The whole thing with CCCC not withstanding, this felt like a good day to take another break from talking about that, particularly since I’m to the point where names might be named very soon. Today I’m going to go with something a little softer… in application purchases/downloadable content.
I teach games classes. One of the major issues in any class I teach– be it on interpretation, on design, on marketing, on the Esports scene– is the idea of a single-time-purchase vs. pay-for-play vs. downloadable content in patches vs. “freemium.” For those who don’t know the terms, a quick overview:
A game with a single time purchase price is what most people thought of as games before the internet (though some games did sell expansion packs). It’s a game that as a consumer/player you pay for one time and you own. That’s it. There might be bonuses to unlock, there could be content to download (though it was the arrival of downloadable content that changed this model), but there was never another fee. As a consumer you paid a premium price (stand alone games are rarely cheap, particularly if they come from triple A companies), but then you were done paying for that game.
A more common triple A game strategy right now is to sell a game as one big, functional piece but to sell downloadable content as well. This varies from game type to game type and from company to company, but the most common things are: 1) Fighter games with new characters 2) RPG/Action games with new missions/narrative content 3) games that sell enhancements (card packs to draw new items, cosmetic changes, etc.) This is a game with downloadable content
A pay-to-play model is what most gamers consider the most disappointing form of marketing a game, but it works really well for crowds that will spend the money. These games are often what are called “Freemium” games, meaning that the game itself is free, but in order to get any of the useful content, to remove advertisements, to get new characters or abilities, etc. the player has to spend money. In some cases, it’s not a great deal of money. In other cases, it’s insane. I’ll offer an example that I used in class recently in just a moment.
A final model is a game with a subscription fee, which is technically a pay-to-play but works in a different way. The best marketed of these games– something like World of Warcraft– manages to sell a stand alone game client that is useless without a subscription, a monthly subscription, expansion packs every 1-2 years for another flat fee, and cosmetic items galore in their online store. It’s brilliant as a marketing plan, IF you can get the player to do it.
The reason it’s important to know these forms of marketing is that this is a part of a game’s design. At its core, you have to figure out the best way to monetize a game. And I want to give you a few quick examples of ways this works so you can see just how the money is made.
Example 1: Stand alone game, Madden 2018 (without the card game– that makes it a different market, and not all players are lured into that).
A copy of Madden 2018 for Xbox 1 or Playstation 4, at launch, costs $60 with a collector’s edition that costs $80 and basically just sucks the player into playing the card-game based challenge mode, which becomes a pay-to-play model that is rather unforgiving. But let’s, for now, ignore that aspect, as I’ll cover how that works in a few of the other examples.
If the average player spends $60 on Madden, the projected sales will be in the ballpark of last year’s game, so that’d be 5.5 million copies over the duration of the game’s life. At the retail price, that is a total revenue of $330 million, or about half the global revenue of the Star Wars Rogue One movie. More important, Madden doesn’t start from zero every year. Some years it barely changes. The overall revenue for Madden as a franchise eclipsed $4 billion in 2013.
Not a bad outing, right?
Let’s sit that next to another newer release, Injustice 2, a fighting game from NetherRealm Studios, the makers of Mortal Kombat. To date, it has sold 790,000 copies. They also retail at 59.99, but to get all of the downloadable content, that price jumps to $100 (or another $60 if it is bought in pieces). There is also a currency in game that can be used to buy cosmetic options, but I’m not even going to add that layer into figuring their profit yet. I can’t find hard numbers on how many people who bought Injustice 2 bought DLC or bought the more expensive version of the game to have the DLC content, but conservative estimates are that 3 out of 4 players will want the DLC content for a game that is all about playing against others.
So the math for that would be $60 x 790,000 + 50 (averaging full DLC purchase vs. ultimate edition with DLC) x 592,000 = $77 million. And that’s only six months into the life of the game, though it is the most significant amount of income the game will see.
Not bad, right?
I’m not even going to try to reverse engineer the math, but subscription-based World of Warcraft had generated $10 billion as of January of this year. That’s over a little less than half the span of time that Madden needed to make it’s $4 billion, but Madden, of course, takes less resources.
Blizzard, who make WoW, also make a free-to-play card game called Hearthstone, where all a person pays for are occasional expansion packs ($20-40) and packs of cards ($1.50 each, generally, for 5 new cards). Making the game free might seem like it limits the chances for revenue, but in 2016, Blizzard made $395 million. That’s more than Madden, where we started.
Beyond that, it gets a little more tricky to figure out revenue, but I used this as an example in one of my classes, so I want to try it here again in a slightly different light. I play a game called WWE Champions on my phone. It’s a match-3 with wrestling elements, one of the key factors being that some wrestlers have better attacks to trigger with the matches (think of Puzzle Fighter). It’s free-to-play, but you quickly run up against several in-game currency walls. To level characters up, there are two different kinds of items. These items drop, but not nearly often enough to be competitive in the now 20 million strong set of people playing the game. There are also health packs to buy, which enable you to return to playing faster (thankfully the game doesn’t use the energy model, one of the worst of the IAP money-sucks). I can’t find any public stats, so I’m going to do some fancy math footwork to give just the closest napkin-back example of what that game is making.
There are 20 million players. I am probably one of the least spendy of the people who spend in the game (some swear by staying free-to-play, of course, as is always the case). I spend a nominal amount because I believe in supporting the developers of games. I have averaged around $10 a month since the game came out. That doesn’t seem like much, until I realize I’ve been playing it since right around by birthday, so I’ve been playing six months. I’ve spent $60, and I will likely spend more.
But I met a guy through Reddit who is obsessed with the game and has plenty of money to spend. How much, you might ask? When a new “megasuperstar” is released, which is roughly every three days, there is a %0.5 chance to get said character from a 400 in-game cash draw. That’s $4 in real-world money if you buy the cash, which this guy did. He had to draw 4000 plus times to get one of the superstars he wanted. So he spent, in a day, $16,000. I told him that was awesome in a way but also scary, and he told me that he knows a whole guild of players who do this, and they have competition who does it, too. As we talked, he told me there were 3 big time guilds full of what we call “whales” in the games IAP world. A guild is 100 players.
So I asked the guy to average it out, and he told me that this particular champion was hard to get, but he usually makes sure he gets everyone. So let’s do the math. %0.5 chance to get the wrestler means you’d have to try 200 times if you had exact even-odds at the percentage. That’s $800 for a rare open. There average 3 of them a week, so that’s $2,400 a week. The game has been around a year for those who started day one (which all these guild members had, he told me). That’s, then, $124,800 for a single person. Now, as I mentioned, there are 4 of these guilds. So that’s $49.9 million. And those 400 players aren’t even entirety of the top 1% of those who play the game. There are 200,000 in the 1% of the 20 million players of that game.
So if 2% of the top 1% spent 49,9 million dollars, imagine what the total revenue of the game might be. if 1% of the players spent what I projected here (and given, this is really abstract math– I’m not claiming to be accurate, just to be somewhere in the ballpark), that would be almost $25 Billion. And remember, this is a “free” game.
I seriously doubt the game has made that much money, but this is why the IAP world works. Games that sell that in-game purchase for almost everything aren’t catering to the same audience as a game that you buy once and you’re done. They don’t need to worry about 99% of their players, because the 1% with insane amounts of money to spend can net them massive, massive profits.
So if you’re making a game, maybe think about IAP. It will lose you street cred, but it might make you rich.