Paying the Price: The Ethical Crisis in Freemium Game Design

When Johnny Richardson landed a job as Lead UI Developer on a game featuring the hottest fantasy franchise in the world, he thought he’d hit the jackpot.

“I was over the moon,” he told me as we chatted about his experiences in the industry. “Being able to work on such a famous IP felt like I had made it.”

But Johnny’s excitement quickly soured as he realized what his real job would be.

“The first cracks started to show when our CEO told us the best thing we could do for the company as developers was to think about how to make as much money as possible,” he explained, frustration still evident years later. “I got into this line of work to make something fun for our players.” So why was his job now to figure out how to generate revenue?

What Johnny discovered was an industry increasingly oriented around a single goal: identifying and extracting maximum value from “whales,” the industry term for high-spending players that generate the bulk of revenue in freemium games.

“As you advanced through the leveling system, it would’ve been increasingly impossible to advance … without spending money,” he explained. “In general, I believe the freemium model is reliant on tactics and patterns to essentially addict people.”

The experience was so disillusioning that Johnny, like many developers with similar ethical concerns, ultimately “left the games industry forever” after departing the role.

Johnny isn’t alone in his discomfort with freemium practices. As a gamification expert who’s consulted with major companies, I’ve watched the mobile gaming industry transform into a psychologically sophisticated machine designed to maximize spending… often at the expense of the most vulnerable users.

The Money Ocean of Freemium

The mobile gaming industry has exploded into a $100+ billion behemoth, with the vast majority of that revenue coming from “freemium” games (those that are free to download but designed to extract money through in-app purchases). What most people don’t realize is how concentrated this spending actually is.

Industry data shows that a tiny fraction of players (just 1–2%!) contribute between 50% and 70% of all freemium game revenue according to Udonis, a mobile marketing agency that specializes in games (Udonis). These super-spenders are known in industry parlance as “whales,” a term borrowed directly from casino culture that refers to high-stakes gamblers courted aggressively by gambling establishments.

But who are these whales really? The industry narrative portrays them as wealthy enthusiasts with plenty of disposable income, ex. tech executives killing time on their commute or successful professionals indulging in a harmless hobby. The reality, as we’ll see, is much more troubling.

The Human Cost: In Their Own Words

“Between April and May of 2018, I spent over $1,000 on loot boxes in Fate/Grand Order, a gacha game based on the Fate/Stay Night franchise,” confessed one player in a revealing personal essay. “I was sad, I lived in my parents’ basement, and I was unemployed.” This player described how the game’s gambling mechanics played on their vulnerability during a difficult period in their life (The Escapist).

Another player, a Twitch streamer named David Pietz, admitted to spending upwards of $20,000 on microtransactions and loot boxes over a five-year period. When asked why, he simply said, “It’s a super competitive game. It was an RPG and your characters could get more powerful by getting weapons.” Competitive dynamics, one of the elements that gamers find the most enjoyable in games can drive excessive spending (Udonis).

These aren’t isolated cases. Online forums are filled with confessions from players who’ve spent amounts they can’t afford:

Eugene, a precision engineer, regularly spends “around US$1,700 to US$2,100 to max out” characters in games like Genshin Impact. Despite setting a budget, he admits:

“But most of the time, I go over budget because the RNG is hard to beat sometimes.” (Yahoo!)

“I spent $3000 on a gacha game because of a gambling addiction. It hasn’t been 24 hours yet, but I’m freaking out.” (Libredd)

“If my family and non-gamer friends ever knew, they would absolutely lose their minds.” (Kotaku)

What’s particularly disturbing is how many of these stories come from people who are already financially vulnerable or who describe patterns that mirror addiction. They’re not wealthy enthusiasts indulging a hobby; they’re often people struggling with impulse control who find themselves caught in a carefully designed spending trap.

The Industry’s Open Secret

The industry knows exactly what it’s doing. In a shocking anonymous confession published on TouchArcade, one free-to-play producer revealed the lengths companies go to target their whales:

“And if you are a whale, we take Facebook stalking to a whole new level. You spend enough money, we will friend you. Not officially, but with a fake account. Maybe it’s a hot girl who shows too much cleavage? That’s us.” The developer went on to explain how they built custom items specifically to sell to a single high-spending player they had profiled (Toucharcade).

