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7 Ways to Fail at Free-to-Play

November 13, 2012 Article Start Page 1 of 3 Next

Working in the free-to-play space on mobile is a real challenge, and building a great business model is an integral part of the process of developing games. Developer Aaron San Filippo talks about the bumps in the road he faced in the transition.

When my brother Forest and I started Flippfly, we struggled for a long time over the pricing strategy for our first project, an ios "Edutainment" app called Monkey Drum.

On one hand, it was unique (it's a combination of a musical sequencer with 3D characters) and it had great production values that would, in theory, set it apart from the average iOS entertainment app. On the other hand, we were completely unknown as a company. We were also releasing into the "Entertainment" category, and most of the successful apps there were free.

So we eventually decided that Monkey Drum would be free-to-play, and that we would implement a virtual currency system where users could earn coins through playing musical instruments, or buy the virtual currency in chunks for real money.

Two of our goals for the app were to gain users and to prove that we could produce a top-quality product. We largely succeeded at these goals: To date the app has been downloaded over by over 80,000 users, and has a 4.5-star rating. Users love it.

Of course, we also hoped that the app would turn a decent profit, perhaps funding the next project and allowing continued updates for some time. From the title of the article, you may have guessed by now that we failed in this regard.

The conversion rate was pathetic, and the average revenue per paying user was low enough that despite its decent download numbers and great review scores, we had achieved less than $500 in revenue after several months.

In retrospect, the mistakes we made are obvious. But since this time, we've seen these mistakes repeated by others, often small indies like us. So I'd like to share what we've learned and observed. Learn from our mistakes!

So, here are seven things you should do if you want to doom your free-to-play project to almost certain financial failure.

1. Fail to Give Users Great Reasons To Pay

Our thinking with Monkey Drum went something like this: "If a good conversion rate is something like 1-3 percent, maybe we can achieve that by delighting our users into wanting to give us more." The more we look at effective F2P design and contrasted it with our app, the more we realize that this doesn't work in reality. Your users need to love your app -- but you need to leave them wanting more. Sure, there will be a small percentage of philanthropists who will give you a few bucks to support you as a developer or out of pure appreciation, but generally speaking, you need to leave people wanting, or your conversion rate will probably round down to zero.

With Monkey Drum, we provided reasons to pay in the form of additional instrument unlocks and, eventually, character customization items -- but we also provided them with a means of unlocking the virtual currency to buy these items, and this method was actually a lot of fun and not terribly "grindy." In the end, a lot of our players probably don't have that urge to spend because they're always having lots of fun, and because the items included with the base product provide hours of entertainment.

Some very effective F2P games are clever and calculating in how they create this "pay magnet" -- often by giving you opportunities to spend more and more virtual currency as you "level up" (Zuma Blitz from PopCap is a good example.) Others succeed by pure variety: by providing not only gameplay incentives, but vanity items, extra content, etc.

Whatever your strategy, please realize that you have to find a perfect balance between delight, and leaving users wanting more. If they feel that they have a complete experience, or a reasonable means to unlock these items through gameplay, they will probably not pay for more.

2. Ignore the "Whale" Factor

Free-to-play monetization is fairly simple mathematics when it comes down to it. Your revenue will be LTV (lifetime value: the average amount a paying user will spend over the entirely of playing your game) times the conversion rate (the number of people who will spend anything on your app) times the total downloads.

Just keep that formula in mind:

Revenue = LTV x Conversion x Downloads.

Astute developers will realize that the lifetime value of a user is capped at whatever the maximum possible spend is. If this cap is $1 or so (maybe you charge to unlock the "full version") then you need a great conversion rate, and with such a low LTV, you'll need to be lucky enough to achieve virality, because the cost to acquire users by any paid method would exceed the return on investment.

The truth is: free-to-play works in large part because of "whales" -- users who spend significant money in your app. No matter how good your app is, there will be a percentage who download it and never play it. Of those who play it, there will be a percentage that just plays once. Of those who really get into it and pay for something, many will only pay once.

