Live Service Layered Cake — Part III

The Evergreen Stuff

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9 min readApr 17, 2023

This text is the third part of a new series of texts about metagame design and live service monetization of free-to-play games. You can read the first and the second part here and here.

Layers

I mentioned already that I like to use a metaphor of a layered cake when discussing the metagame in the context of the live service of a free-to-play game. In what follows, we will examine the structure of the live service monetization layer by layer. Layers 1, and 2 consist of evergreen purchases, i.e. stuff that your players are always able to purchase within your game. Strictly speaking, these are not a part of the live service. However, these two layers are the basis on which the other layers are built.

Layers 3 to 5 contain the monetization mechanisms that are part of the live service in a stricter sense.

The last layer, layer 6, consists of advanced monetization features.

Layer 1 — Basic Monetization

The bottom layer of our monetization cake consists of the oldest and the most venerable types of monetization features. These are the standard IAPs (in-app purchases) offered by almost all free-to-play games. Usually, these include packs of hard currency sold for real money and packs of soft currency that can be bought using hard currency.

The classical metaphors for these two types of currencies are Gold Coins as a representation of the soft currency and Gems (or diamonds) used to represent the more valuable hard currency. This is a common trope but it is by no means universal. The advantage of reusing this trope is that it is familiar to the players. Since so many games use it, it has been established as a visual shorthand for the feature. By now even the most casual player knows that Gems are more valuable than coins and that gems are usually purchased with real money.

Not all games employ two-tiered currency systems. Some employ only one (hard currency). The purpose of this dual currency system is to achieve flexibility. Hard currency represents a level of abstraction between real-world money and the game’s economy. Games are normally operated in multiple markets. There are some 180 currencies used in the world today. Each with its own exchange rate. The game teams need a level of abstraction between this myriad of real-world currencies and the rest of their game. The game economy can be designed and balanced using these abstract and universal gems as the fundamental variable. The pricing of the game packs can be adjusted separately, without the need to tweak the rest of the game economy.

The consequence of having this additional layer of separation is that it becomes harder for players to establish the correspondence between the value of things on which they are spending gems in the game and the real money. This has been highlighted as one of the most ethically challenging aspects of free-to-play monetization. Keep in mind though that when designing such systems one needs to above all provide value for the customers. The old adage, that you can fool some people all the time, and all the people some of the time, still applies. You can’t build a successful business by trying to trick all the people all the time!

There are a couple of other things that one needs to keep in mind when designing monetization features at this level. By now the industry has drifted into a recognizable template of having 3 or 6 packs of diamonds sold for cash and 3 to 6 packs of gold coins sold for coins.

*A screenshot of the store in Zooba by Wildlife Studios.*

It is a good practice to follow, at least initially this established template. However, one should not just blindly copy the example. It makes sense to understand some of the important details regarding these packs.

The pricing of the packs is by no means accidental. It has its own internal logic that should be understood. The first and the most important of all the price points is the price of the first, i.e. the smallest gem pack. This is the basic reference point that you will use to determine the prices of the rest of the packs in the store. This is (except in very special cases) also the cheapest thing to buy in your game. It also might be the first thing many of your players will purchase first. One might be tempted to put this price as low as possible to ensure a big conversion rate.

This price should never go below the impulse purchase threshold. This is the amount of money people are ready to spend without batting an eye. This is the price of a small bag of Pringles or an ice cream in the grocery store, this is the price of a bag of Pokemon cards or a cup of espresso. If you set it to anything below this threshold, you are leaving the money on the table!

Keep in mind though that impulse purchase thresholds can vary greatly from market to market. What is considered cheap in some places, will be prohibitively expensive in other locations. Having different price points for different important markets might be necessary. This is where having a hard currency as a buffer layer comes in handy.

On the opposite end of the scale is the price of the biggest gem packs. One of the typical quips about free-to-play games is about the outrageous prices of items in the store. OMG 100$ for a pack of gems! These huge gem packs with their high prices actually have a double purpose.

They are not necessarily intended to be bought by an average player. Above all, they are there as an anchor point to establish the range of values that the player might expect to see in this store. In-game shops offer a range of virtual goods. They do not exist in the real world, and players might not have a frame of reference to evaluate the prices. Is 10$ a lot or little for these kinds of things? Is 20$? Is 50$? Setting a high anchor point helps establish this frame of reference. Some people will apply the strategy of buying the second most expensive or the second cheapest thing in the store. Selecting the appropriate price points for both ends is essential.

