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6 Core Freemium Monetization Mechanics Explained

Although Freemium is a concept that has been coined in the last 10 years, Free has been a concept that has been around for decades.

Social Mobile gaming in the last 5 years have evolved tremendously while usurping the revenue model that console has built up for years. As social gaming becomes a mainstay in the industry, monetizing users is becoming more and more of an art form as users become more educated about how they spend their money in – game.

The mobile freemium market experiences shifts in environment, every 1-3 months as users spending habits change, platforms (Apple and Android’s) Platform updates or new and innovative ad networks disrupts the playing field. But as discussed earlier in this post, free has been around for decades and this post will discuss the 6 different core monetization methods developers repackage to provide users with a unique purchasing / gaming experience.

Lets take a look at the 6 core monetization mechanics you need to know to succeed in this market.

1) Gacha / Lootbox

Ahhh, The all mighty Gacha system. Gacha is a term that was coined in Japan that represents the sound of a child turning the knob of a toy dispenser spitting out a ball to reveal a unique toy inside. This chance based payment reward system is primarily used for trading card games, where users are required to pay for treasure boxes with hard currency (real money) and open the box to reveal their character. This rinse and repeat process is conducted until the user collects the battle deck they were looking to create. This is an effective means to monetize a user and maximize specific content (or characters) by controlling the drop rate of each character.

2) Speed Up

A monetization concept that is very popular in the mobile space and how Supercell manages to build their billion dollar empire. Most commonly seen in city builder games, players are given a choice to speed up the development of a building they chose to build with hard currency. The fundamental concept of speed up is to create a situation where players have the option to purchase “Time”. This form of service is apparent in our everyday life, where people with money, spend it to cut down on time. For example, People often choose to take the Taxi vs the bus to save on time, and accept the increase in price for the purpose of saving time and getting to the destination faster.

3) Continue

The continue system was the conventional arcade monetization mechanic that drove the gaming industry for years, which revolved around the concept having players play a specific game for X period of time or until they player could not meet X condition. Whether it be time or a stage they could not defeat, users can revive their character which provides the user an option of maintaining their in – game progress or game data by spending hard currency to continue their experience.

When Puzzles & Dragons was released in 2012, they’ve proven to the mobile world that the “Continue” concept had the potential of actually making more money than the Gacha (gambling) monetization model. Which was the talk of Asia, which also recognized Gungho (Developers of Puzzles & Dragons) as the first $ Billion App to be recognized in Asia. P&D’s concept revolves around players going through a series of battle sequences collecting treasure boxes, but players can only claim these rewards once they can successfully defeat the boss at the end. This innovative idea paved the way for a continue system to be a mainstay in all battle type freemium game play.

4) Unlock

In recent games, there has been a lot of innovation regarding the unlocking monetization model. Traditionally, console utilizes this model by releasing DLC (Downloadable Content) through the cloud for players to purchase. This content provides them with new features for them to play. Recently, freemium games started using this system as a means of accessing time gated content. Users are then required to purchase a ticket to access the time gated content and by-pass the waiting period.

For example, a game runs a weekly event where, from Mon – Fri, you can access specific dungeons that yield different rewards for everyday of the week. Lets just say, today is monday, but the user needs item content from a dungeon that is scheduled to be unlocked to all players on friday, this user will have the option to purchase a ticket to unlock this specific friday dungeon to potentially farm the items he needs for an X period of time.

There has been a lot of innovation in the “Unlocking” space in 2015 -2016 as developers are getting creative on how they are packaging this concept. A good example is with a VIP system. This unique system rewards users on how much hard currency they spend. Their total hard currency spend will increase their ie: Prestige status which in turns yields than better or higher returns than the non paying users. For example, your Daily Login in Bonus, or a better drop rate when purchasing a gacha box. This system motivates paying users to monetize more to max out their prestige, and unlocking the possibility of better rewards in the long run.

5) Subscription

This has been a popular model out in japan since the 2000’s when Carriers and developers worked together to provide content for Japanese users with their high tech feature phones. Users would subscribe to a specific portal (called a WAP site) and pay a monthly fee to the carrier (ie 300 Yen = $3.00 USD) for the information or content the developers provided. For example, obtaining basketball scores via your phone was not a possibility without “real” internet at the time but what the NBA did was charge users $3 / Month for users to subscribe to their portal to get the updated scores, real time, at anytime. This sounds ludicrous now, but in the year 2000, information was still extremely powerful and in demand.

This business model proved extremely successful as developers were able to deliver mobile type content through the web, via carrier with a reputable billing system (The Carriers) . Now, in 2016, it seems this model is making its comeback as, Apple also announced their 85 / 15 Revenue share model which would entice developers to think of more unique was to exploit this new found revenue share.

Recent games have users have an option to sign up to a monthly subscription plan where the daily bonus yields, ALOT higher / rare-r rewards than your usual daily login bonus and the best part of this design is that, at the end of the month users will obtain an extremely rare reward, this system keeps users coming back to obtain these rewards and the low hanging fruit looks juiciest at the end of month to prevent users from cancelling their subscription.

6) Aesthetics

The concept of making your avatar or character look different. The customizable aspect of the game. A monetization mechanic that had zero effect to the actual gameplay. Which in the past yielded very little return versus the cost of implementing. But as mobile technology improves and users engaging game design improves, the aesthetic business model is re-emerging as another viable business model as affinity towards mobile in-game characters are being established.

In the past, Trading card games wouldn’t even consider such business model, as any character that was presented differently would be wrapped into the Gacha pool for variety and help provide more value for the game. The ROI on aesthetics model has only been re-established as developers pivoted to more of a game driven model than a content driven model. What i mean by this is that, developers are moving away from the 20 new characters a month model to a 2 new characters a month system. This shift is due to the massive demand and art quality and the increasing improving free engines that allow devs for more engaging battle experience. Some of the top Korean games now have aesthetic business model in their game such as Summoners War and Seven Knights, and it seems this will be the next trendy business model for 2016, and 2017.

These 6 core free monetizing concepts has always been at the core of any successful mobile title since the release of the smartphone. As the market shifts, developers are always looking for new and innovative ways to repackage these 6 concepts to stay relevant and provide users with a unique user experience.

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