Grow your games’ revenue with subscriptions

New monetization trends to diversify your games revenue — post 2 of 5

This is the second post in our series looking at the importance of diversifying revenue streams in games and exploring the practical approaches you can take to implement a diverse monetization strategy.

My colleague Adi Haddad has already provided an overview of the landscape in the first article in this series. In this post, I’ll deep-dive into the use of subscriptions in your diversification strategy, with the contribution of Fay Griffin from N3TWORK.

Subscriptions are not a foreign concept in games. From PC to console, many have used subscriptions as a content pass. However, instead of treating subscriptions as bundles of items, I’d like to encourage you to think outside of the box and imagine a different kind of subscription model, one in which you layer subscriptions on top of IAP to create tiers of premium experiences for your players. The most similar industry analogy is an airline loyalty program.

Benefits of in-game subscriptions

The momentum of subscriptions in mobile games has accelerated in recent years. On Google Play, we’ve seen global growth in game subscriptions of 70% year-over-year.

There are three main reasons why subscriptions are growing:

1. Developers who have implemented in-game subscriptions have seen an increase in retention

“Subscribed users play about 20% more daily compared to before they subscribed to Monster Strike’s MonPass, implying an increase in user engagement,” — ©XFLAG (Mixi)

2. These developers have also seen an increase in revenue

“Due to the retention associated with monthly subscriptions, the ARPU curves for subscribers are steeper than those of non-subscribers leading to much higher overall LTVs for these players.” — Scopely

3. The ability of subscriptions to defuse feelings of regret. This may be a surprise to some so let me explain: gamers sometimes binge on IAP and then feel regret. Subscriptions can be used to structure consumption smoothing, for example, instead of eating all their cake in one day, players eat one slice each day, over a longer time with potentially a less likelihood of regret.

How to design in-game subscriptions

Three design principles

The best-in-class subscriptions design is a multiplier of overall revenue (including IAP) and engagement. However, unlike in-app purchases, designing subscriptions requires a shift in mindset.

#1: Design “access”

The main difference between IAP and subscriptions design is that while IAP is about ownership, where players keep what they buy, subscriptions is about access: access to different tiers of premium experiences, access that you can gain and lose.

In the airline loyalty program analogy, a member with status will get exclusive access to the airport VIP lounges, which provides a more premium experience with more comfortable seats, and offer food and beverages.

In mobile games, subscriptions access is centered around content. Some games offer subscribers exclusive tournaments, items, events or early access to a major new content update, such as new levels, maps or characters.

#2: Define an engagement loop to “earn”

While IAP lets the user gain benefits directly with a purchase, the most effective subscriptions mandate that subscribers must earn these unlocked benefits with their time, progression, and skills. Think of a subscription as a license to earn additional exclusive awards. Thus, subscriptions create an engagement loop, encouraging players to increase time spent in-game, and offering a reason to return day after day.

In my airline program analogy, members level up their status by flying more or buying more expensive tickets, such as business class. The “earn” criteria here — flying and/or spending — is precisely the desired customer actions that the airlines want to reinforce.

In mobile games’ subscriptions design, some offer a booster or bonus points, to reinforce the action of “play.” Some create a durable good, such as a permanent building or character, that levels up as a player remains a subscriber for a longer period of time. In these cases, the desired action is “continue to subscribe.” In other cases, subscribers get bonus premium items, currency or points to reinforce the action of “in-app purchases.”

#3: Create benefits that “evolve” over time

While the IAP items remain static, we can design subscriptions as a program, such that the benefits and experience evolve over time. As the players invest more in the game, whether it’s with their time, skills, or other IAP, the subscription benefit also compounds.

In any airline loyalty program, there are multiple layers of premier statuses, with the higher membership status offering more benefits (complimentary tickets, free checked luggage) and better experience (priority boarding, upgrades).

In games, some in-game subscriptions designs tie benefits’ value to the players’ in-game levels, either through points system, a separate VIP point system, or tiered rewards program. In these cases, a level 100 reward is significantly more valuable than level 10. In other games, some developers offer a milestone reward. For example, if a player has been a subscriber for 3 months continuously, they will unlock a valuable one-time reward in game.

