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About the Episode
Today’s guest has over 15 years in the gaming industry and he walks us through the 3 models of monetizing a freemium game and what model is best moving forward. If you love games like I do then you’ll definitely want to take notes.
Three Models of Monetizing a Freemium Game
Monetization for video games or freemium apps can take the following paths:
Pay to Win–You empower the user by making them pay more. You give them more power ups to be able to beat everyone else, for example. Aaron shares that he personally doesn’t like this model as it doesn’t work as well as it should unless you really have a very good skill-base to match people evenly.
Competitive Model – this is the model which a lot of companies use and which Aaron prefers. An example is Team Fortress which makes about $120million a year selling just hats. When users see something unique in a competitive game, they want to make themselves unique too. Fun Run is one game which really did well in this model. They sold little items which made players unique and they blew up to 60 million users.
Clash of Clans, went with a combined Pay to Win and Competitive Model and did really well because they did an excellent job in matching people. You’ll only play with people with the same skill level so rather than being a Pay to Win, it became a Competitive model. It still has the Pay to Win aspect if you want to play competitively in the big leader boards, but in general, it is an even skill to skill level.
Ad-Based Revenue–this model is dying and not that great but if you do it right, you get better engagement. Example is getting free gold coins at the end of a stage if you watch a certain video ad. It will cost nothing to the gamer so the tendency is to click it, cost nothing to the developer as well as they are spending fake currency, and creates better engagement because more people click the ad which leads to the advertiser payer more.
For AI-based games, this model is the most recommended one.
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