What you care most about about are those who are left. If you provide continual motivation to spend money, then the "burning core" -- that subset of customers for whom this is the best app ever and part of their daily routine -- will push up this LTV to the point that it can start to make sense financially.

With Monkey Drum, we failed here. To be honest, we really hated the idea of "whales" -- especially given that our app was primarily for children, and we were hearing all the horror stories about kids spending hundreds on virtual currency. We had one consumable item in the app -- a bunch of bananas you can feed to the characters. But in our determination to not be evil, we provided a fairly easy means of earning enough coins to unlock more bananas -- not to mention our clear message to parents about how to disable in-app purchases -- and it turns out that most of our audience really enjoys the process of playing the instruments and unlocking these.

Article Start Page 1 of 3 Next

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K Gadd
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Your explanation behind point two reads like 'being profitable in free to play requires being evil', which I hope isn't the gist of your point here. I agree fundamentally with your premise that monetizing whales in an edutainment app is not a great idea.

Is your point simply that your attempts to avoid monetizing whales impaired your ability to monetize normal customers? Or do you think that any free to play game must fundamentally be built on revenue from whales, and as a result edutainment is a poor choice for f2p? I think the second half of this point is relatively clear but the tagline for that point and the first half obscure your meaning a little.

Kirk Black
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Good point, Kevin. When I read through the article, my take was that their mindset was "don't be evil" (common amongst indie developers who are doing it first and foremost for love and passion) and didn't want their players and fans to feel they were contorting the game design to suck money from unsuspecting children. The reality they are proposing is a balance has to be struck between passion and financial reality rather than viewing the choice as being evil (and profitable) or not evil (and bankrupt).

I know I personally grapple as a developer with how to create and execute a game design that is both fun but creates reasonable incentives to spend money without my players feeling like I'm purposely "screwing" them so they have to spend in order to succeed. I personally liked the MMO subscription model from that perspective: you pay for access which keeps the game and the finances largely separated so developers can do what they want and need for love of the game and players simply pay for access to the game. Micro-transactions are ripe for contorting a game design to feel like it's tuned to force you to pay if you really want to get the full experience.

Simon Ludgate
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@Kevin, throughout the article I kept thinking "this shouldn't be an F2P game at all" and that was confirmed by the end of it when they released a deluxe version. I think the "target whales" and "don't be evil" can be reconciled though: you just need a game that can target whales in a non-evil way. I think point 2 is basically concluding that unless a game can target whales, it can't be a successful F2P.

@Kirk, as you point out, a successful subscription game requires a good quality GAME, and a successful F2P game requires a good quality monetization strategy. I think this article demonstrates that F2P isn't the "win-all" its sometimes portrayed as and I think subscription is still very viable... if a game can meet the quality levels that justify a subscription.

Aaron San Filippo
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Definitions of evil vary. There are very few examples of highly successful F2P games that *don't* utilize the whale factor in some way, at least that I've seen. I wouldn't say it's evil, it's just not a direction we wanted to go.

F2P is also in its infancy - there are a lot of innovators in this space, and I think long term the methods that win will be the ones that create the most value for players ( see Dan Cook's feature on this too.) It's just not an area we're passionate about making work.

Christian Nutt
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Actually, while I was editing this, I really got some perspective on the whole "whales" thing. The problem is that the discussion of whales was generally framed by douchebags who want to pump as much money out of these people in the least ethical way -- or at least that's how it's often perceived. But the idea of "paying fans" -- people for whom the game has value and who will pay for it in the long run because they care about it and play it a lot -- is not offensive at all. The issue, I guess, will be designing mechanics that don't stop those people from enjoying the game yet encourage them to pay. If I feel too prodded by an F2P game I'm kind of out the door. But that's also because many of the F2P games I've played aren't worth sticking around for in the first place.

Jeremy Glazman
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@Aaron "Definitions of evil vary. There are very few examples of highly successful F2P games that *don't* utilize the whale factor in some way, at least that I've seen. I wouldn't say it's evil, it's just not a direction we wanted to go."

