Behavioral Economics In F2P Game Design | wappier
Loot Boxes, FOMO, and Mental Accounting: Behavioral Economics In F2P Game Design

Loot Boxes, FOMO, and Mental Accounting: Behavioral Economics In F2P Game Design

“The free-to-play market may be the most profitable gaming segment of all time, but it’s also the most competitive. Studios can’t just release games for free and expect to earn a profit without monetizing uniquely engaging experiences. That means developers must precisely optimize monetization initiatives to maximize revenue and user engagement. As the free-to-play market grows, leading developers have turned to the world of behavioral economics, which lies at the intersection of psychology and economics, to understand what motivates the purchasing behaviors of F2P players. When integrated into pricing strategy, these insights can boost revenue, highlight new opportunities, and even give developers a competitive edge.”

You can read the entire post on Business of Apps.

What is behavioral economics?

Behavioral economics is the study of the psychological, cultural, and social factors that influence the financial and commercial habits of individuals and organizations alike. When developers combine game design with behavioral economic theory, it’s possible to steer the player journey to improve monetization from ads and in-app purchases. Together these principles promote player engagement and improve retention while also unlocking new revenue streams for developers.

The challenge of behavioral economics, however, is that human behavior is not always rational. To monetize games under the F2P model, game designers, and monetization managers must communicate the objective and contextual value of conversion activities. Here are a few behavioral strategies as examples:

Account for mental accounting

Economist Richard Thaler first coined the phrase “mental accounting” to represent the fact that humans view gains in relative, rather than absolute terms. From a financial perspective, this means that the perceived quality of a deal can be just as crucial as the objective value it delivers.

Here are a few examples of mental accounting in action: Some customers may only buy items at a discount from their regular price. Others could be convinced to buy limited-edition items that would be difficult to obtain elsewhere. Meanwhile, many fall victim to sunk cost fallacy, which drives consumers to continue spending in an attempt to recoup the loss of a particular investment. In each of these examples, consumers apply a relative value that is distinct from objective value.

By the same token, mental accounting applies to F2P games that offer in-app purchases. These transactions don’t necessarily have objective value — they represent digital goods or content that exists solely in the context of that game. Still, developers can frame IAPs to highlight a subjective value that interests particular player demographics.

This mental accounting dynamic comes into play when developers implement loot boxes, for example. These mystery boxes contain a random selection of virtual prizes — ranging from powerful virtual objects and in-game currency to new outfits or skins. While you cannot assign an objective value to a box of random rewards, developers can still position it as a “good deal” by doing the following:

  1. Ensuring loot boxes are conveniently priced and accessible
  2. Offering a loot box bundle deal that maximizes the overall value
  3. Creating loot box tiers:
  • A basic loot box contains a random selection of items and can be earned through standard play
  • A premium-priced loot box includes at least one guaranteed rare value item

In recent years, loot boxes have drawn criticism for their reliance on gambling mechanics. For developers seeking a less controversial approach, ‘Season Passes’ (like Fortnite’s “Battle Pass,” and Clash of Clans “Gold Pass”) tap into this same mental accounting dynamic.  In this model, players pay a fee to unlock the opportunity to win even bigger in-game rewards throughout gameplay. Even long-time, loyal players have a propensity to hold out for the right deal, and season passes play into this behavior. Unlike loot boxes, season passes rely less on luck — they reward players simply for playing the game. Developers can dramatically boost revenue as a result.

Provide choices, but not too many choices

As a rule, customers expect to have choices in the way they consume content, and that’s a positive thing. In practice, however, there is such a thing as too much choice. Customers encounter the dilemma of overchoice when choosing between too many restaurant items or too many streaming services, for example. Overchoice contributes to decision fatigue and dissatisfaction with the associated brand. In some cases, it can even discourage users from engaging with monetized game elements entirely.

This can be a challenge in a F2P market where there is already no shortage of choice. App storefronts feature millions of games across multiple genres, each of which can include several monetized elements — developers who aren’t selective in the choices they present risk losing differentiation or alienating customers with complexity.

For a F2P monetization manager, there are a few key considerations to keep in mind. Firstly, be selective in the monetization options you integrate into your game. Rather than offering rewarded advertising, IAPs, downloadable content, optional subscription fees, and more, simplify the mechanics for the consumer. If you include every available option, most players will choose the default and ignore the rest. Instead, behavioral economics suggests that players should have just two options available, tailored to their specific temperaments.

