them as disposable, like visitors to a carnival midway (or fairground if you’re British). If we rig the games too far, then people will lose the joy and simply stop coming back.

The concept of ongoing spending as a user presents different short-term vs. long-term risks. Most players have a budget they are comfortable spending regularly. In the heat of a game they might exceed that, but this creates Buyer’s Remorse unless they feel they can choose to limit this spend in the future. We have to consider the short and long term risk profiles of the game as well as the context for players including:

  • Escalating costs – The perception of ever escalating costs will impact player demand. This isn’t the same as price sensitivity but never-ending upward pressure creates payment fatigue.
  • Never-ending spend – The perception that I will always be asked for more money from the game creates payment fatigue, but that is different from the desire to want to spend money of my own choice. Always have more for me to acquire on my own initiative; don’t make my basic retention depend on it.
  • Comparative progress – Seeing others perform better than me can create playing fatigue. If someone else’s spend alone makes it appear impractical for me to compete, I will abandon the game – claiming that it’s pay-to-win.
  • Substitute games – We can’t ignore that there were an average of 362 mobile games released every day in Feb this year alone. There are always substitute games, and they are all free too.

Buyer’s Remorse is a real thing. We build up a great deal of anticipation and often get caught up in the heat of the moment when we make a purchase (or download).  But after our purchase is when we are at our most vulnerable and we will (at some point) cool down and review our purchase decision. The role of a designer is to keep that player playing. More than that, as a designer of IAP we have to keep players wanting to not just continue playing, but paying. That requires us to sustain their attention, interest, and desire over time!

Just like every game mechanic has to engage and entertain a player, our game purchases have to ‘supercharge’ a player’s sense of delight and drive repeat engagement.

  • Unfinished Business: Games like Kim Kardashian Hollywood do an amazing job with the narrative progression and the format of what are essentially ‘Cookie Clicker’ tasks and still create a sense of unfinished business. The gameplay may be limited but the engagement is very real – this leaves the player always wanting more. That engagement directly helps overcome the issues from any opportunity cost there may be
  • Continued Relevance: Games like the VEGA conflict show items which players will be able to unlock later in the game. Their associated stats similarly go a long way to show the continued relevance of playing as well as how what the players just unlocked fits into the game. Often this is about putting the monetization in the context loop, rather than in with the core game mechanics.
  • Social Capital: It’s also important not to ignore both the social consequences and the value that players put on the ability to personalize their experience as long as others are able to observe their decisions. This was key to most of the revenue in the now shutdown Playstation®Home experience with examples like the ‘Gold Suit’ offering its wearers social capital. However, people often misunderstand this phenomena – customization has to be authentic as it’s about a real person’s response to your experience.
  • Inertia: It’s also easy to underestimate how important it is to keep your players playing – even if they are freeloaders! The fact that a player deliberately chose to play your game is hugely valuable – it’s a massive compliment to you and your team and you should respect that.  This is the key to you being able to generate revenue in the first place and their ongoing commitment will be hard to win. That’s why your initial on-boarding process is so vital. Acknowledge that every player has a lifecycle and be aware of how their needs will change as they move from Discovering to Learning then Engaging.  Building longevity takes an understanding of the community as well as how your game’s rhythm of play fits into your players’ lifestyles.

We should not consider someone who pays once to be a customer.  They may have purchased, but unless they do it again there is work to do to not only create a scaleable business, but also one which delivers what our players actually want!

According to Park & Lee, players are buying because they have an expectation of value, not just because they are happy with the game. They are demonstrating a desire to get more out of our game and we have to sustain that if we are to encourage them to keep spending. You can’t sustain this desire if your IAP doesn’t deliver both logical and emotional value. If we respect our players, we will earn a longer Lifetime Value (LTV), but unfortunately no matter how good our game is there will always be a diminishing return.

That’s why we have to take a design view to the kinds of goods we offer players.  I like to break these down into four categories:

  • Sustenance – Goods we require to continue playing
  • Shortcuts – Goods which speed up the actions we are performing
  • Socialisation – Goods which are primarily about social capital
  • Strategy – Goods which open new playing options

These goods can come in various forms:

  • Consumable – a one-time use item
  • Capacity – something which enhances growth/play
  • Permanent – a permanent upgrade or unlock item
  • Generators – an increase in the supply of a consumable

Looking at your game, you will be able to identify a point in the game mechanic or the context loops of play (perhaps even the metagame) where any of these items would benefit the players. However, the problem most developers fall into is forgetting to make their goods scaleable.

