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[Gamesbriefers] Should there be an upper limit on IAP spending?

By on October 12, 2012

This is a Gamesbriefers post, in which industry luminaries answer a pressing topical question.


Question:

Nicholas Lovell

This week’s question is courtesy of Ben Cousins and GAMESbrief’s rules of F2P.

In the GAMESbrief rules, I propose that developers should make sure that customers can spend at least $100 in a game, mainly because to designers who are new to free-to-play, this seems like a staggeringly high amount. Ben said that this was a terrible rule: you should actively design to ensure that there is no upper limit to the amount someone can spend in a game. I tend to agree with Ben, but think that it is worth giving game makers a target to aim for, and then exceed. What do you think?


Answers:

Harry Holmwood, Consultant at Heldhand

I think there are two aspects to this question – the business case and, perhaps in the longer term, the moral one.

We’re seeing games in Japan generating ARPPUs well in excess of $200 per month. I’ve even read about Chinese titles which attract individual spends in the tens of thousands of dollars. If there was a finite limit of $100 (or whatever) for the title, of course that ARPPU would be a lot lower, and the game ultimately less profitable, so we should definitely avoid putting any limits in place, provided lower spending users still get an enjoyable and worthwhile experience.

From a moral perspective, while I’d be delighted to get $10,000 a month by hooking in a Premiership footballer or Oligarch to a game, I wouldn’t feel the same way about getting that kind of money from someone who’s struggling to pay a mortgage. Japan has taken steps to ban the ‘Complete Gatcha’ mechanic, which was proving overly additive and costly. We’re not yet at the stage where there’s any real problem in the West, but, if we keep getting better at what we do, it’s possible there could be.


Melissa Clark-Reynolds Founder of Minimonos

Harry, I tend to agree with you, with one caveat – it depends on your target customer.

We sell to children, and I think in that demographic it is really important to protect the children from spending a lot of money.  Even so, we design for open ended payments and have a monthly ARPPU that is almost twice that of Club Penguin.

This discussion can’t be meaningful without also understanding the cost to acquire (both a user and a paying one) and their kLTV.  If you are spending more to acquire a user than they spend, you are in big trouble.  Conceivably there are games out there which have paid more than $100 to acquire a paying user.  They need to have an ARPPU of much higher than a world like ours where the cost to acquire is much lower.


Lance Priebe Founder of Rocketsnail Games

I a reminded of the GIJOE USS Flag Aircraft Carrier.
http://youtu.be/hopjrK0X27M

The entire franchise was designed for you to spend a couple hundred dollars a year. You could watch the animated series for free, collect the episodic comics, buy the action figures and vehicles. But every couple years GIJOE would release the mind-blowing $100 item. I doubt Hasbro sold many aircraft carriers. I never met anyone that had one, but every fan remembers the USS Flag.

There is more to free-to-play than just have a collection of items at various price points that equal $100. What are you doing to delight your fans? Will your fans print a list of your items and post them on their wall? Did you ever wish you could have the GIJOE Aircraft Carrier?

Side Note: The day the USS Flag was announced, I recreated the entire aircraft carrier in cardboard with working elevators.


Martin Darby CCO at Remode

In the states I believe there is a law where if you want to buy a firearm many outlets operate a policy where you cannot pick it up for 24 hours after purchase. The theory is that it deters the impulse decision making (relating to murder, crime etc).

I wonder if we should be applying a similar theory to IAP, where over a certain $ threshold there is a cooling off period which gives the user a certain time period in which they can cancel the decision. Applying this logic, surely if the player really is a ‘true fan’, and F2P really is all about monetizing ‘true fans’ he/she would not cancel the high value IAP at any point because they clearly want item X or Y irrespective of impulse.

Would this help vindicate F2P or prove an ugly truth?


Felicity Foxx Herst Product Manager at GREE

“There is more to free-to-play than just have a collection of items at various price points that equal $100″ — I’m pulling Lance’s quote out of context but I think this is a crucial point.

Sure it’s a target for new devs as you certainly don’t want users to be able to “buy the entire game” for less than the cost of a box product. Those new to the F2P space are still often shocked by how few users generate the vast majority of revenue. I’m not advocating whale-driven design, but providing options and desirable vanity items for these core high-spending users is a part of serving your audience. The value of goods – even virtual ones – is what your customer will pay for them in the end.

