Most free-to-play games (both for PC and mobile) face an ongoing retention challenge: To make money, you need to keep getting more and more players playing on a regular basis. (Since active players are the ones most likely to monetize.) But to get regular players, you need to give them a compelling reason to keep coming back. Add to these concerns the rising cost per-acquisition of new users: You work hard to acquire them, and they cost more every year. You should work just as hard to keep them.
One key solution I strongly recommend: A repeat log-in bonus which rewards players every day they log-in with a free reward of virtual goods. These bonuses leverage a well-known principle of behavioral economics: Operant conditioning of a given behavior by positive reinforcement -- in this case, increasing log-ins by associating them with a reward (i.e. a free gift of virtual goods). While claiming the reward, users associate the positive feedback with the log-in behavior, and tend to associate this positive feeling with the game as a whole. As a result, users tend to log into the game more frequently and play more often.
While a daily reward is most typical, some games, such as Clash Royale, give out rewards even more frequently -- every four hours, in Clash’s case, with a push notification telling players they have a gift chest awaiting them.
This isn’t to suggest every developer should replicate Clash Royale’s application of the reward mechanic. Further, not all regular login bonuses are created equal, and are appealing to different kinds of players for different reasons (which I’ll explore down the way).
All that said, I do have several recommendations for rewards that are pretty universal across all games:
Add opt-in push notifications to remind players when a bonus is available
Add an element of randomness to the bonus, to make claiming it a mini-game in itself
Increase rewards over time, to encourage repeated and consistent logins
DON’T add rewards to games aimed at children for ethical reasons -- and to avoid angry parents accusing you of addicting their kids, going all Kanye on you on Twitter
That established, let’s look at several variations of this mechanic, and how to further optimize them:
Increasing Rewards Over Time? Add a Reward Schedule
Armored Warfare’s Daily Bonus
In this variation, the more consecutive days the player logs in, the bigger their reward. Like Jerry Seinfeld’s “Don’t Break the Chain” strategy for creative success, this mechanic encourages players to make it a habit of consistently claiming rewards. (And I can personally attest to its motivating effect: my son wakes me up every day to "do dailies" in Clash Royale, our current favorite.)
However, there’s a downside to this model: When a player forgets or is too busy to claim their reward, they generally break the streak and get pushed back to “square one” -- a demotivator which players often interpret as a punishment. At this point, many players often just give up on the game as a whole.
My Singing Monster’s reward schedule
One effective solution: Include a daily reward schedule in the game’s user interface, such as this one for Cookie Run, and include extremely good rewards spaced out throughout the run -- especially between the 2nd to 5th day. That way, players are reassured that they’ll quickly get good rewards soon after starting over at square one. My Singing Monsters displays a reward schedule built around a five day cycle (above).
Tiered Bonuses for Cumulative & Consecutive Daily Log-Ins
Many successful games go beyond a simple daily reward cycle, offering a tiered reward for both cumulative and consecutive log-ins. This is an application of behavioral economics’ principle of fixed-interval reinforcement , in which behaviors are shaped to occur within a certain time frame. By claiming regular rewards -- especially when the rewards get incrementally larger -- players get into the habit of logging in, which in turn increases their attachment with the game.
So for instance, in the game Warframe, players who log-in up to 2 consecutive days would receive a “common” reward, but after logging in 3 to 6 days, earn a chance to win an “uncommon” reward, and from 7 days and beyond, the chance to win a “rare” reward. When players miss just one day, the counter is reset, and they’d have to go back to receiving the lowest tier of rewards. While reset players still win a reward, many of them might still consider this to be a kind of punishment, and feel less inclined to jump onto the reward treadmill again.
Japan’s Puzzle & Dragons, one of the most successful mobile games of all time, offers a partial solution to this: Cumulative log-in rewards. That is, rewards based on the total number of times a player has logged into the game overall. So for instance, after logging in 100 total days, a P&D player wins 10 Magic Stones; after 367 total days, a special playable dragon; after 1000 total days, an uber Memorial TAMADRA creature. These cumulative rewards are given out in addition to consecutive log-in rewards, incenting both hardcore and casual Puzzle & Dragons players. This is an example of different daily rewards appealing to different gamer personalities: Those who prefer to focus on mastering one single game at a time would enjoy consecutive rewards, while those who enjoy sampling multiple games at once would appreciate cumulative rewards more.
Daily Bonus as Mini-Game with Random or “Gambling” Feature
Heroes of Order & Chaos Lottery
Many log-in rewards incorporate an element of chance, turning the very act of logging in into a mini-game. For instance, Order & Chaos Online has a very interesting model worth looking at. With that game, a player has a daily chance to win a reward running from “inferior” to “epic” in quality. The chances of winning high quality rewards substantially increase if a player buys Runes or Emblems through an in-app purchase. In essence, then, Order & Chaos Online’s daily log-in reward is an opportunity to gamble real money for a virtual reward.