The players that do buy these high-value packs are obviously going to be big spenders or even super spenders in your game. These types of players have usually graduated to these high-value packs by purchasing something cheaper in the game first. This means that they will have a clear understanding of the value they are getting. They are also likely to do repeated purchases. They obviously have enough disposable income to spend on this game. If the price or the amount of goods that they are receiving is not large enough, you will get one of the most common complaints that this type of player makes. Why don’t you let me spend money on your game? I want to spend this and this much money on your game, but you make me buy these small packs 10 times instead of buying only once!

We have already mentioned the correspondence between time, real money, and virtual currencies. This is one of the fundamentals of game monetization. In the same way, individual currencies within the game have their own exchange ratios. But here is the kicker, most often you should not be using one single ratio even for a single pair of currencies in your game. What you should be doing is encouraging bigger spending. One way of doing this is by offering a bulk discount. This means that when purchasing bigger gem packs, the player should play less per individual gem than when buying the smaller packs. The cheapest IAP is thus the least economical one. The same applies to packs of soft currency.

This inevitably complicates the balancing of your economy. The smaller packs tend to be bought by players that are early in the game, the bigger ones tend to be bought by players that have already invested a lot of emotional energy into the game. The value that they get out of them affects their own game progression. Be careful to take this into account when balancing all other game features that can be directly influenced by your currencies. Do at least two balancing models, one taking into account the best and one for the worst exchange ratio!

Layer 2 — Convenience Purchases

As we mentioned before, both layers 1 and 2 include evergreen purchases. The reason why I separated them into two distinct layers is the context. Layer 1 consists of packs of hard and soft currency, i.e. gems and gold coins. These are something present in almost any free-to-play game. They are useful in any game regardless of the feature-specific context. For a player, they are a universal tool. A player can decide to purchase them at any point in the game with or without trying to solve any particular need.

The purchases that constitute layer 2 on other hand are always context specific. These include things like:

buying of missing resources, either items or currencies, as found in many farming and city-building games
speeding up all sorts of timers
instant unlocking chests in games like Clash Royale, etc.
buying missing character shards, cards, or upgrade items in RPGs (Role Playing Games)
buying additional energy or hearts in games employing energy mechanics, typically in Match 3 games
Etc.

*Convenience purchases in Family Island by Melsoft Games.*

Various types of gacha boxes offered in the shop can also be seen as part of this monetization layer.

These types of purchases are usually denominated in hard currency and can constitute major sinks of gems.

The trick for creating a successful indirect monetization feature is to make clever use of this particular monetization lawyer. A successful indirect monetization feature should motivate the player to repeatedly make various convenience purchases. The player should either face a puzzle that he is able to more easily solve by doing several convenience purchases, or he should be in a contest with other players which would offer him a chance to strategically use his money and other resources to gain an edge over the other players. In any case, in order for this to work properly, it must involve a significant level of decision-making on the player’s part and a chance to make a mistake. Otherwise, the feature will inevitably have a pay-to-win feel to it.

Conclusion

In this part of our series, we have begun to explore the layers of the metagame and the monetization of live service games. The two bottom layers represent evergreen stuff, which most free-to-play games employ today and which changes relatively rarely if ever. These two layers however provide the support needed for the development of the following three layers which actually constitute the main part of a well-managed live service. We shall explore them in detail in the next part. Stay tuned!

Key Takeaways

The metaphor of a layered cake is useful to describe the structure of the monetization layer of the live service of a free-to-play game.
Layers 1 and 2 consist of evergreen purchases that are not part of the live service, but serve as the basis for the other layers.
Layers 3 to 5 contain the monetization mechanisms that are part of the live service.
Layer 6 consists of advanced monetization features.
Layer 1, the bottom layer, consists of basic monetization, including standard in-app purchases (IAPs) of soft and hard currency.
The dual currency system achieves flexibility in pricing game packs in different markets and abstracts real-world currencies from the game’s economy.
The pricing of the first, i.e., the smallest gem pack, sets the reference point for the rest of the packs and should not go below the impulse purchase threshold.
The pricing of the biggest gem packs helps establish a frame of reference for the value of virtual goods and serves as an anchor point.
High-value packs are intended for big spenders who understand the value they get from the game.
The appropriate selection of price points for both ends is essential to the success of the monetization strategy.