In-game purchases and their effect on game longevity - 309W Literature Review

The appearance of free to play games as a model of monetization in the video games industry calls for a rethinking of game design in general. The introduction of freemium games reflects the video game economy transition in the late 1980’s from quarterly arcade machines to single unit price home consoles. This new model has found success, but not without at times rampant outrage from consumers as well as game designers criticizing the model’s ethics. While backlash is apparent, professionals in the game design field agree that free to play games are here to stay. This literature review will look at how in app purchases of free to play games affect the game’s longevity as well as the attitudes of the playerbase. For the purpose of this literature review the terms freemium and free-to-play are interchangeable and reference a video game or app that relies mainly on in app purchases of virtual content in order to make money.

Free-to-Play Games: Professionals’ Perspectives (Kati Alha, Elina Koskinen, Janne Paavilainen, Juho Hamari, Jani Kinnunen) The interests of this article lie in the opinions of the developers on a range of topics, including the success of the free to play model, the views of the gaming audience, the ethics of the free to play model and the future of freemium games. Alha et. al. interview 14 male professional game developers, 10 with experience working on freemium games and 4 without. The results of the study showed that most developers agree that the free to play model is going to continue showing itself in the industry because of previous success, but the current free to play model is stuck to specific types of game genres with large player bases. In general developers view free to play models positively, while they believe that their players are against them because of the loud and hostile backlash from the hard-core users towards the model.

Cash Trade Within the Magic Circle: Free-to-Play Game Challenges and Massively Multiplayer Online Game Player Responses (Holin Lin, Chuen-Tsai Sun, 2007) This article discusses the impact of the free to play model of monetization on players of MMOGs (Massively Multiplayer Online Games) experiences of immersion, fairness and fun. The researchers looked at commentaries and articles in magazines and media with primary sources being Taiwanese discussion websites, one with a younger user base and one with an older hardcore gamer base. The research showed that people easily accept that game developers deserve money for making their games. Most issues with free to play games on both message boards were to do with fairness and immersion breaks. As free to play games can allow people to bypass hard work or skill to acquire powerful or rare items by simply purchasing them outright, financial inequalities outside the game make their way in and give a rich player an unfair advantage. Findings also showed that real world calculations about money and finances enter the game and break immersion. Interestingly, researchers noted that freemium models could cause people to leave games due to the smaller sense of loyalty or ownership to the title compared to MMOG’s that require a subscription service.

Paid and Free Digital Business Models Innovations in the Video Game Industry (Myriam Davidovici-Nora, ) Myriam Davidovici-Nora proposes an interdisciplinary approach to the economic architecture in paid and free business models for video games. Most of what is discussed is the differences between the common Pay to play game model and the free to play model. Davidovici-Nora does this by way of bringing together microeconomics and business models literature and applying these to make each model’s process and values explicit in order to fill a knowledge gap. The article finds that there is no superior model to another, and that the strategy going forward for game designers should be to hybridize the two methods and rely on certain parts of each method differently as per the context of the game, as this has seen success in recent years.

Purchasing Behavior in Free to Play Games: Concepts and Empirical Validation (Hanner, N.; Zarnekow, R., 2015) This article looks at the reasons behind people purchasing content in free to play games and the purchasing behaviors of users. The authors conduct their research through a data analysis study through a video game marketing firm using 3 anonymous mobile freemium games. Hanner and Zarnekow (2015) argue that the small group of paying players is where most monetization elements of game design should be focused, rather than trying to convert free players. The study shows that users are most receptive to becoming paying players when they first start playing the game. Repeated purchases increase retention rate so users are more likely to make purchases more often after their first. Research also found that as the number of purchases grew, so too did the amount of each purchase, revealing a confidence in players that their purchases will be justified over time.

The economics of free: Freemium games, branding and the impatience economy (Evans, E. 2015) Evans delves into the ways in which freemium games are designed around their monetization, especially in casual smartphone app games. In this case study 3 successful similar freemium games are studied in order to reveal the relationship between game design and commercial economics. After dissection of the games, each were found to be designed around short playing times with long and forced waiting times inbetween, as well as limited time offers to gain access to premium content. It seemed that each game fostered a mentality of immediate gratification in their users and relied on this to drive their game’s monetization, essentially exploiting impatience for economic gain.

Contested Reception of the Free-To-Play Business Model in the North American Video Game Market (Matthew M. Chew, 2016) This chapter in a larger book looks at 4 debate questions related to the free to play business model. I focused on the question presented of whether or not the free to play model ruins creativity in the gaming industry. Many different arguments are presented for and against the notion in order to give a better understanding of the reception to the free to play model by the people invested in the games industry. The arguments that free to play as a model destroys creativity state that these games focus on a minimum viable product, a game design based on analytics and monetization rather than the ideas of the developers. These arguments generally agree that the model prioritizes effective monetization of small parties over intelligent and innovative game design. The arguments against these claims state that there is in fact more initiative with freemium games to make a fun and long lasting game experience, as the punishment for poor quality games is much more intense.

Understanding Consumption in Virtual Worlds (Yoonhyuk Jung, Suzanne D. Pawlowski, 2014) This article looks at how users understand the consumption of virtual goods by surveying 154 Second Life social virtual world users. The survey involved a free word association question and an open ended question both about virtual consumption. The idea of this was to take the data and apply social representation theory in order to reveal how users of free to play games make sense of virtual consumption. The survey found that there are 3 elements to virtual consumption, amusement, virtuality, and consumer activity. The motivations for each of these is rooted in Socialization and role playing. The amusement element is rooted in pleasure and fantasy, players finding amusement in relating with their avatar. Virtuality is the element that refers to the goods state of being. Users don’t see the good as not existing, they see it as existing in a virtual context. The consumer activity element shows that users see virtual economy in the same way as the real world economy, as their social values are rooted within the virtual world.