Some mobile game subscriptions have one or two of the design principles, but the most effective ones have all three. I encourage you to examine and assess your existing in-game subscriptions designs using this framework.

Two target user segments

As with in-app purchases design, subscriptions offers are more effective at offering targeted values to the specific customer segments.

#1 Convert new buyers

A good deal often motivates new buyers. Scopely’s game Wheel of Fortune frames its subscriptions offer as an all-access pass. These subscriptions feature exclusive rewards that a potential buyer would want in addition to a sales discount. Surfaced right after the first-time user experience (FTUE), with benefits such as “more energy” , this subscription aims to increase these new buyers’ in-game engagement, and cultivate a habit of playing regularly and investing in their future gameplay.

#2 Celebrate high value users

For loyalty programs, you want to target high-value users, as airlines do with frequent flyer programs. These players are motivated by the ability to access a premium experience, prestige, and rewards for their commitment to your game. Ludia’s game Jurassic World: the Game offers their VIP subscribers extra currency, exclusive tournaments, early access to new content, and, as with subscriptions for new buyers, access to special durables that may even strengthen over time.

The obvious concern is that subscriptions could cannibalize IAP, but with careful and smart design that is not the case, as the case study from N3TWORK shows.

Some games also offer multiple subscriptions targeted at different segments simultaneously, such that one would be more valuable to new players, and one would be more valuable to older players or those who spent a lot of IAP by design. Players then opt-in and choose whichever subscriptions offer, or both, as they like.

N3TWORK case study

N3TWORK, the developers of Legendary: Game of Heroes, employs 90 people in offices in San Francisco, Los Angeles and Santiago. Legendary: Game of Heroes was launched in August 2016. It’s a puzzle card battle game that invites players to go on quests, join guilds, collect powerful cards, and more. It also offers weekly events and fresh new content to engage and delight players. Monetization is primarily achieved through IAP and, to a lesser but meaningful degree, through VIP subscriptions.

The business model is built around the reality that most players don’t pay. The game team’s focus is to delight all players and get them to come back everyday, for years to come, with the goal of ensuring that all of the payers have an obvious reason to return. When N3TWORK thought about subscriptions, they saw an opportunity to be generous: they’d happily give away $100 in value every month if it meant a player was going to show up regularly.

N3TWORK’s subscriptions philosophy is that VIP subscriptions are a loyalty program which provides premium access. For them, subscriptions equal access and highly retentive, long term access to content.

Legendary: Game of Heroes’s subscriptions offer:

• Convenience to the players. In a special VIP store, players are offered items they may otherwise have to perform multiple steps to buy. Players should be allowed free progression in the game without having to watch a video ad. After having experienced the game as a subscriber, the player cannot imagine playing the game without a subscription.
• Early access to content. VIPs that have subscribed for a certain period of time get tokens that give them a head start to fight higher level bosses before other players.
• Lifetime rewards. In addition to daily rewards the VIPs get lifetime rewards. The lifetime rewards are more valuable than daily rewards. This helps increase loss aversion.
• Increase value of in-app purchases. Subscribers receive loyalty or mileage points per purchase. The more points a player collects, the higher the VIP level, the better the daily and lifetime rewards.
• Create predictability for players. Offer something that subscribers can do every day, such as a daily reward that they can expect. This ultimately can provide players with rewards that reinforce the points above.
• Allow non-subscribers to also accumulate lifetime tokens. In Legendary, non-subscribers also build up their VIPlevels. Higher VIPlevels provide better values; so, when they reach a sufficiently high VIPlevel, it would become an obvious next step for them to convert into subscribers.
• Dedicated customer support for VIP’s

Looking at the design, Legendary actually uses all three of the “Access”, “Earn” and “Evolve” framework referenced above:

And they reported phenomenal results:

• N3TWORK offers the VIP subscription in Legendary at $29.99 USD per month.
• They have 30k active subscribers, which amounts to a small but growing portion of the game’s revenue.
• Their VIP subscriptions have achieved D425 retention of ~20% and players with the VIP subscription have a 95% daily log-in rate.
• Cannibalization of IAP is not a factor.
• Cost Per Player (CPP) is coverable by VIP subscriptions.