...but you specifically say in the article that you thought it was "evil" to incentivise monetization. That's just a bizarre philosophy, honestly, especially since it's pretty clear from this article that the motivation behind Monkey Drum was first and foremost to create a profitable app.

The point about these new business models that seems to be lost on so many developers is that they allow you to find new ways to provide value to your players. Listen to what Gabe Newell has been saying for a while now about 'value propositions', and take a look at Steam to realize how effective (and not "evil") this idea is.

Being "evil" is a completely separate discussion that revolves around game design and mechanics. Monkey Drum wasn't designed around anything like "pay to win" or thinly veiled compulsion loops, so how was being "evil" even part of the discussion?

Aaron San Filippo
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@Jeremy - I didn't mean to say that monetization was evil, but rather that we wanted to avoid the trappings of some F2P games where there's a repetitive, compulsive loop that drives you to eventually pay so you can avoid the monotony. Certainly not all F2P models use this though! I think you're right on in mentioning the "value proposition" - that's kind what my point #1 is all about.

I definitely wouldn't say that "being evil is a totally separate discussion" because almost by definition, the monetization *is* tied intimately together with the game design. So being ethical about it has to be part of the discussion, IMO.

Aaron San Filippo
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For those of you who read my little blurb at the end and are curious about what we are doing as an alternative to chasing the F2P craze, I wrote a post about it on our website yesterday:

Also - thanks for the discussion here. Hopefully this was helpful for the folks who are pursuing F2P, and inspiring for those looking for alternatives. Best of luck to you all!

Nicholas Lovell
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My definition of how to successfully make money from whales is:
"make it possible for people who love your game to spend lots of money on things they value".

I don't think that is evil.

Aaron San Filippo
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I agree, in theory. The devil's in the details :)

I find it a little repulsive, personally when the "thing I value" that the game is asking me to spend money for - is my time.

As an example (from a game I'm totally addicted to, by the way,) "Super Monsters Ate My Condo" makes it impossible to earn enough coins through play to use the best list of "powers" and so if your choices are (1) grind for 3 or 4 games to earn enough to do your best, or (2) pony up a buck or two so you can play for awhile at maximum mastery. So yes, I "value" these fun powers because they give me the best chance at a high score, but in reality, what I'm paying for is the ability to not have to grind in a less fun environment.

Thankfully, they also offered a $1.99 permanent upgrade that just doubled your coin earn-rate, and I gladly paid for this (on top of the $0.99 I'd already spent.)

Again, my point with this article wasn't to say "going after whales is evil" but rather - whales are probably a necessary component of F2P, and incidentally the model as a whole is one we've decided not to pursue.

Christian Nutt
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One thing is that lots of games that we PAY FOR already ask us for inordinate amounts of our time to achieve things! How many games force you to play through a whole bunch of repetitive content to gain levels or unlock characters / outfits / etc? It's a common tactic in console games. So that's the flipside of the whole issue, I think, or at least another way to look at things.

The quote Nicholas pulled is exactly the one that struck me the most. I think that's a great philosophy. It's just not what the F2P segment is known for.

Jeff Alexander
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Even merely allowing whale-ish behavior without explicitly encouraging it requires that you believe all those whales those customers who spend $20 or $200 (every month!) on a game that, if premium, would have a one-time cost of $1.99 are making utterly rational and wholly uncoerced decisions that you have no legitimate authority to question. That's a tall order when dealing with such unusual behavior. I'm not sure how I'd go about convincing myself it's not evil to let whales whale when I have the ability to stop them.

Christian Nutt
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That's why looking at them as "whales" is wrong, and encouraging the behavior is sketchy.

Look: I spend $40-60 on a console or handheld game, pretty cheerfully in most cases. If you can extract that "LTV" from me by giving me a good game experience that's free up front, in an ethical way, I don't think I'd complain.

Paul Boyle
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"make it possible for people who love your game to spend lots of money on things they value".

The problem is that very few developers create products worthy of love by a few. I'm not deriding developers - I am one myself. But think about most apps. They're worth being liked by many, but 'loved' by noone. They're not Starcraft. They're not SMB. If they are, they're the millionth iteration of that genre.

