The top-selling apps in app stores are free games. How can games costing nothing make loads of profit for their developers? Using "Dragon City" as an example, I’ll try to show the tricks that make our "Free to play" games extremely expensive. Free to play games are anything but free, if you take a closer look at their principles.
"Free to play" (F2P) is a business model that has reshuffled the gaming industry considerably. Within the gaming industry, F2P is the latest and fastest growing exponent. The games – played by means of a browser, on Facebook, or through apps - all work on the same basic principles: The game is free to download. At a later stage, however, it allows us to spend money. The offers are manifold, be it to personalize our gaming character, to strengthen it, or to exchange real money into the game’s currency for other purposes. Via an in-app purchase we spend money quickly and painlessly. It is deducted in the background from our linked credit card.
The concept is extremely successful: The best-selling apps are all F2P games. The top trio at the moment are: "Clash of Clans," "Candy Crush Saga" and "Hay Day". "Dragon City" coming from Studio Social Point in Barcelona with its 140 employees is not yet in this major league. It currently comes 23rd; the Facebook version of the game still has six million users every day. The iOS version has just been launched; an Android version is in the works.
In "Dragon City", we breed dragons. We are collecting as many as we can and try to make them as special as we can contrive. And we fight tournaments with these dragons. All this we already know and recognize from a proven recipe like "Pokemon": Something to cherish and nurture, something to appeal to our collector’s instinct, and competition – it’s an irresistible blend.
Everything in Dragon City takes a lot of time. If we cross two dragons to breed a new one - fire and water dragons are crossed to produce a cloud dragon - it takes a while for an egg to be laid. Until it is hatched, we have to wait even longer. Then, the baby dragon has to grow and become strong. To that end, we have to feed the hatchling with berries grown on our farm. We have to wait for the harvest to get the berries we need. And once the dragon is grown, we are allowed to fight with it three times and then have to wait to be allowed to participate in further battles.
Or – Eureka! - we spend gaming money to speed up the harvest or the hatching. Each gaming operation has a timer; we can wait until it has run its course; or we can spend the local currency of gems to be able to continue immediately. We can earn these gems in the game; they are given after battles with a certain amount of success as a reward. But very few ever come in. Players wanting to proceed rapidly will sooner or later make use of the opportunity to buy these gems by exchanging real money for the virtual currency. "Dragon City" is not the only game that uses this mechanism; you can call it an industry standard.
Let’s look at the most common tricks of the trade. The list is not exhaustive and far from complete. If you want to know more, visit Gamasutra and its many articles referring to F2P games.
So what about the real money situation? As described above, we usually exchange money for time. To achieve this, we are maneuvered into a gaming situation that is uncomfortable. In "Dragon City", these situations are delays at every corner. We just had so much fun! Now we can’t do anything! "Yes, you can!" whispers the game, "Spend a gem to end the waiting period right now!"
For children and adolescents this solution has a particularly strong attraction due to their level of personality development. They weigh the need to break free from the predicament right now more heavily than adults who include long-term analysis to assess the detriment of money spent. Young people over the legal age of 18 have this development under way but not yet complete. As opposed to young children, though, they may spend their money without legal restrictions.
Not all F2P games are aimed at children and adolescents - the main target of "Candy Crush Saga" for example, are middle-aged women. That "Dragon City" is aimed at young adolescents on purpose is made clear by the graphics as well as the growing and picking principle involved in the game. In the Facebook version of the game, the group of 18-24 year old is the most represented. The goal of trading time for money is applied to all ages, though. Prices are limited to ensure that the threshold for this exchange is as low as possible.
No successful game ever shows anything in real money. Something like "Your balance" or "How much have you spent so far" is never displayed or even offered as an option. It would cause players to think about their buying decisions.
The next step is to disguise the true value of the virtual currency. The technique is called "layering": instead of one virtual currency, there are several with different and complicated exchange rates. In "Dragon City", we buy gems; we can convert these into gold or berries. The price of gems is fixed in a way to make it complicated for us to exactly assay how many cents to a gem. If we have to exchange them for berries and convert at a weird rate again, we give up.
Instead, emotional factors start to influence us. We buy gems for our dollars. And of course, we always get a lot of gems for just a few dollars. A bargain because gems are precious! In the game, gems are used but rarely. We usually have to exchange into another currency - berries. And we get a lot of berries for just one gem! Again a super bargain! Spending berries to feed a dragon is easy because berries are so much cheaper than gems.
