Updated: Feb 12
Thus far we have investigated my near-miss with freemium gaming, what freemium gaming is all about, the size of the freemium gaming industry, and its links to gambling. In the last article we covered the underhanded tricks it uses to maximize profits at player’s expense. In this, the fifth and final episode in the series, we will investigate what the freemium gaming industry thinks of the people it exploits.
Players into Payers
Considering the sheer size of the freemium gaming market and its multibillion $ a year turnover, you might be surprised to learn that most of the freemium gaming player-base will never spend a single dollar, pound, or euro on their freemium games.
Therefore, it is the remaining minority of players who are generating these vast sums of revenue.
The freemium gaming industry is well aware of this of course, which is why they are on a constant mission to turn players into payers.
To achieve this, they must overcome a ‘hump’. This hump is that many players have an ‘I will never pay’ mindset. To overcome this hump freemium games will often use a ‘hook’, using one or more of the mind-games covered previously. This might take the form of a one-time offer that looks too good to pass up - especially for someone who has already invested time and effort into the game and are thus likely to keep playing.
This leverages the ‘Ikea effect’, a term used to describe our tendency to assign value to something we have made ourselves, even if that something has little-to-zero real value. In a freemium game, this might be a character the player has leveled up to a reasonably high degree or the large size of their farm in Farmville.
One of the tricks of the trade used to turn players into payers is ‘anchoring’. Here the first price offered is high. This primes the player what prices to expect. Then the player is offered a significant time-limited discount. This gives the player the illusion they are getting an excellent deal, whilst the time limit leverages the F.O.M.O. (Fear Of Missing Out).
This might be just enough incentive to get over the hump and turn a player into a payer. Once a player has made that initial purchase, they are statistically far likelier to spend again, and again, and again, since it sets a psychological precedent.
This is why I describe my experience with Family Guy the Quest for Stuff (FGtQfS) as a ‘near miss’. If I had made that initial purchase, I undoubtedly would have made many, many more. “After all, it's only £1.35 to unlock that character…”
This is the first part of the Hook-Habit-Hobby cycle, which is designed to be addictive and habit forming. If you type it into a search engine you will find no end of business gurus advising companies how to make their products (social media apps and games in particular) more addictive. I shan’t be linking to them for ethical reasons
Let’s go Whaling
You might be wondering how I know all this. Do I have a shady anonymous source revealing the freemium gaming industries’ dirty little secrets?
Nothing so exciting I’m afraid. No meetings in badly lit parking structures were needed. The freemium gaming industry not only makes no attempts to hide its business practices, it is proud of them! It even aids other developers to do likewise. But don’t take my word for it - get it from the source.
Let’s go whaling: Tricks for monetizing mobile game players with free-to-play
NB - I don’t habitually do trigger warnings, but for this, I will make an exception. This video may induce rage and disgust, especially if you, or someone you know, has been a victim of freemium gaming’s tactics.
Video by PocketGamerbiz
Amongst the already small percentage of players who become payers, there is a clear hierarchy, based on average spend per month. Below you can see the dehumanizing terms the freemium gaming industry use to delineate these tiers.
Designation Average monthly spends Percentage of paying players
Freeloader $0 0%
Minnow $1 50%
Dolphin $5 40%
Whales $20 10%
(Data from https://www.gamesbrief.com/)
It is the ‘Whales’ that the freemium industry is the most concerned with. Although they make up the smallest percentage of the paying player-base by number, they generate the most revenue overall. This follows the power law.
Whales may not have a budget, and so might spend in the tens or even hundreds of thousands of $/£/€ on a game over several years.
The freemium gaming companies know who these people are of course. They may send gifts and keep in contact with ‘their’ Whales, complimenting them on their achievements and generosity.
This can make the whale feel validated and special, and thus more likely to keep playing and paying. Considering that some whales are particularly vulnerable people, this is especially underhanded.
The Human Factor
Thus far we have concentrated on single-player games. The situation in multi-player games can be even worse.
A major added problem in multiplayer freemium games is peer pressure. In games where microtransactions are for purely cosmetic items, the pressure may come in the form of bullying those who have not spent money in-game. Allegedly, young Fortnite players have been shunned for their avatar wearing ‘default’ costumes, as it suggests their family is poor.
Indeed, the word ‘default’ is allegedly now used as a general-purpose insult amongst some children and teenagers, both on-line and off.
In team multi-player games where microtransactions do have a tangible in-game effect, some players have allegedly been denied entry to a team, or even expelled from an existing one, for failing to spend enough to keep their avatar at a competitive level.