My colleague Johnny (remember, the developer on the IP-driven fantasy game) saw this pressure firsthand: “I honestly think that the games industry is such that people that love games feel so lucky to just be employed in it, that they often don’t think about potential ethical dilemmas, because there’s always somebody there to take your job if you don’t want it.” This creates an environment where ethical concerns are often suppressed in favor of business imperatives.

When I worked at Sidekick Health, I collaborated with a team of former King developers (the company behind Candy Crush Saga). While we were designing engaging health interventions rather than exploitative games, they revealed many of the data-driven design secrets from their time in mainstream mobile gaming. The sophistication of these techniques (i.e. psychological triggers, brutally exacting A/B testing, artificial difficulty spikes timed to encourage purchases) would shock most casual players.

To be clear, I’ve never designed exploitative freemium models, nor would I. But I’ve seen firsthand how the techniques used in gamification can be weaponized to extract maximum money from users when profit is the only consideration.

How the Trap Is Set

What makes these games so effective at extracting money, especially from vulnerable users? Several mechanisms work in concert:

The Tiny Purchase Treadmill: Contrary to what many assume, most whales don’t make huge purchases all at once. Research shows that the typical transaction for high-spending players is around $20, with many never making individual purchases over $50 revealing that problematic spending accumulates over time rather than in massive splurges (Udonis).

This makes the spending feel more reasonable in the moment. It’s just $5 here, $10 there… until hundreds or thousands have been spent.

Variable Reward Schedules: These games employ the same psychological principle that makes slot machines so addictive, namely: unpredictable rewards delivered at variable intervals. When players don’t know exactly when they’ll get the item or character they want, they’re driven to keep trying, chasing the dopamine hit that comes with success.

Social Pressure and FOMO: Limited-time events and exclusive items create artificial scarcity and fear of missing out. When combined with social features that showcase what others have obtained, this creates powerful pressure to spend.

Sunk Cost Fallacy: Once players have invested time and money, they’re reluctant to walk away. The more they spend, the more invested they become, creating a dangerous cycle.

The Social Science Of “Free” Gaming

Academic research is catching up to what game developers have known for years. A scientific study published in Addictive Behaviors examined whether high-spending “whales” were wealthy enthusiasts or problem gamblers.

The findings were sobering. A significant correlation exists between problem gambling behaviors and high spending on loot boxes highlighting the connection between these monetization methods and addiction-related behaviors (ScienceDirect).

Another study found that loot box spending was linked to financial harm: “Similarly, individuals seeking treatment for internet gaming disorder have reported large debts due to microtransactions,” underscoring that this isn’t just about entertainment choices but about real financial damage (ScienceDirect).

The psychological similarities between gambling and certain freemium mechanics are so strong that several countries, including Belgium and the Netherlands, have already regulated loot boxes as gambling. Others are considering similar measures. (Voight)

A Path Forward

This isn’t about demonizing all freemium games or gamification in general. When designed ethically, these approaches can create sustainable business models while providing genuine value and enjoyment to users. I’ve seen this firsthand in my work creating gamified health interventions that motivate positive behaviors without exploiting vulnerabilities.

So what would more ethical monetization look like?

Transparent Pricing: Players should know exactly what they’re buying and how much it costs, with no obfuscation through multiple currencies or hidden odds.

Reasonable Spending Caps: Ethical games could implement monthly spending limits to prevent excessive use.

Value Over Addiction: Focus on creating genuine value that people willingly pay for, rather than exploiting psychological vulnerabilities.

User Wellbeing Metrics: Success should be measured not just in revenue but in user satisfaction and healthy engagement patterns.

Ultimately though, a shift back to paid, premium products is the best way forward. When players know the price and the value proposition up front, and get what they pay for, the opportunities for exploitative design all but evaporate.

The future of mobile gaming doesn’t have to be predatory. As consumers become more aware and regulators more active, companies will face increasing pressure to adopt more ethical models. The most forward-thinking developers are already moving in this direction, recognizing that sustainable success comes from creating genuine value, not exploiting vulnerabilities.

Games provides so much value to the world: fun, stress relief, artistic expression. The companies that make these products and artworks absolutely deserve to make money, and developers deserve to be compensated for their work. The question is whether that profit should come at the expense of vulnerable people spending money they can’t afford to lose. The answer seems clear.

Sam Liberty is a gamification expert, applied game designer, and consultant. His clients include The World Bank, Click Therapeutics, and DARPA. He teaches game design at Northeastern University. He is the former Lead Game Designer at Sidekick Health.