So we're not talking about using the *very old* art model of having many people view a painting freely, but a few rich patrons who love the work and are willing to pony up the dough to keep the artist in watercolors.

Moral developers realize that they're not creating a product worthy of love. These are not products that challenge the mind and hearts of their users. They're not going to have a lasting impression on anyone. Like? Yes, sure! Definitely many apps are likeable. But F2P dictates that, instead of having the many people who like your app pay something, they get it for free. A few people who like it will pay appropriately but not enough.

Which leaves use with what F2P actually does, to get by, which is target whales. It targets people who 'love' something beyond any reasonable scale of the value it could be worth. These people are not patrons of the arts, guys. They're people with poor impulse control. They're people who don't rationally evaluate the worth of something. This is why "pay for instant gratification" is the dominant IAP strategy, one way or another, in F2P. And many articles you will read will tell you that those people aren't rich people spending within their leisure budgets either, they're people spending beyond their means.

And targetting people who have a weakness like that, as your primary source of revenue? I would say that that fits most definitions of evil.

Justin Sawchuk
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Actually its not imoral at all, usually these games and you could ask yourself I could spend 3-4 hours grinding or shell out ~$50) and the kids that have more free time will just sit there grinding away but the busy people with some extra cash and not alot of free time will rather pay out.

Hakim Boukellif
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You're forgetting that the people offering to let you skip grinding for 3-4 hours in exchange for money are the same people that made it necessary to grind for so long in the first place. Creating artificial demand by putting segments in a game where you need to do a lot of grinding before you're able to progress for the purpose of getting people to pay isn't exactly what I'd call "moral".

Also, spending $50 to progress in a game while for that same amount of money you could buy 1-5 large-scope games, that'll last you for weeks if not months without asking for more money, seems to me like a skewed perception of value.

Tim Elder
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"many articles you will read will tell you that those people aren't rich people spending within their leisure budgets either, they're people spending beyond their means"

From what I'm seeing on my project, the big spenders are almost exclusively busy professional or business owning middle aged women. These aren't people who would play StarCraft or SMB and are looking for an entirely different experience from interactive entertainment.

This is one thing that F2P (amongst other things) has opened up - a significantly different audience to the young male with ample time to burn.

We're also seeing that they're generally not engaging with the "pay to skip the grind" aspects of the game (which are fairly light anyway) and are generally paying for the premium cosmetic enhancements.

"Moral developers realize that they're not creating a product worthy of love"

Maybe some aren't, but perhaps this is exactly what some developers are striving for. Whether they can achieve it or not is another matter, but if the goal of your dev project is to create something that the audience genuinely loves (or at the very least highly values) is it so bad to allow people to pay as much as they want?

Ian Hamblin
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I agree with Nicholas also. If you create value with your game, then you deserve to reap the rewards of that in as many ways as possible.

You can then take those rewards into future projects and contribute more value to the world. It's only evil if you don't deliver value i.e. sell a car to someone for full price, that you know is about to break down.

tony oakden
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thanks for sharing. Your mobile experience is similar to mine.

Justin Sawchuk
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I remember paying something like 9.99 in army of darkness defence because I was on the second last level and had spent an insane number of hours in the casual game (so once your invested and hooked you dont really care). Even my brother who never buys any mobile games did pay 4.99 in the game kingdom rush ios game.

Even if you were able to get 1% to 3% of 80k its only 800 to 2400 customers at what 99 cents a pop its still going to be a failure (with freemium games its all about download numbers). You would need to get a million downloads in order to get 10k customers, if you dont have different levels of money you are shooting yourself in the foot.

Mark Nelson
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@Justin. I just ground and ground until I beat Army of Darkness Defense. Closest I ever game to paying. I ultimately found a way to congest near the gate and rack up tons of cash.

I was playing on a iPhone 3G, so the sluggish performance probably had something to do with being able to react faster than the enemy attacks. 100s of archers, soldiers, knights, etc. Ash firing away all those spells.

Even now brings a smile to my face. :-)

In this case the grinding was tons of fun. Trying to 'stem the tide.'