It’s something which, in my opinion, was the downfall of the free2play version of Dungeon Keeper.

Scale matters!

Some methods we can use to help scale goods include:

  • Bundles – Whether it’s a BOGO or a pack of 10, selling more than one consumable in a single transaction not only makes the offer more attractive to the player, it also means that they may have some left over. And that means they’ll need to come back to use them.
  • Ratchet Mechanisms: It can be scaling how many recharge crystals you need to continue your run, having died multiple times like in Blades of Brim by SYBO, or the classic mechanic where to upgrade your HQ you first have to upgrade your Gold and Mana Stores (which of course takes an escalating amount of time and resources to complete). I’m falling out of love for this system to be honest, but it’s still valid when spread amongst a large number of assets such as the different heroes in Marvel Future Fight. This method also includes multi-part items such as the Blueprints in the Force Collection.
  • Scissor-Paper-Stone: This remains my favorite approach to scale and I think the most consumer friendly – add a touch of dilemma to the purchase. Do you buy the Blue Sword or the Red one? Blue is better on Green, but Vulnerable to Red attacks… Do it well and you’ll turn purchase decisions into a positive part of the reason to play. Look at games like Hearthstone or DOTA where players have no problems with spending money. A dilemma doesn’t have to be profound, it can be as simple as the mental switch between collecting gems and avoiding obstacles in Lets Go Rocket from Cobra Mobile.
  • Customization: The more creativity you allow your players, the more engaged they will be with their characters emotionally and the better impact your purchases will have on ongoing retention. However, this has to be authentic. You can’t fake Geek Cool.

There are other things you can consider too, such as how rare an item might be, what function that item delivers, why that’s special, and how it improves the gameplay. But also ask why an item will be something a player aspires to get and how you can make it more personal.

IAP must be part of the game design experience. We have to create a sense of anticipation and delight if we are to attract players’ interest and create the desire to act and purchase from us.  We are now retailers inside our game and as such have to think in a similar way. Why not consider some of the following techniques?

  • Help from a friend: Games like Criminal Case actively use Facebook connections to offer gifts to their friends of freely available consumable items like energy. Learning from Puzzles & Dragons as well as Marvel Future Fight, we can connect with other players who are online at the same time as us and make tentative allies. These can be a great excuse to see what impact a power or new character might have on our game, and make it easier to get past a troublesome boss.
  • Free use of an item: Sometimes we have to show people what they are missing out on; unless you have used a better car/gun/etc, how will you know how much more fun it is that the one you already have? Sometimes this temporary use can be a reward or part of a daily challenge, but it can also be highly effective to use ‘Opt-In’ Video Ads to offer such experiences. These put a commercial value to the free item, something the player often appreciates more as a result.
  • Predictable uncertainty: Knowing you will get something but not knowing what is a great tool. This is often used crudely by throwing a roulette wheel into the game. However, it’s more interesting in its use in Crossy Road: I regularly get a random creature from the coins I earn through play or from watching opt-in videos. These creatures are all delightful in some way, and each time I get one the other becomes more interesting. There are some which I just had to get my hands on straight away – as a result I was willing to spend real money to get the ones I wanted, Emo Goose and Frankenstein.
  • Limited offer: Whether it’s limited by time or event, it can be really effective to make players authentic and in-game context plausible offers. Fake scarcity will add to playing fatigue.

Finally, the point of making sustainable IAP is to look at the sale as the beginning not the end. If we are to really achieve that, then we have to recognize that each purchase we initiate creates its own sense of buyer’s remorse and build playing and paying fatigue – leading to churn. We have to constantly fight this inevitable loss by building post-purchase utility. That means making the user feel special every time they make a purchase, similar to the unboxing experience of an Apple product. Identify and allow players to show off ‘landmark items’ which genuinely expand the scale of play, but then don’t forget to show them what their money has bought. All this has to also take into account how each purchase affects the gameplay of others; we can’t afford to increase the engagement of one player at the cost of dozens of others.

Show me as a player that you respect my decision to invest in your game and give me a reason to do it again!

Oscar Clark   •  June 23, 2015