Kongregate: the science behind the massive profits of F2P games • Hacker News Board

Re: Kongregate: the science behind the massive profits of F2P games

#11

Post by cat9 » Mon, Jun 15, 2015, 1:29 AM UTC

patio11 wrote: post #8

fsk wrote: post #2

Eventually, the pendulum will swing the other way. People will get sick of freemium games, and go back to games where you pay $1-$10 once. Some people made a lot of money with freemium, so everyone is copying them. I can't stand wait timers, energy systems, and all the other tricks they use to balance freemium games. Many freemium games require an Internet connection to play, which is bad for me because my prime gami…

There is an interesting line in one of those presentations: (paraphrase) "There is a hyper-competitive market for player attention, which has caused the price of a game to fall all the way to zero, but after they're in your [end]game you are a monopolistic provider of the game content, so you can charge any profit-maximizing price." This is a slightly more nuanced take than mine, which is that F2P games are what game…

I'd prefer the first explanation as well, not least because "optimize your business model for the people who are willing to pay you, not the people who aren't."

Re: Kongregate: the science behind the massive profits of F2P games

#12

Post by cat9 » Mon, Jun 15, 2015, 1:38 AM UTC

patio11 wrote: post #9

joshuapants wrote: post #6

Earlier quoted context omitted.

There's a reason gog.com is making money. Going DRM-free doesn't harm your business, it just respects the users. If people like a game, they will pay for it as long as you don't have some kind of annoying obstacle preventing them from doing so. edit: DRM isn't even really a good counter to piracy for the most part. It will be cracked sooner or later (sometimes before the game is even officially released) and the peop…

DRM is largely about protecting the new-release window where a supermajority of AAA game/video sales happen. It doesn't have to be effective for all time -- if it delays the first crack until release plus two weeks then it's still worth tens or hundreds of millions of dollars in marginal sales.

It's less effective at even that much than it could be, e.g. any game released on Steam can be cracked in a largely homogeneous fashion.

(Which is exactly the value point I'd be working to improve if I was working at Steam and trying to convince more titles to release there.)

Re: Kongregate: the science behind the massive profits of F2P games

#13

Post by rtpg » Mon, Jun 15, 2015, 1:50 AM UTC

fsk wrote: post #2

Eventually, the pendulum will swing the other way. People will get sick of freemium games, and go back to games where you pay $1-$10 once. Some people made a lot of money with freemium, so everyone is copying them. I can't stand wait timers, energy systems, and all the other tricks they use to balance freemium games. Many freemium games require an Internet connection to play, which is bad for me because my prime gami…

It's possible to make freemium without wait timers. See Hearthstone, League of Legends.

I don't see freemium disappearing anytime soon.

Re: Kongregate: the science behind the massive profits of F2P games

#14

Post by patio11 » Mon, Jun 15, 2015, 1:59 AM UTC

Emily Greer (CEO of Kongregate) has a very good presentation, not to my knowledge already linked in this discussion, about F2P whales: http://www.slideshare.net/emily_greer/dont-call-them-whales-... Partially it's an apologia for the business model, but it is dripping with useful facts and commentary.

Re: Kongregate: the science behind the massive profits of F2P games

#15

Post by freditup » Mon, Jun 15, 2015, 3:47 AM UTC

patio11 wrote: post #14

Emily Greer (CEO of Kongregate) has a very good presentation, not to my knowledge already linked in this discussion, about F2P whales: http://www.slideshare.net/emily_greer/dont-call-them-whales-... Partially it's an apologia for the business model, but it is dripping with useful facts and commentary.

I used to be a moderator on Kongregate and had a decent amount on interaction with multiple of the administrators. I also was somewhat involved in the flash game market (just casually as a hobby). When I found out how Kongregate specifically worked with developers to help make games that target the 'whale' spenders, I was pretty shocked. Making games that are not enjoyable, just addictive, in order to take in thousands of dollars from single individuals just seemed so unethical.

I just glanced over that link of Emily's ethical rationale for this, and it didn't convince me. But I'll have to go back through it more carefully before I can decide for sure.

Re: Kongregate: the science behind the massive profits of F2P games

#16

Post by [deleted] » Mon, Jun 15, 2015, 4:11 AM UTC

patio11 wrote: post #14

Emily Greer (CEO of Kongregate) has a very good presentation, not to my knowledge already linked in this discussion, about F2P whales: http://www.slideshare.net/emily_greer/dont-call-them-whales-... Partially it's an apologia for the business model, but it is dripping with useful facts and commentary.

[deleted]

Re: Kongregate: the science behind the massive profits of F2P games

#17

Post by freditup » Mon, Jun 15, 2015, 4:12 AM UTC

freditup wrote: post #15

patio11 wrote: post #14

Emily Greer (CEO of Kongregate) has a very good presentation, not to my knowledge already linked in this discussion, about F2P whales: http://www.slideshare.net/emily_greer/dont-call-them-whales-... Partially it's an apologia for the business model, but it is dripping with useful facts and commentary.

I used to be a moderator on Kongregate and had a decent amount on interaction with multiple of the administrators. I also was somewhat involved in the flash game market (just casually as a hobby). When I found out how Kongregate specifically worked with developers to help make games that target the 'whale' spenders, I was pretty shocked. Making games that are not enjoyable, just addictive, in order to take in thousan…

A few more thoughts on the matter of whales:

On Kongregate, 2.1% of users buy virtual goods. Of these, about 4% (the whales) have spent over $500 and bring in about half of Kongregate's revenue. Top spenders often spend $50K-$80K.