Alexander Symington
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You tried to make a game that doesn't the exploit the compulsions of players, that doesn't disrupt their immersion with nagging requests for purchases, that doesn't intentionally unbalance their experience regardless of whether or not they comply. A good game and a moral game.

You didn't fail at free-to-play. Free-to-play failed you.

Jeremie Sinic
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If grinding is not fun, then the game is wrong. Pay to skip the grind means you are telling your customers: "sorry, we know it's not fun, but if it were fun, would you pay to skip it?"
I am thinking more and more that the only way to truly let whales pay unlimited amounts without altering the gameplay is to either sell only cosmetic items or additional real content (expansions like maps or levels, not power ups) or add a "Donate" button.

Carlo Delallana
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I like monetization that allows me to bypass time investment without negating the skill investment. Magic 2013 is a great example of this and more. I can earn cards the hard way, which is still enjoyable and actually makes me a better player, or just purchase them which in turn enhances the game in numerous ways.

Luke Ambrogio
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I think the point to extract from this article is that with F2P, unlike other other traditional business models, real life payment must be an indelible part of the gameplay design. Ultimately the whole structure of the game must be as much about having an enjoyable experience as well as being able to make the experience more enjoyable by injecting money, with the knowledge that the more money you put into the game the more it becomes enjoyable. In that respect the article helped me identify mistakes in my game design as much as my business model.

I understand why the author would feel these aspects to be "evil". Most passionate game developers would find including payment requests as a core element of gameplay to go against what we they believe in, but ultimately it's a choice which has to be done at the start of the design.

And unless the game deceives the player into what is being purchased and for what reasons there's nothing immoral or unethical. If the player doesn't like the price proposed to make the game more enjoyable they don't pay it. This applies to one-time payment or subscription-based games as much as F2P.

Aaron San Filippo
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Yep, I agree. To be clear, I don't think F2P is "evil." We just decided it wasn't a direction we wanted to keep pursuing.

Christina Carter
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F2P has been around for so long that I feel we should have already moved past the arguement of "evil", and instead focusing on how to make it more fun for players so they pay. I can't help but seeing most of the time the "evil" argument is nearly always made from the developer's point of view. This is how 'I' feel it would be evil, not how your players (who are your customers) feel. If you provide a core experience that is fun and engaging, and then provide additional items (without a low ceiling) that enhances these fun elements, then why can't you charge for it? The players have voted by their wallet that F2P is the dominant business model, and you're saying all those paying customers have all been cheated? Is it not at all possible their idea of fun is different to yours?

I met countless players who may never have played a game if not for F2P. And I have always been surprised by why they think the game is fun to them. Taking FarmVille for example, I met a player (a middle age woman) who's lived a city life all her life and she's so busy with her daily life it's very hard for her to find peace and quiet. She loved FarmVille because it gave her a chance to 'imagine' having a farm and she occasionally paid for things she liked here and there. This is a loyal fan. Your players are not like you. In fact, statistically speaking, developers are so few in percentage in the player community your players are most likely not like you if we're talking about a casual audience.

Douglas Scheinberg
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Anyone here familiar with Magic: the Gathering, in either its cardboard or digital incarnation? That's a game that has a HUGE "whale" factor. I'm not sure how evil the whole "trading card game" business model is to begin with, but I love Magic enough that I actually am willing to spend hundreds of dollars a year on it.

John Kuraica
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I made a very polished game for iOS, spend many thousands of dollars on development. Was a very highly rated game and was in the top 50 slot for a shot time, until it was auto pirated. Sales dropped while downloads surged (and not from iTunes!). Needless to say I did not make my $$$ back....

After lessens learned, second game was designed with Free 2 Play in mind. One full year after release, its still in the top 10 free games slot on the Mac App Store. Its also extremely successful on Facebook (over 1.1 million MAUs) as well as with many other portals and platforms. We are now working on our second Free 2 Play game while our first is still going strong. I am a firm believer in the Free 2 Play business model.

I wish you guys lots of luck with your games!