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How Hearthstone gets loot

By on May 9, 2014
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This is a guest post from Mark Sorrell

Hands up who wants an exhaustive and in-depth look at the pricing model employed by Blizzard’s card-battling behemoth, Hearthstone? Yay! I knew you’d be into it! Hold on to your analytical hats, because this is going to be one crazy ride.

If you want to know how to monetise a game, simply and effectively, Hearthstone is really a very good example indeed. It is doing well in the Top Grossing charts and it is using very traditional and well understood principles, but its exact implementation feels very different to most F2P titles. There are no timers or limits on play, whatsoever. Further, it’s adding monetisation to a pre-existing game concept, not starting with the business model and building from there. This is no mean trick – having the tail wag the dog like this and *still* build effective monetisation takes talent and a very solid understanding of the underlying principles of F2P and human behaviour.

Hearthstone uses the basic concept of giving you what you need for free and selling you the things you want. Most games do this by giving you what you need very slowly, then allowing you to skip ahead and get what you want – the things you need NOW – by paying. Hearthstone has no lockouts or energy timers around its core game whatsoever and you are free to play it as much as you like. Indeed the fact you can do this is one of the reasons it is so addictive – there’s nothing to get in the way of the ‘just one more go.’

What is gated is the tools the player has to play with. The game is a card battler and players develop personalised decks over time. They are given number of basic cards by completing the basic tutorial and reaching level 10 with each class. To get the more powerful cards, players have to get ‘expert’ cards by opening Packs. Should players fail to find the cards they are looking for in Packs that they open, they can turn unwanted cards into Arcane Dust, one of two in game currencies. The other is Gold, awarded for winning matches and completing quests, which players are given one of per day. These are the important items in Hearthstone – Packs, Gold and Arcane Dust.

Baldly, in Hearthstone there are seven possible transactions, six possible orders and two purchasable objects. The two objects are ‘Arena Entry’ and ‘Pack of Cards’. Arena Entry allows the player entry into the Arena. I know, right? Fighting in the Arena is a uniquely enjoyable challenge in the game and provides prizes – as a minimum a pack of cards and a small amount of one of the two in-game currencies. A Pack of cards gives the player five random cards, at least one of which is guaranteed to be a rare (cards come in common, rare, epic and legendary quality, each rarer than the last).

The six orders are, a single Arena Entry, or one, two, seven, fifteen or forty Packs of Cards. Then there are the seven possible transactions. Arena Entry can be paid for either with 150 in-game gold or £1.49. A single Pack of Cards is 100 in-game gold. Two Packs is £1.99, seven Packs is £6.99, fifteen Packs is £13.99 and forty Packs is £34.99.

Pricing wise, the packs are elegantly tiered. Two are 99.5p each. Two is a decent number of Packs and will provide quite a thrill when opening them. £1.99 is in the ‘a coffee’ range and won’t take much internal persuading. The next step up to £6.99 is interesting, as the packs are now more expensive. 99.85p each, this is clearly a silly amount to buy. This feels like a classic ‘ugly brother’ pricing strategy. As we don’t know how to price packs of virtual cards in our minds, we use relative cues. Which is the best comparative value? Well it’s definitely not the £6.99 pack, so users are pushed either back down to £1.99 or up to £13.99 which, at 93.2p a Pack, is clearly better value.

The shorthand heuristic calculation here is “one pack free”, as the expected cost of 15 Packs is £14.99 (this is despite that theoretical bundle price representing even worse value than the £6.99 price point). That means that the brain doesn’t need to do any sort of intensive calculation to see the better value of this bundle.

By this point, you may as well look to the biggest order of all, the £34.99 forty Pack bundle. At 87.5p a Pack, this is obviously the best value. Again, the easy mental short-cut is “five packs free” with an expected bundle cost of £39.99. So it’s easy to see how the eye is drawn further up the scale by some very simple pricing techniques, most importantly the use of the £6.99 ‘ugly brother’. The real choices are between £1.99 for two or £13.99 for 15 and then £13.99 for 15 and £34.99 for 40, with the better offers always tempting, starting with that £6.99 decoy.

So far so good, but there are issues with the longer term potential of this scheme. As there are a finite number of cards available – and only a smaller subset of those are actually useful to any given player – then the utility of each subsequent pack decreases. Unwanted cards are turned into Arcane Dust, which can then be converted into cards of the player’s choosing. Rates of exchange are not great – an average Pack of five cards will give 40 Arcane Dust and one of the best cards will cost 1600 Arcane Dust – so at worst it will take 40 packs to get one Legendary card. Or, conveniently enough, the same number of Packs a player receives in the £34.99 bundle.

This reduction in utility and high pricing means that most players are likely to stop buying packs as the rate of duplicates to new cards decreases. Some players, however, specifically those who are driven to play at the highest level and reach the highest places on the leaderboard, will have to continue to buy Packs, and given they will be paying in the order of £35 for a single card, this can be seen as a strong super-fan monetisation.

And in the future, Blizzard is planning to release single-player content which they will charge for using either in-game or real-world money, so there will still be plenty of well-pitched reasons for players much further down the scale to put their hands in their pockets.

While Hearthstone is unlikely to hold its position near the top ten for long, it should continue to monetise well, and given that this is a game that was designed to be the game Blizzard wanted to make first and to monetise well secondly, this is an astonishing achievement.

When making your own games, look to its simple offers, compelling value, thorough understanding of need vs greed and super-fan monetisation to see how basic concepts can lead to unusual and highly effective monetisation techniques.

About Mark Sorrell

Mark Sorrell is a consultant and advisor on freemium game design, behavioural change, value perception and strategy. With over a decade of experience in making games do new things, in new places, for new audiences, for companies across gaming, broadcasting, advertising and finance, if you want to know how games can help your business, start by asking Mark.
  • Mark Sorrell

    Sorry, missed this.

    You would expect the observed effect though – you’d see an increase in the lower and higher packs as people are pushed away from the ‘ugly brother’. We’d need to see hard numbers, rather than relative numbers to see if it ‘works’.

    I discussed this with a few people who have seen this effect happening in the same way – inadvertent changes into other currencies – and there is always an effect. Sometimes good, sometimes bad…

    It is worth reiterating that it only works if it is the dominant route to comparison of the options. If there are better heuristics, you’d expect them to ‘win’ so to speak.

    Here’s an interesting thought experiment (unless your job is pricing at Blizzard) – would you a) add 50p to the 7 pack b) subtract 50p from the 7 pack c) do nothing?

  • In the UK the 7 pack item is the second highest selling set of cards, after the 2 pack. In the US these are flipped around with the 7 pack being most popular. So it would seem that, all else being equal, the conversion rate issue is downwelling people to a cheaper purchase. Of course “all else being equal” is a huge assumption.

    Unless you can actually test price changes and see the effects directly on the same user base, what’s causing the difference is speculative – another one of the joys of Behavioural Economics where there are often several effects directly competing 🙂

  • Mark Sorrell

    Never mind the practice, does it work in theory?

    Interesting. Still, works a treat in the UK. Now I want to see some comparative analysis from the UK and US sales figures.

    The joy of Behavioural Economics – it works whether you knew you were doing it or not.

  • Daniel Mesonero Kromand

    The ‘ugly brother’ concept only works in Britain because of some kink in the iOS pricing tiers.
    In the US the unit price for a card pack is 1.5USD when purchasing 2 and 1.43USD when purchasing 7.

  • Re: the “ugly brother” pricing, when you look at the order prices using the USD costs for tiers, the 7 pack order is cheaper per pack than the 2 pack. As Blizzard’s a US dev, I would imagine they worked using those prices, rather than some deliberate tricky pricing ploy.