By now, mobile gaming has mostly transitioned to free-to-play. But while most games are free-to-play, it’s still the case that free-to-play games, and the free-to-play business model, are often misunderstood. In this blog post, we’ll examine some of the mythology around one of the most common complaints about free-to-play games: that they are "Pay to Win."
What is "Pay to Win"
One of the most common objections to the free-to-play business model centers around the idea of "Pay to Win" (hereafter pay-to-win). For example, a person making this objection might say
Free-to-play multiplayer games tend to favor wealthy players that will simply "pay to win", buying up all the power-ups or items they need to edge out the players who can’t afford to compete (or who don’t want spend). Ultimately, most of the players feel the game is unfair and get "crowded out," thus making it hard to build a long-lasting community for free-to-play games.
There’s a lot in there, and it can be hard to tease apart. But it boils down to the following 4 claims:
Wealthy players will spend more in a game.
Spending more gives people a significant advantage in multiplayer games.
The most successful players are the players who have spent the most (which is unfair and it discourages new players from playing or participating).
Therefore, when you avoid pay-to-win, you wind up making a game that either doesn’t monetize well, or isn’t very interesting.
If these were always true then, taken together, they would imply that multiplayer games which are strongly free-to-play don’t build long-lasting or large-scale communities. Since that’s not true (there are free-to-play games with very strong monetization which measure user lifetimes in years), it’s worth examining these claims a little more closely and talking about how to use the free-to-play model effectively without destroying the gameplay.
Before we begin, it’s worth noting that the old saying that "Where’s there’s smoke there’s fire" applies here. 10 years ago, on the desktop, in the early days of free-to-play, pay-to-win was a huge problem (especially for MMORPG’s with strong communities. Games like Age of Wushu were often upbraided for being pay-to-win). But it’s much less of a problem today (and, in fact, incorporating a small amount of pay-to-win into your game is an established best practice).
Wealthy Players Will Spend More
This is, in general, true. Keeping in mind that the vast majority of players don’t spend at all in free-to-play games, it’s still the case that the likelihood of spending, and the likelihood of being a "VIP Spender" are higher when the player has significant disposable income (e.g. is wealthy).
In the absence of personalized or dynamic pricing, this also means that wealthy people generally buy more things than people with less disposable income. But also note that the app stores generally encourage charging different prices to different players (for example, Apple’s pricing tier system is nothing but a way to charge lower prices in less wealthy countries).
Spending More Gives People a Significant Advantage in the Game
This would be a huge problem if true. It’s usually raised in the context of games where people compete directly with each other and there are items or power-ups that can give a player a competitive advantage (we’ll call these "competitive items" and buying them "competitive spend" below). For the game to be unfair, it must be the case that different players are competing, or at least comparing their experiences, and that spending helps them win.
But here’s the thing: while people do spend for competitive reasons, they usually taper off fairly quickly once they start winning. While every game is different, competitive spend often has the following pattern:
Figure 1. Spend versus Win Percentage
Or, in plain English:
Players who are very bad at the competitive aspects of the game don’t spend to improve. They’re often newbies who play to improve, but they don’t often spend right away.
Players who occasionally win, but aren’t very good, but who are improving, will spend on things that will help them compete.
Players who often lose will invest in competitive items.
Players who are already winning at a high rate, often do not invest further in competitive items.
Higher rates of in-app purchase revenue for competitive or gameplay items typically come from players with win percentages in the low to middle range, while players at higher win percentages have increasingly lower monetization rates. The most likely inference here is that less experienced players are spending more IAP in a (usually futile) attempt to gain an edge against talented veterans they’re going up against.
This doesn’t mean, however, that your game’s best players are free riders: In fact, they’re helping monetize it by giving others further incentive to keep playing in order to catch up with them (boosting retention), or buying high quality items/consumables that would otherwise require many hours of gameplay to earn (boosting revenue).
And it also corresponds completely with time-honored precepts of game design that have nothing to do with free-to-play design. Consider, for example, matchmaking (grouping players by skill, so that players play against similarly ranked players). It turns out that effective matchmaking increases direct monetization dramatically.
The traditional argument for solid matchmaking is that it makes the game more interesting. It makes matches more competitive, which improves retention. And that is certainly true (and that improves monetization indirectly, since players who don’t play certainly aren’t spending).
But what’s the direct effect on monetization?
Good matchmaking actually decreases newbie monetization because the newbies don’t lose as much (they’re already competitive, so they’re not in the sweet spot of the curve as much) and because the newbies don’t see all the possible items and strategies (in a wide variety of games, players have the ability to see a lot of different strategies and items in use, which leads to purchasing).
Good matchmaking increases long-term competitive-item monetization by causing experienced players to lose more (since they’re playing against players of equal rank). It "artificially" reduces the win percentage of good players by forcing them to play competitive matches and thereby increases their baseline spend rate.
The Most Successful Players are the Players Who Have Spent the Most
While this can be true in some games, it’s actually more of a failure of game design than an indictment of the overall free-to-play model.
Consider a modern PvP mobile strategy game like Clash Royale (note that Clash Royale is not a Scientific Revenue customer) which has the following characteristics:
It’s a highly competitive PvP game.
Players are in arenas grouped roughly by skill and compete to destroy the other player’s towers by deploying troops.
Acquiring cards, and leveling up the cards, gets you more powerful weapons and troops.