But if you’re just pricing a collection of content up to $60 or $100 or $10,000, then I’d hazard you’re not doing F2P right.

An F2P product is by nature a service. Games as a service should be designed for the long term, as systems that are endlessly engaging not collections of content that can be completed or owned. Whether it’s consumables or another method, in the service model there is no upper limit.


Andy Payne Owner of Mastertronic

I would say that all F2P games can allow players freedom of choice and they should be allowed to spend as much as they want with no upper limit. But with all sorts of consumer protection legislation for digital goods and services coming down the line, game makers should do their best to make games which positively reward spending and over deliver on value to the player. Regulation always signifies something has gone wrong too many times, and that is bad news for all of us who make games. We have a history of self regulation. Would be nice to keep that intact by encouraging safeguarding for players or all ages ideally.


Mark Sorrell Developer at Hide & Seek

Felicity has it nailed, I feel, from both an economic and ethical standpoint. Spending a lot of money on something you love is, of course, fine. And, to my mind, if that money is spent consistently over a long period of time, that not only indicates quite strongly that the customer is satisfied, but also represents a more mature and sensible economic model.

Games as services is very much the point of free-to-play, which is, I suspect, where many studios go wrong when making the switch. It really isn’t about the ‘objects’ it’s about the ‘experiences’.

Many developers are still making games as objects and then supporting them, rather than seeing them as ongoing and ever-changing experiences. Thinking about how to design a fundamentally, intrinsically long-running game-experience over an impressive but short-lived one,is an important shift in philosophy.


Tadhg Kelly Consultant at What Games Are

Sure. But bring everyone else along for the ride too.

I recently got into playing an f2p game. I went to the store to see what was purchasable in the game (as I often do these days), to discover that some of the major upgrades were priced at a thousand of the game’s hard currency. Thinking to myself “I’m just never going to spend that, nor play long enough to get to that level for free”, I felt like the poor kid with his nose on the window of the sweet shop.

So, as others have said, the quality of the service experience matters.


Will Luton Consultant

That’s a very good point from Mark. If the player isn’t satisfied and happy, they’re unlikely to hit that top spend – they’ll bounce long before. So $100+ can be the aim, but without the quality to back it up, you won’t reach it. If you’re IAPs and game aren’t rewarding, you can expect only one per person maximum.

As with what Harry mentioned earlier, these super high-ARRPU Japanese games will go for 12 months or more of grinding refinement based on analytics and player feedback, before they hit an inflection point. That’s really serving the player.

Very similar to the world of simulation games. High dedication players, willing to spend on something they love (trains, airplanes etc). Again, as Harry says, the moral question is when they can’t afford what they’re willing to spend. That is almost impossible to address and not just a problem for games but all discretionary spend from high street fashion to sports cars.


Oscar Clark Evangelist at Applifier

Monetizing games is a fine balancing act between the engagement level of the player at that point and their longevity as a user. Players go through different life stages of play and it takes 8-12 days for a Truefan (Spending $100+/month) to start paying. But its not just about money.  We need to create entertainment that players will love and want to repeat time and again for days, months and years.  That kind of entertainment needs a different attitude than arbitrary caps of potential spending.  It needs a mindset that we will evolve the product and given them entertainment in repeating play… The result is no limit on how much they can spend – but they only spend if they enjoy that game.

We have also seen that a good balance between consumable (e.g. one-use energy Crystals for 10cents) and durable (e.g. a well of energy crystals giving 20 crystals per day) goods is essential to balancing the user perception of short-term and long-term risk; and to deepen engagement with the game.

X-City has a user who has spent over $35k over 9 months on the game.  It wasn’t a random act – they did this over a long period of time.

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Every week, we all ask our august panel of luminaries a burning question in the world of free-to-play and paymium game design. Or we ask a broader question on the future of the industry. We’re not going to announce who is a GAMESbriefer. You’ll just have to read the posts to see who is saying what to whom. We have CEOs and consultants, men and women, Brits, Germans, Americans, indies, company people and much more besides.