Emily's premise is this: that people who spend lots of money on games (whales) are people who healthily enjoy the games as hobbyists.

Her most interesting points, in my opinion are as follows:

We think whales are bad (but shouldn't) because they spend their money on virtual goods: "Spending $5-$10k on specialized PC Gaming rigs that improve your skills and enhance your competitiveness is not really that different from spending money for in-game items that do the same. But I bet you all ﬁnd it a lot easier to contemplate."

We think whales are bad (but shouldn't) because we don't think games are a legitimate hobby: "The bias against games is so insidious that even within the industry we’ve internalized it enough that we question someone with means spending tens of thousands of $s on a game, especially when you combine it with the low value we place on mobile and PC games and especially virtual goods. And so people jump to explanations like “mental illness” or “evil games manipulating players” when the real explanation is that they are rational, wealthy people who are dedicated fans investing in a particular game."

I personally don't agree with her though. We would have no problem with a person spending $10K on software. The issue isn't virtual vs. physical goods. The issue comes down to if games are a legitimate, healthy hobby or not. I would argue that they are not, at least for most of those who are whales. I don't have time to flesh this argument out tonight though.

Re: Kongregate: the science behind the massive profits of F2P games

#18

Post by patio11 » Mon, Jun 15, 2015, 4:19 AM UTC

freditup wrote: post #17

freditup wrote: post #15

Earlier quoted context omitted.

I used to be a moderator on Kongregate and had a decent amount on interaction with multiple of the administrators. I also was somewhat involved in the flash game market (just casually as a hobby). When I found out how Kongregate specifically worked with developers to help make games that target the 'whale' spenders, I was pretty shocked. Making games that are not enjoyable, just addictive, in order to take in thousan…

A few more thoughts on the matter of whales: On Kongregate, 2.1% of users buy virtual goods. Of these, about 4% (the whales) have spent over $500 and bring in about half of Kongregate's revenue. Top spenders often spend $50K-$80K. Emily's premise is this: that people who spend lots of money on games (whales) are people who healthily enjoy the games as hobbyists. Her most interesting points, in my opinion are as follo…

Yep. In particular, if demographically whales are (as subtextually claimed on slide 12) functioning upper-middle-class professionals like business owners, engineers, doctors, and CPAs, then there doesn't seem to be any meaningful harm in it.

My unease about F2P monetization is that my sense of the demographics is that it tilts more towards "people with undiagnosed depression" or "the Vegas slots demographic."

Re: Kongregate: the science behind the massive profits of F2P games

#19

Post by freditup » Mon, Jun 15, 2015, 4:28 AM UTC

patio11 wrote: post #18

freditup wrote: post #17

Earlier quoted context omitted.

A few more thoughts on the matter of whales: On Kongregate, 2.1% of users buy virtual goods. Of these, about 4% (the whales) have spent over $500 and bring in about half of Kongregate's revenue. Top spenders often spend $50K-$80K. Emily's premise is this: that people who spend lots of money on games (whales) are people who healthily enjoy the games as hobbyists. Her most interesting points, in my opinion are as follo…

Yep. In particular, if demographically whales are (as subtextually claimed on slide 12) functioning upper-middle-class professionals like business owners, engineers, doctors, and CPAs, then there doesn't seem to be any meaningful harm in it. My unease about F2P monetization is that my sense of the demographics is that it tilts more towards "people with undiagnosed depression" or "the Vegas slots demographic."

Slide 12 isn't a convincing argument that these people are okay, but of course it doesn't indicate the latter either. But even if these people are upper-middle-class professionals, there's still a chance that their action stem from things like depression/addiction. My hunch would be that the cause of the big spending leans more towards addiction than well-reasoned spending on a health hobby, but without data or evidence that's purely a guess.

It would also be interesting to look at the group of whales in general. Perhaps the very top 20 spenders are all well-balanced, healthy individuals with large incomes. But what about the rest of people who are spending large amounts of money? This might be where struggling individuals are more likely to be found.

Re: Kongregate: the science behind the massive profits of F2P games

#20

Post by interesting_att » Mon, Jun 15, 2015, 4:49 AM UTC

patio11 wrote: post #18

freditup wrote: post #17

Earlier quoted context omitted.

A few more thoughts on the matter of whales: On Kongregate, 2.1% of users buy virtual goods. Of these, about 4% (the whales) have spent over $500 and bring in about half of Kongregate's revenue. Top spenders often spend $50K-$80K. Emily's premise is this: that people who spend lots of money on games (whales) are people who healthily enjoy the games as hobbyists. Her most interesting points, in my opinion are as follo…

Yep. In particular, if demographically whales are (as subtextually claimed on slide 12) functioning upper-middle-class professionals like business owners, engineers, doctors, and CPAs, then there doesn't seem to be any meaningful harm in it. My unease about F2P monetization is that my sense of the demographics is that it tilts more towards "people with undiagnosed depression" or "the Vegas slots demographic."

Actual F2P developer here. I've spent countless hours interviewing payers. Vast majority of people are normal, hardworking people who just genuinely enjoy games.

You're focused on a problem that doesn't affect 99.964% of people playing the game (Math: Avg 3% of people are payers, 4% of those payers are whales, and a small fraction of those big payers could be recognized as people with issues).

Moreover, even if this problem existed, that doesn't make these games inherently bad. People can develop addictions to whole gamut of things: alcohol, drugs, sex, gambling, porn, Facebook, relationships, food, etc. But none of those things are inherently ban. Why is gaming any different? Yes, F2P games optimize for retention/monetization, but how is this any different from any other product in the market?