The New Currency for Video Games
Games developers are increasingly recognizing the contribution of their players' time and attention to their overall economy and sharing that upside back with their players, in the form of free in-game virtual goods including vanity items, boosts, characters and game currency, and NFTs, courtesy of brand sponsors.
Free-to-play (F2P) video games were originally considered a race-to-the-bottom innovation that would cannibalize overall game revenue and sacrifice game quality. But instead, F2P games (also known as “freemium”) have revolutionized the industry, first by helping to turn mobile games into the largest and most accessible segment of the market in less than a decade and, more recently, by ushering in a new wave of growth and creativity in the big screen console/PC/metaverse space. What was once a leak in the premium/paid pricing model is now a full-fledged flood of new gaming content coming to the big screen -- for free.
All video game business models are increasingly built around enticing players to make a financial transaction to unlock new game features, such as season passes, characters and items. Known as “live service” spending, this line item accounts for nearly 100% of the revenue for games like Fortnite, Warzone, Apex Legends and Roblox, and a meaningful chunk of the ongoing revenue from premium games like Call of Duty and Grand Theft Auto.
Big screen video game publishers on console and PC are soon going to find themselves in the same scenario that challenges mobile game companies: the fact that less than 5% of gamers actually spend any real money in the live-service game economy in their F2P games; the rest play completely for free.
Yet mobile games have figured out a way to collateralize these non-spending players in their freemium economies, through rewarded in-game video ads. In this model, a player watches a video ad and, in return, earns some sort of a valuable in-game item such as a boost, item or currency. Mobile games convert between 40% to 60% of their players into video ad watchers, meaning that they have largely figured out how to turn increments of 15 and 30 seconds of player attention into a form of sponsored game currency, while also helping keep those players engaged and on a relatively level playing field with those willing or able to pay a fee.
While there are other ways for video games to profit from in-game advertising, such as background billboards or integrated sponsorships, there is only one model that recognizes the player as a true contributor to the game economy, turning their time and attention into a valuable currency for them to “spend” on that paid in-game content they covet.
Once console and PC games developers are confident that they can provide a player-controlled ad experience commensurate in quality and creativity with their rich, immersive game experiences, they too will move to adopt this new form of sponsored currency. Expect increments of time and attention to be the next big payment type in these big screen F2P games and metaverse environments, because it will be the best way to engage and retain their savvy players.
Want to learn more? Find out how PlayerWON™ enhances the experience for F2P console and PC gamers while driving lifetime value and in-game spending for publishers.
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