Free-to-play games are certainly the way of the future, available in the present. These electrifying entertainment attractions are reshaping the gaming world, and players are lapping it up in droves. This gravity-defying gaming model is all the rage. Yet, beneath the surface, plenty of exciting stuff is going on. It’s a sophisticated economic game engine driven by micro-transactions and unique monetization strategies. A growing number of the world’s premier gaming companies are hopping aboard free-to-play gaming models and all the fanfare they deliver. It’s a bonus that the games are readily available to players for free – but the litmus test of their popularity remains in the upsell component.
As cases on point, Statista lists the number of multiplayer & free-to-play video games scheduled for release between 2024 and 2026 as follows: Possibility of online play at 796, and no possibility of online play at 401. With hundreds of games slated for online play in the coming two years and hundreds exclusively available offline, it is clear that this burgeoning industry is alive and well. However, the pertinent economic question is, how are these games financially sustainable? What business model finances the profitability, development, and distribution of f2p games? Before we begin, we must define microtransactions and how they impact the iGaming arena.
Microtransactions pertain to business models where players can purchase virtual in-game packages, player upgrades, unique tools, essential resources, or value-added accouterments. These microtransactions are not necessary upfront, but they certainly add value to the overall gaming experience for players. Recall that market-leading social gaming platforms like Zynga Play are free to fans; no deposit is needed to get up and running. However, the business model, vis-à-vis microtransactions, facilitates a monetization model that ensures its continued survival and prosperity. Therefore, f2p games make it highly enticing for players to purchase additional coin packages (Gold Coins) for enhanced enjoyment of the gaming platform. Zynga has mastered the f2p system and players appreciate the variety of options.
Stellar Financial Performance of F2P Games
Back in the day, a contingent of the gaming community was not convinced of the viability or the efficacy of the f2p business model. Skeptics abounded, believing that f2p games should remain that way, with no in-game purchases warranted. However, with in-game purchases, the f2p gaming model now accounts for 78% of game industry revenues (ARK Invest Big Ideas 2021). For example, industry GGR spiked to $98B during the pandemic – up 10% due to social distancing and in-home gameplay. True to form, Asian gaming aficionados comprise the lion’s share of the f2p market, amassing 58% of global earnings. Among the top-grossing f2p games is Pokémon Go, which incidentally earned more than Call of Duty: Modern Warfare, a premium (pay-to-play) game title.
Part of the tactical and strategic challenge presented to players and game developers with f2p games is acquiring in-game currency. If this process is complex, player bounce and attrition rates rapidly increase. The business model is unsustainable without microtransactions (in-app or in-game purchases) for coin packages – similar to arcade halls where players purchase tokens or tickets. Given the sizable competition in the f2p gaming arena, players are likelier to navigate out – never to return. The business revenue model collapses when it’s too easy for players to restock on GCs (Gold Coins) organically during gameplay. Recall that social game companies rely almost exclusively on the success of their microtransactions model to remain afloat.
Examples of Microtransactions in Social Games
Many leading social gaming platforms present players with valuable microtransactions for achieving gaming objectives. With many social games online, it’s about having the requisite number of gold coins ready for action. At this juncture, it’s important to distinguish between soft in-game currencies, such as free games, and hard currencies with real money. As a new player at a reputable social gaming site, registration, and friend referral bonuses are commonplace. But premium currencies are equally crucial in allowing players to advance in games with necessary accouterments, skills upgrades, resources, etc. They are deemed microtransactions since they are small enough not to break the bank but necessary to participate in vital gaming sessions.
From a developer POV, it’s undoubtedly a challenging undertaking. If coins are freely available and there are simply too many, they diminish value and appeal. Too many coins in player accounts result in inflationary pressures and sharp reductions in the perceived and actual value of the GCs. Some f2p games work to counter inflationary pressures by adding to the inflationary uptick – high GC requirements for gaming-related issues. The following table lists some examples of microtransactions in social games:
| Game Title | Microtransaction Type | Description |
| Candy Crush Saga | In-Game Boosters | Purchase extra moves or special boosters to advance through difficult levels. |
| Clash of Clans | Gems | Speed up building times, train troops faster, or purchase resources for quicker progression. |
| Fortnite | V-Bucks | Buy skins, emotes, and battle passes for a personalized Fortnite gaming experience. |
| Pokémon GO | PokéCoins | Purchase premium items such as raid passes, incubators, and storage upgrades. |
| Zynga Poker | Poker Chips | Buy additional chips to continue playing in higher stakes games or tournaments. |
| FarmVille 2 | Farm Bucks | Purchase special items, speed up tasks, and unlock new game features. |
| PUBG Mobile | UC (Unknown Cash) | Purchase in-game cosmetics, crates, and Royale Passes for enhanced gameplay. |
| The Sims FreePlay | Simoleons, LP, SP | Virtual currencies used to build homes, buy furniture, and speed up time-consuming activities. |
| Genshin Impact | Primogems | Use for wishing (gacha) to obtain new characters and weapons in the game. |
| Hearthstone | Card Packs | Buy packs to obtain new cards, which can be used to build stronger decks. |
The monetization of these games, facilitated by microtransactions is the driving force behind the global prosperity of free-to-play (f2p) social games!