Add to this all the proven sales tricks: Always submit special offers. If we want to buy gems, we can spend a little bit more and get many more gems. Such offers, preferably time limited, lead to higher spending. Offering many ways to save real money also obfuscates the true value of a virtual currency.
Another trick is the so-called "anchoring". The first number we get offered influences our feelings about the value of an object. Therefore, a seller starts at a steep price; he is not expecting to attain it but to give us the feeling that this is the true value of the product. If we pay anything below this initial price, we will have the feeling of having made a bargain. The trick works even if the numbers have no rational connection.
One would guess that sums spent in the game must be small. One should not have to think twice: "It's less than a cup of coffee, what the heck." Position the spending threshold as low as possible and collect the nickels. That's right, but only half the story: Even large amounts need to be allowed by offering super bargain buys. All these small and big amounts add up. "Clash of Clans" and "Hay Day" make about two million dollars in sales - per day.
To hook the bait, money doesn't play a role at the beginning of the game. Since there are many F2P games, players can select any they like the look of - whether they then remain in the game is decided in the first minutes. If they are faced with demands for money at that point, they're gone.
Successful F2P games begin with easy challenges to hook as many people as possible. Then the challenges are made a little bit more difficult allowing players to master these initial hurdles still without spending any money. The players are made to feel competent and therefore feel good. Later in the game, the difficulty continues to increase, and thus the temptation to overcome these new and higher hurdles with money increases, too. The game is slowly changing from one of skill into one of money. This change is subtle; the player does not notice the fundamental change in the rules; he still has the feeling of improving his personal skills with just a little help from some money.
Earlier F2P games often had hard pay barriers: At some point, players were only able to continue if they spent money. For example, they had to spend a dollar on a particular building which was not otherwise available. Newer games such as "Dragon City" are putting in soft barriers. Everything in the game can be accomplished with time and patience. But the time needed increases until it is too long for almost everybody - and thus convincing them to cut short the waiting time with money. The paying threshold becomes individualized in this process. And because the constraint of a hard barrier is removed, fewer people drop out.
The tricks of the industry are not confined to virtual currencies and gimmicks. To sell something, you must create demand. This demand can be created by artificial scarcity: What is rare is valuable. Virtual goods are not rare by definition. Gaming money or objects are arbitrarily distributed. However, an article which is described as rare becomes desirable and more valuable than one marked common. Nobody wants a common dragon. But the Viking Dragon is a rarity! I must have it!
How a game distributes rewards is always central to the gaming experience. In F2P games, the rewarding mechanisms are crucial to ensure that players stay tuned. Only users that stick in the game can spend money. Many small rewards are better than a big reward, too. Getting five single gems instead of five gems in one go keeps the player happy; he had five instances of success instead of only one. "Dragon City" drives this principle to the top: After almost every action there is a reward popping up. And every time, players receive some gold, some berries, or a new gimmick is made available.
Then there is the loyalty card trick to be used, too. Conventionally, it works like this: For each car wash you get a stamp on your loyalty card. Get eight stamps and one car wash is for free. Now modify as follows: You need ten stamps to get something free, but two stamps are already on the loyalty card. With this trick, more customers will come back despite the fact that they have to spend exactly the same amount for both systems. But if the counter doesn't start at zero, the journey has already begun. No one wants to waste the free loyalty card bonus. "Dragon City" does just that; we hardly started the game and already we received some stamps and a reward seems quite close.
Make use of heuristic availability: If we perceive rare events in our environment, we presume that they may happen to us, too. The effect plays a central role in gambling: Because we hear of lottery winners, we overrate the chance of winning ourselves. The same applies to loudly sounding armed bandits: the spectacle around the winner in the hall encourages the losers. This effect is exploited F2P games, too. Success stories are shared on Twitter and Facebook. Joe has managed to hatch the rare Cactus Dragon? Then I can, too! And don’t forget the Joneses next door; if Joe is showing off the legendary Cactus Dragon on Facebook, Joe is better than me! I will be just as good! It's not just about having virtual critters, but to be able to boast with them.
Finally, we are not only competitors: Successful F2P games always include the opportunity to help your friends. Give them a little bit of surplus to help or, as in "Dragon City", shorten their harvest time by a visit to their dragon island. This mechanism results in social obligation: Others give me something, so I give something back. And that's why we always come back to the game.
Free to play is not that free, after all. If you buy a car, you put up with the salesman once and then good riddance. In a free to play game, you take the car for free, but the salesman is seated next to you selling you additional gadgets at every turn. Are you still playing?