Positive reinforcement may also play a role. Other players complimenting a payer-player on their avatar, and the quality of their in-game equipment, may encourage the payer-player to continue playing and paying.
The ability to pay-to-win can also be a powerful motivator in some multi-player games, as it will allow a Whale to show off and dominate other players.
A ‘keeping-up-with-the-Joneses’ effect may also play a role, as payer-payers may not wish for their avatar, farm, clan, etc. to appear ‘unfashionable’ or ‘weak’ in the eyes of other payer-players.
To legally qualify as a free-to-play game, a freemium game must be possible to play effectively without paying. However, designing it so that it takes an inconveniently long time to make significant progress is acceptable.
This is as important psychologically as it is legally. A player may be reluctant to pay for an in-game item if they do not feel it is particularly valuable to them. However, their time probably is valuable to them. Therefore, they may be more willing to pay for the convenience and the time they will save by not having to grind for it.
Legally qualifying as a freemium game is only the first step on the path to obscene profits. In addition, there are several gameplay mechanics that a freemium game will need to implement. These are;
One: There must be no upper limit to how much a whale can spend in-game.
Two: The game must be made in such a way that it is both possible and easy to spend a large amount.
The makers of freemium games are aware of this of course and may create their games based on these principles.
That said, not every developer of a freemium game gets the balance right. Electronic Arts were slated over their mobile remake of Dungeon Keeper, which featured so many timed activities and microtransactions that playing without paying became borderline impossible. As a result, all advertisements stating that the game was free-to-play were banned by the British Advertising Standards Authority.
Those Most at Risk
As with most addictions, some people are particularly at risk of becoming addicted to freemium gaming. These include people with addictive personalities, and those who are socially isolated, depressed, grieving, etc.
Again, as with other addictions, freemium gaming may be used to self-medicate or mentally escape from underlying problems.
Some payer-players have spent literally millions of dollars on freemium games.
NB - there has been some disagreement as to whether obsessive playing and spending on freemium gaming should be considered an addiction or a compulsion.
As with most addictions - or compulsions - freemium gaming addiction can result in several negative social and societal impacts. These can include everything from skipping school, slipping grades, and becoming socially isolated to unemployment, family and relationship breakdown, poverty, and even homelessness.
Out of respect for the victims, I have decided not to highlight individual case studies. A quick internet search will bring them up if you wish to read/watch/listen to them yourselves.
Legalities and Regulations
The problems caused by some forms of in-app purchases has not gone unnoticed by some governments around the world. Several European nations have expressed concerns that loot boxes are a form of gambling.
Apart from outright banning microtransactions, what can be done to help players?
Apple Arcade is one possibility, as it will offer an alternative method of both distribution and monetization, which may entice some developers away from the freemium model, whilst also upping the quality of mobile games on iOS devices.
Another possibility would be to ban games that contain in-app purchases from being advertised as free-to-play. This may be happening already in some jurisdictions.
However, I suspect the most effective method would be education, which is why I wrote the ‘Perils of Freemium Gaming’ series. The freemium gaming industry is unlikely to clean up its act if players keep becoming payers.
If enough potential payers realize how the freemium gaming industry is attempting to use and manipulate them, then the number of payers may go down. This may hit the industry in the one place it does seem to care about - its bottom line.
This concludes our investigation into the perils of freemium gaming. For those who joined me on this journey of discovery since the first article, thank you. It was a challenging topic to write about, and I imagine reading it has been no less depressing.
Despite having devoted five long-form articles to the subject, we have barely scratched the surface. There is a wealth of information available in the public domain you can access if you so wish. Topics you may wish to look up include China’s freemium gaming situation, further examples of ‘super-whales’ who have spent millions on microtransactions, and deeper dives into the psychology and monetization of freemium gaming.
Parts one to four in the series can be found by clicking the links below:
What are your thoughts on freemium gaming? Have you been affected by it, or know someone who has? Do you have any thoughts about what should be done - if anything - to regulate it? Feel free to share your thoughts and opinions in the comments section below.
NB - Are there any other issues relating to video games and the video games industry you would like to see investigated? If so, write your suggestions and requests in the comments section below, or PM the Exclusively Games Facebook or Twitter accounts if you wish to do so anomalously.
Iain is a 40+ author and gamer from England, who started his gaming journey on the Atari 2600 36 years ago. His specialities include obscure cult classics, retro games, mods and fan remakes. He hates all sports games and is allergic to online multiplayer. Since he is Bri