Leverage in-game social norms

People do not make economic decisions in a vacuum — they are far more likely to be influenced by the spending behaviors of other people around them. This behavior goes by many names: a commitment to social norms, a herd mentality, or even FOMO (fear of missing out). In short, people are more willing to commit to things that they observe others doing.

As multiplayer games become more prevalent, it’s clear that social norms apply to digital experiences as well. One of the most common examples are cosmetic skins in F2P games. While players start their first session with standard skins, they will eventually meet someone using a premium or paid skin. This interaction will encourage them to purchase the item for themselves.

The principle of in-game social norms also extends to limited-time events. Consider Destiny 2, which runs a variety of seasonal activities that feature unique levels and cosmetics. Since this content disappears once the event is complete, it encourages players to log in and experience it alongside other online players. Mid-way through the event, Bungie will offer Destiny 2 players reminder notifications that include mentions of what other players are currently enjoying.

Behavioral economics gives developers an edge

Although behavioral economics was not conceived as a F2P game design strategy, it’s a valuable tool and even a strategic advantage. As the free-to-play space becomes more competitive, monetization managers that consider behavioral economics will engage consumers more successfully. When matched with the ability to segment players and apply user-level optimization, these psychological principles also drive higher ARPU. These strategies may then be scaled efficiently through machine learning to ensure maximum engagement at each consumer touchpoint.

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wappier @Pocket Gamer Connects London 2020

wappier in heading to London for Pocket Gamer Connects, January 20-21. 

Interview Title: “How Loyalty Programs can Improve Mobile Game Retention”

Our VP of Business Development, Ted Verani discusses Global Pricing, Intelligent Revenue optimization, and wappier’s AI driven approach to Loyalty & Retention with James Gilmour – Pocket Gamers January 22nd

wappier does #GDConnect2019 Flag: United States on Google Android 10.0

 

Our own Ted Verani moderated the Mobile Gaming Today panel with industry leaders at GameDaily Connect USA on August 27, 2019.

The mobile market represents around half of all global games revenues, and opportunities abound for savvy developers, but it is very challenging for game makers stand out from the crowd in app stores.  This led off a free wheeling conversation about how to not oly acquire players but to retain them,  as well as discussion on market trends and keys to success for the booming mobile space.  Our panel of experts shared perspectives and  vital points developers need to understand.

 

PANELISTS:

 

MODERATOR:

Ted Verani, Vice President Business Development, wappier

wappier featured @ PocketGamer.biz 📹

12 September 2018: Video Interview for PocketGamer.biz

Interview Title: “wappier on Using Dynamic Pricing in Mobile Games to Increase Spending and Retention”

Last September, wappier joined forces with Pocket Gamer Connects Helsinki 2018 and was part of this amazing mobile gaming gathering. On day 2, our Founder and CEO, Alex Moukas, met with James Gilmour, Video Production Editor at PocketGamer.biz. Alex chatted with James about Dynamic Pricing and how we are using machine learning to automate the pricing of IAPs in mobile games leading to a positive impact on both user spending and player/payer retention.

wappier does #PGCLondon2019 Flag: United Kingdom on Apple

21-22 January 2019: Pocket Gamer Connects London 2019

Session Title: “Loyalty Programs – Increasing Engagement and Retention Outside of Gameplay”

Our Founder and CEO, Alex Moukas, took the stage this January and shared his insights on why app developers need to invest in loyalty and retention to make more out of their existing users.

Summary: Leading brands and organizations around the world use Loyalty Programs as a way to engage meaningfully with their customers. Why not in mobile gaming? Loyalty Programs are an easy and effective way to improve engagement and retention outside of gameplay. Even a 5% increase in retention can lead to 30-100% increase in revenue. Plus, it’s cheaper to retain an old customer than acquiring a new one.

In this session, Alex Moukas will demonstrate how game developers can get revenue and retention boosts of 30%+ by enabling an Automated Loyalty Program for their existing players on top their game. He will focus on specific loyalty tactics, how to set up a program without affecting the underlying gameplay, and share case study results from over 30 mobile games.

wappier does #GDConnect2019 Flag: United Kingdom on Google

28-30 May 2019: wappier part of GameDaily Connect London 2019. With over 7,000 attendees each year, GameDaily Connect, ex Casual Connect, is one of the largest mobile gaming trade shows across the world with events in China, Serbia, Kyiv, Tel Aviv, London, Seattle, Anaheim, San Francisco, and more.

