Is it just a closed loop of game companies paying eachother or are they getting money from somewhere else?
In: Economics
I worked in the mobile free to play industry. The current answers I see don’t reflect what I experienced.
Ads are nearly worthless. Usually 1 to 2 cents per view. So if we have a user base of 5000 active users a day and they each watch 5 ads it’s $250. Which is not terrible but that number is basically the maximum many dev studios would see.
And more importantly ads give resources without training purchasing behavior which is discouraged. You will often see limits on the number of ads you can volunteer to watch for instance. This is because it’s not valuable to allow you to farm currency that way. It’s a supplemental income, not the main focus.
Whaling would be a great term for how free to play games actually make their money.
99% of a studios income will be from a very small percentage of the userbase. These people are the whales, they spend literally thousands to tens of thousands of dollars on free to play games. They do this because free to play games focus on including every single mechanic they can to encourage addictive behavior. With many strategies pulled right out of casino textbooks.
It’s very important to gate time. You can’t have people burning through content. So time sinks need to be made. All resources are monitored to make sure that their are good gold/gem sinks. So that players are properly on the verge of just having enough to push them to buy more.
Also it is very important to encourage purchasing as early as possible to normalize the behavior. You’ll be given premium currency as part of the FTUE (first time user experience) and this will maximize the likely hood that you will be tempted to purchase more premium currency.
Lots of people will spend a few dollars here or there. But all of the players that spend a reasonable amount combined likely do not add up to what the biggest whale is spending.
So when trying to understand these markets, remember they are whaling industries trying to land the big one. This is why so much of what they do seems so unappealing. They don’t care about you shrimp, because the whales ‘love’ it. (Or at least they will drop their money endlessly and that’s the important bit.)
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