Since many game developers aren’t interested in casino games as a genre, here’s some behavioral economics background on why they’re so appealing as a regular reward mechanic: The randomness aspect adds variable ratio reinforcement  to fixed-interval reinforcement (mentioned before), which can powerfully shape player behavior, since it associates unpredictable results with the expectancy of winning a large/valuable reward. (Of course, regular players of social casino games tend to be especially sensitive to variable ratio reinforcement.)
There’s a major consideration to adding a risk factor to a regular reward mechanic: Players who pay cash to increase their odds are apt to get angry when their bet doesn’t yield the epic items they were hoping for. To offset this frustration, and make players feel good about the gamble, it’s a good idea to guarantee all paying players win a high quality consolation reward.
Why Social Casinos Need More Than a Daily Reward
Jackpot Slots Daily Bonus
Ironically, the growing popularity of randomized daily rewards across all genres of games somewhat negatively impacts the genre that’s all about randomized rewards: Social casino games. Almost all of them have incorporated a daily spin bonus long ago. But now that so many strategy, roleplaying, action, etc. games also have a daily spin, the genre needs to differentiate itself further. The challenge is even greater for social casino games trying to differentiate themselves from competing social casino games: Without a clear way to tell these games apart, and a clear reason to stay, fans of the genre will often collect and spend their daily reward of one game, then immediately move on to collecting daily rewards from another casino game installed on their phone. For social casino games, then, the daily reward must also include messaging about further gameplay opportunities that exist beyond spending it. Flowplay’s Vegas World, for instance, not only features casino games, but also avatar customization options and social interaction with other online players.
Regular Annuity Awards on Log-In
Finally, I should note a variation on the standard daily rewards model: Annuities, in which players pay to have a block of virtual goods or coins sent to their game account on a regular basis. In this model, the rewards “pile up” even when the player doesn’t log-in -- which further increases the incentive for players to return to the game, even weeks or months after last playing.
For instance, in NetEase’s Eternal Arena, players get two different but complementary annuity options for the game’s “diamonds” currency: Pay $4.99 for 280 diamonds and then 100 diamonds every day for 30 days, for a total of 3,280 diamonds -- or pay $9.99 for 600 diamonds immediately and then 100 diamonds every day in perpetuity, for a theoretically limitless number of diamonds. My colleague Isaac Knowles has an in-depth analysis of this model on his own Gamsutra blog.
Crafting the Dream Reward System - for Currency OR Consumables
Summing up the variations of mechanics we covered above, an ideal daily reward should come with an opt-in push notification, give out extra, publicly scheduled rewards for both consecutive and cumulative log-ins, include an element of randomness, and function as an enjoyable mini-game in itself.
Some developers still hesitate to implement a daily rewards system, worried it might cannibalize their revenue. (Since you give away the stuff you want people to buy.) Our experience is that properly designed, rewards increase retention and increase revenue, due to a training effect. (I’ll discuss that in a future post, but briefly put, giving people free virtual currency teaches them how to shop in your marketplace of virtual goods, which ultimately leads to IAP.) And a daily log-in bonus doesn't have to be currency, if you're worried about cannibalization. You might instead give away power-up consumables (on a randomized chance) to train the player to use and eventually purchase them.
Adding a daily reward system is often overlooked, or done in a perfunctory manner. When done well, it can significantly improve retention. If you strive to make the core game an awesome experience for your players, shouldn’t you put just as much effort and creativity in making them want to keep coming back for more?
FOOTNOTES AND FURTHER READING ON REGULAR REWARDS
Is there any place in the F2P designer's toolbox for energy-based economies? (by Jon Jordan, but see especially Nick Lovell’s comments)
“Gate Me If You Can: The Impact of Gating Mechanics on Retention and Revenues in Jelly Splash” [.PDF link]
 On fixed-interval reinforcement:
Lea, S. E. (1978). The psychology and economics of demand. Psychological Bulletin, 85(3), 441. Baron, A., Kaufman, A., & Stauber, K. A. (1969). Effects of Instructions and Reinforcement-Feedback on Human Behavior Maintained by Fixed-Interval Reinforcement. Journal of the Experimental Analysis of Behavior, 12(5), 701-712.
 On variable ratio reinforcement:
Greenfield, D. (2011). The addictive properties of Internet usage. Internet addiction: A handbook and guide to evaluation and treatment, 135-153 (p. 144 - 145 for addictive nature of variable ratio reinforcement) [PDF link]
King, D., Delfabbro, P., & Griffiths, M. (2010). Video game structural characteristics: A new psychological taxonomy. International Journal of Mental Health and Addiction, 8(1), 90-106. [PDF link]