Panel Session Title: “Mobile Gaming Today”

Awesome Panelists:

Awesome Moderator: Our own Ted Verani, VP of Business Development @ wappier

The mobile market represents around half of all global games revenues, and opportunities abound for savvy developers, but how can today’s game makers stand out from the crowd on the App Store and Google Play? How can they not only acquire users but retain them? What are the keys to success and what lies ahead for the booming mobile space? Our panel of experts will discuss the vital points developers need to understand.

wappier does #PGCHelsinki2019 Flag: Finland on Google

1-2 October 2019: wappier proudly being part of Pocket Gamer Connects Helsinki in October 2019. The mobile gaming industry was there and so were we! On day 1, our Ted Verani, VP of Business Development at wappier, took the stage to wow the crowds.   

Session Title: “IAP Pricing Optimization: Timing and Place”

Summary: Knowing the right price in the right location at the right time is the first step towards maximizing revenue from in-app purchases. This tour of factors proven to impact IAP purchasing decisions will offer attendees a collection of low-cost, high-impact techniques for developing profitable mobile gaming environments combined with a case study on Global Pricing (per country optimization) results.

wappier @ PocketGamer.biz YouTube Channel

wappier featured @ PocketGamer.biz 📹

23 January 2018: Video Interview for PocketGamer.biz

The wappier team traveled to London this January to take part in Pocket Gamer Connects London 2018.

Interview Title: “wappier on Improving Mobile Game Monetization by up to 50%”

On day 1, Alex Moukas, Founder and CEO at wappier, gave a very insightful interview to James Gilmour, Video Production Editor at PocketGamer.biz. Alex shared with James his insights about the mobile gaming industry and how wappier is here to help it by building a cloud-based platform that optimizes revenue for mobile apps and games through Engagement and Loyalty Programs and Dynamic Pricing.

 

wappier @ White Nights St. Petersburg 2018

wappier does #WN2018 Flag: Russia on Apple iOS 13.2

4-5 June 2018: White Nights Conference @ Saint Petersburg

Alex Moukas, Founder and CEO at wappier, took the stage last June and shared his insights on why it is crucial to starts investing effort and intelligence on post-acquisition.

Session Title: “Users Acquired … Now What? Mastering Your Game’s Loyalty & Pricing”

 Summary: Established industries, multinationals, the Fortune-500 companies around the world use Processes and Systems that deliver 30-50% revenue increase from existing customers. Why are they literally non-existent in the Mobile Gaming World? It’s cheaper to retain an old user than acquire a new one, right? For the first time in history, 50-people companies are called to manage 50 million users, this cannot happen with typical marketing automation, segmentation, and workflows. Case studies show it’s time to start thinking of ways to reduce user churn and increase revenue from existing customers.

 

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wappier @ Dev.Play Bucharest 2018

wappier does #DevPlay2018 ✈️

4-5 October 2018: Dev.Play Conference in Bucharest powered by the Romanian Game Developers Association (RGDA), wappier was there!

Our VP of Global Business Development, Ted Verani, was there to talk Mobile Gaming and explain how wappier’s Intelligent Revenue Management Platform is transforming the way app developers and marketers maximize consumer revenue with powerful AI that moves beyond marketing automation.

Session Title: “Users Acquired … Now What? How to Use Loyalty Programs and Pricing Optimization to Maximize Revenue”

wappier @ Casual Connect Belgrade 2018

wappier does #CCBelgrade! ✈️

1-3 October 2018: Casual Connect this October 2018 in Belgrade was just awesome! Ted Verani, wappier’s VP of Business Development, was there to meet old and new industry folks and moderate a #NotToBeMissed panel with:

Panel title: “Designing Games for Optimal IAP”

What did we talk about? While the vast majority of mobile game revenue is earned through in-app purchases, designing games for optimal IAP remains a major challenge, requiring deep knowledge of UX design, virtual economy tuning, pricing economics, and many other disciplines. Featuring experts across these fields, this panel will give attendees concrete and proven advice for designing free-to-play, IAP-driven mobile games that consistently drive IAPs without alienating the player base.