The evolution of monetization models in the gaming industry

Tonette Pringer

Author

 


Games are like many other forms of art. They are often made by passionate creatives who enjoy playing their craft to tell a story and entertain the people that play them. However, no matter how much fulfilment they get from their work, the fact remains is that they need to be compensated for their efforts so that they can put a roof over their heads and food on their table.

That’s why almost all titles that have ever been created by the gaming industry have included some form of monetization. However, over the years, the ways in which developers and publishers have generated income from their content has changed, with a few clear types forming.

gaming

The evolution of monetization models in the gaming industry. Source: unsplash.com

Pay per play

Consoles and home computers didn’t begin to achieve widespread adoption until the 1980s, so many of the earliest video games were only accessible to people that visited arcades. These giant computers were built into brightly-colored cabinets and required players to insert coins into a slot to unlock a set number of minutes or lives. Once they were used up, they’d have to keep feeding coins into the machine if they wanted to continue with their game.

This model continues today in arcades, though these machines no longer enjoy a monopoly over the video game market so are nowhere near as popular as they were 40+ years ago.

The iGaming industry also uses a similar model as it allows players to make wagers on its games. Even as they’ve developed new types of game and unique variants of classic ones, the traditional casino monetization model continues. For instance, roulette Betway offers nearly two-dozen versions of the popular wheel-based game, including Multifire Roulette, Spooky Roulette, and Sapphire Roulette. While they all use different rules and themes, they all use the same approach to monetization.

Upfront payment

The pay-per-play model began to be replaced by upfront payments for most mainstream video games in the 1980s. Players would visit a brick-and-mortar game store, hand over their cash or credit card, and receive a cassette, cartridge, or floppy disc with the content on. They could then take it home, load it on their machine, and enjoy the entirety of the game without having to pay any more.

In the 1990s, some developers took this a little further by creating “expansion packs” which cost either the same or slightly less than the original game’s price and would add new content. However, they would require the player to own the original version to get access to it.

As technology moved on, cassettes, cartridges, and floppies were replaced with CDs, DVDs, and Blu-rays, but the model remained the same. Even today, with online payment systems digital game marketplaces where games can be downloaded straight to your console or PC, this upfront payment model remains.

Ad-supported games

In the late 2000s and early 2010s, more of us were gaining access to mobile games through our smartphones. Early pioneers of these titles experimented with different ways to monetize their content and some, like Rovio, created ad-supported free versions of titles like Angry Birds.

Ads would either be a small banner or a time-limited full-screen pop-up and the revenue that they generated would help to pay for the cost of developing the game.

Source: unsplash.com

Free-to-play games

The ad-supported approach still exists today, but it is often combined with the more-recent free-to-play model. This works by giving players access to the game for free but then offering optional in-game purchases of extra items, customizations, and additional levels.

While many players will take advantage of the option to play for free, many will still pay. In fact, a 2019 survey of League of Legends players found that they each spent an average of $92 per year, while some are even willing to spend hundreds or even thousands of dollars on their favorite titles.

Free-to-play games have been criticized by some for creating a “pay to win” model where the players that spend the most on upgrading their characters have the highest chance of winning. This isn’t entirely fair though as many titles only offer cosmetic purchases, such as character outfits or weapon skins.

The model is also very popular among players, will hundreds of millions enjoying games like Call of Duty: Mobile and Fortnite every month.

With the free-to-play model, game monetization has almost come full circle with players paying for their content as an ongoing service like with SaaS rather than a product they purchase once.

SEE ALSO: