As any developer worth their salt knows, figuring out how to monetize a game is one of the most important skills in free-to-play game development. At any conference (or in any blog or podcast series, etc., etc.), you’ll find plenty of discussion about the mechanics of how best to monetize players: what the mix of IAP vs. ads should be, whether battle passes are hot or not, how to optimize your ad network stack, and so on.
These are all important and useful discussions, and any successful team needs to think about them. But it’s also important to realize that the answers to these questions depend very heavily on what type of game you’re building and for what audience. Hypercasual games need to lean heavily into ad monetization, while midcore or casual games tend to lean much more heavily into IAP. And this optimization can even change from day to day as CPMs go up and down across the ad market.
From a design perspective, it’s much more valuable and interesting to understand why players monetize rather than how to monetize them. As a bonus, these core motivations remain steady over time and across game genres and categories. Building a strong understanding of them will help you craft successful free-to-play games while honing your player empathy. It’s a classic win-win!
I use a simple heuristic to think about the core types of player spending motivation: CAPS$ (pronounced “caps money”). This acronym lists players’ most important reasons for spending money in your game, and conveniently it does so in increasing order of spend per player (generally ARPDAU, but certainly ARPPU). Let’s look at each of these core motivations in succession. (No, not the TV show about the spoiled rich family…)
C is for Cosmetics
Cosmetic monetization is fairly easy to implement (depending on your underlying core technology), and many developers, especially those who loudly revile “pay to win” mechanics, like to lean into it. But it’s a path with a number of hazards. I define cosmetic monetization as players paying for items that make them look cooler but give them no functional advantage in the game.
First and foremost, cosmetics simply won’t work in a wide variety of games. For cosmetic monetization to work at all, your game design must include two key elements: an investable player manifestation and high inter-player visibility.
An investable player manifestation is a fairly simple concept: there must be some entity (or small set of entities) that the player focuses on building up over time, and a good chunk of the in-game economy’s output goes into building it up. This might be a well-decorated avatar in Fortnite or a beautiful farm in FarmVille. At first blush this might sound like a universal design concept, but plenty of games don’t really feature it, for instance saga-style puzzle games that focus mostly on progressing through levels, or hero collectors that focus on building a large, powerful roster of heroes rather than a single powerful entity.
High inter-player visibility means that, as part of gameplay, players routinely and frequently see other players’ avatars (or other focal entities). After all, it’s no fun getting dressed up in your fanciest clothes, taking a look in the mirror, and then changing back into your gym clothes. This kind of visibility comes naturally in games where players pilot an avatar around a playfield, as in a battle royale or brawler, but it can also work in games with a strong “visiting” loop, where players are well rewarded for checking out other players’ well-decorated domains. It’s worth noting that third-person games have a strong advantage over first-person games in monetizing cosmetics. It’s fun to know you look cool to other players, but it’s more fun to see yourself looking cool while other players check you out, and even better to watch them react to how cool you look while you check yourself out, and then see them reacting to your reaction to their reactions, and well… you get the idea.
Remember that even if your game design lets you leverage cosmetic monetization successfully, it tends to yield the lowest revenue per user. Often, for a game to succeed purely on cosmetic monetization, it needs a truly massive DAU and great retention to sustain it; more than one game has gone extinct by running afoul of these requirements.
A is for Access (to Content)
The second major type of player motivation is getting access to additional content. For a large class of players, the main motivation is exploring your game, trying to see everything it has to offer. These players act like tourists, and just as tourists are willing to pay a bit extra to visit a beautiful museum or a fantastic restaurant, these players are more than happy to plunk down a bit of money to discover more of your game, as long as you consistently deliver value for their dollar.
Access to content can come in a number of forms. The most direct is literally locking content behind a paywall. This is very common in interactive narrative games like Choices, where players pay a small amount of real money to choose certain actions. As this example shows, these are typically the most exciting or salacious options available, which adds to the player’s curiosity and drive to see the results.
It can also take other forms in different genres. For instance, power-up and extra-life monetization in games like Candy Crush Saga is also based on access to content. Players don’t buy these items for the joy of finishing the current level and watching the ensuing fireworks; they want to move on and see what awaits them in the next level.
Likewise, in casino games like Zynga Poker or Big Fish Casino, some tables or machines are reserved for high rollers, and players may buy extra bundles of chips to experience them.
Basically, any time a player pays to accelerate their single-player progress, you’re seeing Access monetization at work. It’s one of the stronger forms of monetization available in single-player games, but it’s dwarfed by some of the motivations we’ll see in multiplayer games.
P is for Power
Power monetization is when players pay to gain a competitive advantage over their opponents in a player-vs.-player contest. This can take a variety of forms. For instance, a player may buy more cards in Hearthstone to build a top-tier deck so they can beat tougher opponents and advance to higher ranks.
It could also take the form of players buying additional currencies to level up their heroes in games like Raid: Shadow Legends. This raises an interesting question: this particular action, buying resources to level up your heroes, helps the player advance through the single-player campaign and helps them defeat other players in PvP modes. So why does it belong in the Power bucket?
When players can use these resources to beat other players, it taps into a very different set of motivations. Access spenders are your game’s tourists; they want to see the sights and move on. Power spenders are your game’s conquerors; they are highly engaged with the feeling of vanquishing their opponents, and as a rule of thumb, they’ll spend large amounts of money to do so.
This is one of the reasons virtually all midcore games lean heavily into PvP competition. Even so, not every player wants to compete with others; in fact, many casual players just want to relax and enjoy your game. But players who do attach to your PvP features will spend a lot per capita.
S is for Status
So what could motivate players to spend even more than defeating their opponents and proving their supremacy? The ability to show off those accomplishments, of course!
This means that to fully monetize your audience, you need clear competitive goals for players. This might be something like a set of badges for difficult achievements, as you might find on Club Pogo.
More commonly, though, it takes the form of some sort of leaderboard. Individual leaderboards are quite powerful here. Players will spend very aggressively if they think they have a chance to finish on top, even on a sharded local leaderboard, as long as it’s clear that lots of other players will see and value that achievement as a badge of high effort and/or skill.
Guild leaderboards and guild-vs.-guild conflicts are an even more powerful form of Status motivation. Players in top guilds exert heavy pressure on one another to spend in order to maintain the guild’s high (and highly visible) status, and will routinely eject players for failing to perform at a high enough level, which usually means spending heavily on power.
$ is for… Well… $
Although this won’t apply to most free-to-play games, it’s worth mentioning that by far the highest spend per player comes from games where players feel they can win actual money. There are several distinct categories here, each with its own product intricacies, but all share the ability for users to win real money or its equivalent.
The biggest category of money-winning games is online casinos, whether slots, poker, or full casino suites. Playing these for real money is illegal in most of the US (did someone say VPN?) but legal in many other countries.
Closely related are online sportsbooks and fantasy sports sites like FanDuel. The US currently allows online sports betting in 38 states.
The third notable category of real-money gaming is skill gaming, like that offered on the Skillz platform. Players pay fees to enter PvP gaming tournaments; most of the entry fees go to the winner, and the platform keeps the rest, usually around 20%. This is also legal in most, but not all, US states and in a number of countries worldwide.
There is also an emerging category of sweepstakes gaming, pioneered by Chumba Casino and other VGW games, where the money input is masked in various ways but the gift card payouts are quite real.
As with Status monetization, this appeals to a relatively narrow slice of users, but those users will pay quite handsomely to participate in your game.
Combination Approaches
The effectiveness of any of these approaches can be compounded by using a single feature to address multiple motivations. The Fortnite Battle Pass, for instance, is a great example of combining Cosmetic and Status motivations. The Battle Pass gives only cosmetic rewards, but how far a player progresses along the seasonal track depends on how much (and how well) they play, and many of the most visually impressive rewards are available only to players who buy the paid pass. So when you see a player sporting one of the coolest costumes in the game, it means not only that they played a lot (and usually pretty well), but also that they paid for the privilege of letting you know.
In Conclusion
Tactical monetization methods come and go. At times IAP will be in favor, at others complex ad tech stacks, then subscriptions, then battle passes, then various combinations. And there are tons of tactical levers, like price reductions and improved merchandising, that you can apply to enhance those techniques.
However, the motivations that prompt players to pay are fairly stable across time, platforms, and genres. And they exist in a clear hierarchy: C(osmetics), A(ccess to content), P(ower), S(tatus), and $ (money). By focusing on players’ underlying motivations for spending, you build a solid base for tactical monetization approaches and gain real insight into how to create new monetization opportunities in your game. Without a clear understanding of those motivations, however, you’ll be building on a shaky foundation at best.
A few things to check: the original had “(check)” after Big Fish Casino, which looked like an author’s note to self, so I removed it. I changed “illegal in the US” to “illegal in most of the US”, since a few states do allow it; revert if you want the original wording. The “38 states” sports betting figure is probably out of date by now and worth verifying before republishing.