Common challenges

As they approached the introduction of the VIP subscriptions, N3TWORK thought about ways to solve some common challenges:

Intuitive Messaging Through Outstanding UX

How to communicate VIP benefits in a clear and concise way? One of the first things they did was differentiate between standard and VIP subscribers’ features with the use of color. Each VIP benefit would be purple versus the standard blue color. If the players switch off the VIP option, the game looks very different to them. The idea behind this was to build the benefit in the core loop of the game. Players can readily see the benefits, which become even more apparent when the benefit is switched off.

Mindful Upsell Moment

Be thoughtful of the best timing to offer a subscription. For example, the value of subscriptions can be made more apparent right before a big event.

Shared Account Prevention

It might have been possible for multiple players with different game accounts to share a single Google subscriptions account, and thereby gain an unfair advantage in competitive games using the subscription benefits. In such cases, associate the subscription purchase token with the gamer account that purchased it using linkedPurchaseToken, and enforce a 1–1 mapping between gamer accounts and purchase tokens.

High Caliber Customer Support

How do you ensure your VIPs feel valued? For N3TWORK, the key goal is that subscribers must feel that they belong to a community that is appreciated by the game maker. To do this, they designed benefits to maintain VIP subscriber engagement: VIP events, VIP offers, and ‘white glove’ customer support. They created a dedicated and properly equipped customer support channel to provide high caliber and dedicated customer support where VIPs can provide their feedback directly to the team.

Learnings

N3TWORK believes that it’s important to move away from the mindset that subscriptions are just an auto-renewal mechanism for discounted IAP. Instead, subscriptions need to be thought of as offering highly-retentive long-term access to content, rather than the one-time situational purchase of content offered by IAP.

Subscriptions have helped underwrite N3TWORK’s revenue and improve player retention. Retention has been driven further by the ability to personalize the IAP store based on the player’s subscriber tier, which has further boosted the IAP economy by increasing the perceived value of products to subscribers. And, it has been at no cost to other IAP offers or products, in other words they haven’t experienced any cannibalization of other IAP offers.

Looking back at the implementation of VIP subscriptions, N3TWORK believes the impact may have been even better if they had considered:

• Free trials to help with subscriber conversion
• Auto-renew trials and deals through introductory pricing, for example, 3 months at a discounted price.
• Time cards to provide an alternative IAP to gain temporary access to a subscription, similar to the 3 month Xbox Live card.

3 key take-aways the N3TWORK team learned from the process:

• Prioritize subscriptions offers: given its high retention, the VIP subscription should be the #1 thing people are encouraged to buy.
• Framing is everything: celebrate, celebrate, celebrate. Create VIP events, talk outside the game.
• Build fast but flexible: build fast but maintain the ability to test and iterate.

Closing thoughts

If you’re considering testing subscriptions in your game, here is a framework to get you started:

1. Select your target audience

Are you creating the subscription to convert new buyers or offering a loyalty program for high-value users?

2. Customize your value propositions

For each of your key audience segments, what is your main value proposition? What would be valuable to a new user? A tenured player? A high-value payer?

3. Design “access”

Can you give your subscribers access to something special? Something above and beyond a free or even IAP-based experience, so that they’ll return to your game regularly and spend more time? What does “losing access” look like?

4. Define the actions that “earn”

After subscribers gained access, what actions do you want the subscribers to perform to earn their new benefits? How can you create an engagement loop to reinforce these actions?

5. Create the key benefits that “evolve”

For subscriptions benefits, what can you offer players that grows with time-spent, in-game progress, IAP purchases, and alike?

What do you think?

Do you have thoughts on monetization with subscriptions? Let us know in the comments below or tweet using #AskPlayDev and we’ll reply from @GooglePlayDev, where we regularly share news and tips on how to be successful on Google Play.