Why do people buy virtual goods? Attitude toward virtual good purchases versus game enjoyment (Juho Hamari, 2015) Hamari surveys player responses from 3 different free to play games, each from a different genre, in order to find their reasons behind purchasing content in free to play games. Hamari argues that the relationship in free to play games between customer enjoyment and their purchases is more complex than other models of business where customers buy more of the same product. The surveys showed that while each game genre has its own mediating factors, the survey found that in general perceived enjoyment of Free to Play games caused a drop in player willingness to purchase virtual content. However, longer play times and exposure to the game was found to increase player willingness to purchase virtual goods. The social aspects to each game were found to be strong contributing factors to the purchase of virtual goods, as players attitudes toward these as well as their beliefs of the general social attitudes influenced purchase.

Why do teens spend real money in virtual worlds? A consumption values and developmental psychology perspective on virtual consumption (Matti Mantymaki, Jari Salo, 2015) Mantymaki and Salo (2015) look at the value that teenagers associate with virtual goods and how this relates to their developmental stage. Taken from a larger research program, 1604 teenagers who had an account (either free or paid) in the social virtual world Habbo filled out responses to a questionnaire online to give the data for this study. Findings were that while some teenagers purchase memberships and items for fun and decoration, many teens reasons for virtual consumption were rooted in social status as well as the avoidance of avoiding discrimination. Many purchases of virtual goods like avatar clothes or possessions were made to fit in with in game peers, as well as gain respect from other players. Findings showed that teenage users who purchased memberships as well as virtual goods were concerned with being virtually wealthy because of their gain in social circles, as well as their magnified ability to socialize due to larger friend lists and the ability to trade.

The free to play model is a very recent trend in game design, as such it has not been thoroughly studied or experimented. I tend to agree with the notion that a game has to be thoughtfully designed around its method of monetization, and find that free to play games must be re-playable and enjoyable to make money even more so than a single unit price Pay to play game, which can get by with good marketing. A gap in the knowledge on this topic might be how free to play games affects newcomers to games or their effect on the cost of gaming. As well it would be interesting to dive deeper into the difference in experience between the users who play freemium games for free, and those who pay for premium items and gear. The games industry is experiencing a shift in how developers make money, which goes hand in hand with the rise in digital downloads over physical disks. As previously noted, the free to play business model is staying around for a while, but much more research is necessary in order to expand the model and get more consumers on its side.

RESOURCES

Alha, K.; Koskinen, E.; Paavilainen, J.; Hamari, J., & Kinnunen, J. (2014). Free-to-play games: Professionals’ perspectives. | In Proceedings of Nordic Digra 2014 Gotland, Sweden, May 29, 2014

Chew M.M. (2016) Contested Reception of the Free-To-Play Business Model in the North American Video Game Market. In: Fung A. (eds) Global Game Industries and Cultural Policy. Palgrave Global Media Policy and Business. Palgrave Macmillan, Cham

Davidovici-Nora, M. (2014) Paid and Free Digital Business Models Innovations in the Video Game Industry | Digiworld Economic Journal, №94, 2nd Q. 2014, p. 83 | Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2534022

Evans, E. (2015) The economics of free: Freemium games, branding and the impatience economy | Convergence Vol 22, Issue 6, p.563–580 | Retrieved from http://journals.sagepub.com/doi/abs/10.1177/1354856514567052?journalCode=cona#articleCitationDownloadContainer

Hamari, J. (2015) Why do people buy virtual goods? Attitude toward virtual good purchases versus game enjoyment |Elsevier, International Journal of Information Management Vol. 35, Issue 3, June 2015, p. 299–308| Retrieved from https://www.sciencedirect.com/science/article/pii/S0268401215000080

Hanner, N.; Zarnekow, R. (2015) Purchasing Behavior in Free to Play Games: Concepts and Empirical Validation | System Sciences (HICSS), 2015 | Retrieved from http://ieeexplore.ieee.org.proxy.lib.sfu.ca/xpls/icp.jsp?arnumber=7070216&tag=1#at-glance

Holin, L.; Chuen-Tsai, S. (2007) Cash Trade Within the Magic Circle: Free-to-Play Game Challenges and Massively Multiplayer Online Game Player Responses | DiGRA ’07 — Proceedings of the 2007 DiGRA International Conference: Situated Play. Vol. 4 | Retrieved from http://www.digra.org/digital-library/publications/cash-trade-within-the-magic-circle-free-to-play-game-challenges-and-massively-multiplayer-online-game-player-responses/

Mantymaki, M.; Salo, J. (2015) Why do teens spend real money in virtual worlds? A consumption values and developmental psychology perspective on virtual consumption| Elsevier, International Journal of Information Management Vol. 35, Issue 1, February 2015, p.124–134 | Retrieved from https://www.sciencedirect.com/science/article/pii/S0268401214001030

Jung, Y.; Pawlowski, S. D. (2014) Understanding consumption in social virtual worlds: A sensemaking perspective on the consumption of virtual goods | Elsevier, Journal of Business Research Vol.67, Issue 10, October 2014, p.2231–2238 | Retrieved from https://www.sciencedirect.com/science/article/pii/S0148296314000034

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