Why you should monetize exclusivity

Back in the olden days of mobile games (pre-lightening cable), there was a distinctly premium path that was different from the “nonpayer” path. By that I mean there was content (characters, game modes, consumables, etc.) users could only acquire by spending real money. Either the price point was directly in dollars, or there was a distinct type of currency users could only get by spending real money (players could not get that currency by playing). Historically, that’s what the hard currency / soft currency divide was for. The goal was to have 2 acquisition paths that didn’t intersect. Soft currency could be acquired by playing – items acquired for soft currency would allow nonpayers to progress. Hard currency could only be acquired by spending real money – items acquired for hard currency were premium and would only be available for payers. The advantage of hard currency (over a $ price point) was that it provided a layer of mediation (between your wallet and the in-game content) that helped alleviate the psychological barriers to spending money in a game. MobaCoins were a great example of this: premium gachas and consumables could only be purchased for MobaCoins. And MobaCoins could only be acquired by IAP. Incidentally, this made revenue recognition much easier: DeNa would report Coin Consumption as one of its key performance indicators. And it was relevant because those coins that were consumed could only be acquired via IAP.

moba_coins

 

There are multiple advantages to this system. For the developer, the biggest advantage is a greater control over balancing and the acquisition path for these premium items: regardless of how players engage with the game (play a lot, grind a specific game mode, play events, etc.), a specific amount of real money needs to be spent to engage with that premium content. But there is also an advantage in terms of clarity and readability – and that’s a positive for the developer and the fan alike. When something requires an IAP to be purchased (either directly or to get a currency that doesn’t intersect with gameplay), then you are clearly positioning that item as something that can only be obtained via paying. In other words, you are associating spending and exclusivity. Players are spending money to get something they couldn’t get otherwise. That might not appeal to your entire player base (keep in mind the vast majority of your player base is composed of players who don’t want to spend). But it will provide a much more rewarding experience for your biggest fans who do want to spend.

Needless to say, this type of “hard gating” is no longer the norm in the industry. And different games have come up with different ways to lower this barrier. On one hand games that have a dual currency system now tend to reward players with much more hard currency. Games that follow the P&D or Brave Frontier economy have found one the best ways to do this. They reward players with a finite amount of hard currency which is tied to progression. That means players can engage with the more premium content in the game, but in a controlled way. Because players on get gems the first time they pass a level, they can’t continuously grind for hard currency. You know exactly how much hard currency a user who progressed to level 4-1 could have accumulated by that point.

On the other hand there is a more extreme version of this, where free-to-play is associated with the idea that everybody – whether or not they spend in the game – should be able to access all the content in the game. In those cases, the dual currency system is redundant (structurally, the same currency could be used to purchase all items. But the number attached to the more premium items would be very high). Playing the game is the only source to acquire in-game content. Basically, the monetization strategy is based on customers buying gameplay rewards to acquire items faster. In this case, being a customer is not about acquiring more or exclusive items. It’s about having to wait less to acquire them.

free_to_play_brS

 

I’m not convinced the extreme free-to-play approach is the best monetization strategy there is. Making it a matter of principle that every playing user can access all the content of the game is clearly appealing for users who don’t want to pay. But there are multiple data points that strongly suggest this might not be effective and beneficial. The decision to spend is something that occurs early in the player’s lifecycle. The longer a non-payer stays in the game, the less likely s/he is to start spending. So, you want to make sure you are not sacrificing the monetization potential of your engaged fans to cater to your non-paying users. It’s not clear that focusing on the late-game retention of non-paying users has a high ROI. No matter what you do, you should make sure you are not doing anything to compromise the experience of your customers. Even though they are a minority of your users they account for the vast majority of your revenue.

On the other hand, I am not advocating for a return to the radical hard currency / soft currency division from 5 years ago. Impatience is a powerful emotion. There is a reason why many games based on monetizing off impatience are effective. More importantly, some titles and genres lend themselves more than others to a democratic game economy and monetization strategy. And in practice, through balancing and price optimization, you can price something in game and ensure very few nonpayers can purchase it. Think of it as a “controlled democratization” (I write that although I’m pretty sure it’s an oxymoron).

restaurant
In theory any player could get enough currency to unlock this restaurant – in practice few can

 

The focus should always be to create value for your paying users. And if you think about creating value for your players, and the type of emotion your monetization strategy is based on, then you can see that the desire to acquire something exclusive is a positive emotion – whereas impatience is a negative emotion (impatience is the desire to not wait). That’s why I strongly believe that any game that allows users to spend real money should also feature some exclusive items or features only payers could engage with. It’s not about being dogmatic and embracing one philosophy or monetization model. It’s about embracing a wide variety of monetization techniques, catering to diverse motivations and modes of gratification, and most importantly offering a positive and rewarding experience for the paying user. Spending money to get something you could get without spending opens the door to a specific post-purchase evaluation: was it worth spending to get this or should I have waited? On the other hand, the exclusive/hard gating approach removes that from the equation. What then becomes important is to ensure the purchase is rewarding and gratifying.

You need to think in positive terms. Add something to the experience of the customer spending to engage with your exclusive content. It’s not about introducing a blocker in your game design and progression – and then sell the solution. You should always tune your game progression with your nonpayers in mind. Your exclusive item needs to be something that enhances the experience of your customers. It can be something gratuitous like a skin, or something with functionality and higher performance. But in these cases, we are not talking about something that is required to progress.

Alternatively, it can be additional content – content that doesn’t interfere or intersect with the main path. Spending allows users to engage with a different and exclusive events, slot machines, or progression/narrative paths. For the non-mobile version think about games like Skylanders – where having a character of a specific class unlocks an alternative path. Investing resources in making this exclusive content can make a lot of sense depending on the game. If your game features a linear progression (think games like Deer Hunter or CSR), then what percent of your installs ever see the second region, the third? A vast majority of your installs don’t engage with the vast majority of your content. If you are not thinking in terms of number of users but rather follow the money (think about the users from whom the money comes), then it clearly appears there can be a high ROI in developing and marketing this exclusive content for your paying users – event though non-paying users will not experience it.

By definition exclusivity excludes some groups. But when you are thinking about monetization, it’s important you focus on the segment of users who is actually contributing to your bottom line. When you monetize exclusivity, you are clearly saying that spending allows your customers to engage with content they could not engage with unless they spent. And that’s the best way to make sure spending is rewarding and gratifying. It’s not a matter of degrees, and there is no exchange rate between time and money to assess the value of the purchase. When there are exclusive items, the thought benefit becomes binary: was it worth spending to get this (yes or no)? If users like what you are offering, then there is no cost/time calculation and tradeoff. They just need to evaluate if what you are offering is desirable enough to spend money to get it. If they want to engage with it, the only way is to spend. This is a good way to monetize your most engaged payers – those users who matter the most. But when you chose to monetize exclusivity, you also need to acknowledge the fact that the burden is all on you. You need ensure you are actually providing your paying users with something worthwhile.

 

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