Top five tips for making money from free-to-play games

Will Luton is a veteran game developer.

The free-to-play (aka F2P or freemium) model is a revolution in the game business, one that has created billion dollar companies that didn’t and couldn’t have existed 10 years ago.

Yet, what underlies it and how it actually works is so misunderstood that I wrote a book on the subject. Free-to-Play: Making Money From Games You Give Away breaks down in to five chapters covering the economics, gameplay, monetization, analytics and marketing of F2P games, giving a complete picture from theory to practice.

Here’s five tips, one from each of those chapters.

Economics: Bits aren’t atoms

In the old days of games, we had to create a disc, put it in a box, and get it on a shelf so someone could play it. Each player cost us money, so we had to charge them upfront. Today, however, each copy of a game costs us almost nothing: Getting a file from machine to machine via the Internet is so close to zero costs that we might as well consider it as nothing.

As with most Internet businesses, the secret to success in F2P games is an audience, and the largest audiences are created when the product or service is free. The consumer doesn’t have to think “is this worth my time?” or get their wallets out; they can just start playing. Once they’re playing, we want to keep them doing so over long periods.

Gameplay: Core loops in to goals systems

At the heart of any game is a set of infinitely repeatable actions known as a core loop. These are the things players do over and over, keeping them engaged in the short term across a game session. In FarmVille, for example, this is plant a crop, wait, harvest, and then get a virtual currency reward.

While core loops keep players engaged minute-to-minute you really want players to play over multiple session for months, if not years. Therefore, you need goals for your players, along with ways of setting them and rewards once the goals met. I call these goal systems and include things such as collections, levels, and story. Strong goal systems lead to dedicated players and long terms fans, lack of compelling goal systems lead to players drifting off to other titles. Once engaged, you can then begin thinking about making money from your players.

Monetization: The four Cs of IAP

If your players are happy and engaged, they reward you with their cash, but only if your game offers something they see value in. The things players buy in a game, even if it’s through a proxy such as virtual currency, belong to one or more of the four archetypes, I call the four Cs of in-app purchases, or IAP.

Content. Content, such as level or expansion packs, are simply more of the game, offered for players that want to explore more. They’re some of the weakest monetization points owing to the fact that they are durable (nonrepeatable purchases) and something some games offer for free in order to retain players.

Convenience. Getting something easier or quicker in the game is a form of convenience. Players with more money than time often make a value judgment in favor of paying to make the time they spend in the game more enjoyable. Convenience purchases are strongly compelling and often consumable, meaning they can be bought over and over.

Customization. Certain player types like to use their presence in a game world as a form of self-expression and so customize their avatars. Customization creates a strong emotional desire, making it a common and successful monetization point.

Competitive advantage. Equally strong emotionally is the will to win. Very few successful F2P games enable players to straight-up buy advantage, because it’s hard to stop it from disrupting a game’s balance and driving away nonpayers, but they do exist. More commonly, these are a form of convenience.

To ensure success you need to check that your purchases fits with one or more of these Cs and that you cover at least two in your game, else you risk not offering compelling IAPs. However, if you don’t get them right at launch, not all is lost.

Analytics: Use the scientific method

Getting gameplay and monetization right straight off is a near impossible task, but luckily, digital distribution means you don’t just have just one shot, as your game is always updatable.

This eternal beta state means that you can constantly change and tweak, but more than this, by tracking the action of players, you can ensure that the changes you make are backed by data. Analytics and live updating allows you to apply the scientific method to build understanding around your game: Create a hypothesis, test, collect results, interpret results, and make an appropriate change.

By applying this process rigorously and correctly, you can evolve an experience around your players. You can even apply it to your marketing process.

Marketing: No players are the same

Much of marketing focuses on volume: The sheer numbers of players are important, but one highly engaged and spending player is better than a hundred that churn through in a matter of hours.

Imagine you’re bringing players to your gory zombie game through two sources: Agency A brings in players for $.20 each, and Agency B brings them for $1.40. It seems like a no-brainer to double down on Agency A, but what if Agency A was incentivizing players to install your game from inside a pony-petting title? Those players are likely to be young and disinterested in the theme of your game, so have a low propensity to spend, while players from Agency B are more mature and engaged. It maybe that Agency B is the better investment.

Therefor tracking the behavior of players from different sources is very useful, as it lets you understand what marketing yields a return on investment, giving you data to base your campaigns on.

But even more important is making a game that is good enough to generate word of mouth: A player coming to a game from a friend’s recommendation is like to show more good will than one brought in through advertising.

Yet making a good game goes even further: Success in F2P is about showing players a good time and through that engagement provide them with things they want to spend their money on. Therefor, pour your heart in to your product and love your players – they’ll thank you for it.

Will Luton is a veteran game developer and book author who has a wealth of knowledge on free-to-play games from years of building them. He wrote this piece for GamesBeat.