So, how do Gaming Franchises make money generally?
Apart from generating revenue from CD and Digital download sales, gaming company earns money through
- In-App Purchases
- Ad-Driven revenues
- Subscription based model
Welcome to the world of Micro-transactions.
If you are playing Pokémon Go, then you must be familiar with PokeCoins. These coins are a type of currency in Pokémon Go, where players can purchase almost all of the Items located in the Shop.
What all you can buy in Pokémon Go?
Pokémon GO features a wide variety of Items that found in the wide world by visiting places like PokeStops or bought in the in-game Shop. Below is the image that shows the PokeCoins cost range and other probable items you can buy.
The first thing Micro-transaction games like Pokémon Go, Candy Crush Saga, and others do is set-up a virtual currency so that it doesn’t feel that you are spending real currency – even though you are.
A report finds that only 1.9 percent of mobile gamers make In-App purchases – Lauren Keating, Tech Times.
Clash of clans is another big league game with “world’s most downloaded mobile game tag on it” for a brief amount of time. This game uses “in-convince technique” in their game. So, everything you build has a wait time. So the player has to wait for a brief amount of time to use the upgraded item. Else, the player can also buy an upgrade of 5 Gems to cancel that “wait time” and move ahead. So, you are literally buying incentives with real money to make your mobile game easy and hassle-free. Hence, Freemium Isn’t Free…..(Sigh)
Have a look at these six games shown below. So, what’s common between all these six games?
All these six games have in-app purchases to the level that they have earned more than $64 Million in last 30 days just for iOS platform. Here is the complete data generated using apptopia.com.
In 2016, advertisement supported games are serious business. There is no Netflix-like platform where you can enjoy ad-free mobile games. In the world of mobile games, no ad is the next premium model preferable for all users who buy smartphone just to play games.
“In a perfect world we would not put ads in any of our games,” – NimbleBit co-founder David Marsh
An effective Ad-Driven game is where companies can pay to put their products in a way that doesn’t feel overly intrusive. So, for Freemium (free downloadable apps with “In-app purchase applicable” written on your play store) and free-to-play games, brands often advertise via splash advertisements or advertiser sponsorships of virtual-good giveaways.
For Pay-to-play games like Call of Duty, GTA V, and others, developers use the dynamic IGA (In game advertising) in an urban game setting to mimic real world stimuli. Fantasy games, on the other hand, provide ways to collaborate with the brands, but not hamper the experience the game.
It’s not advisable for beginners who develop their game app to use this business model as Ads require a massive volume to be successful. If you want to make $100,000 a year from your ad supported game, you need between 100 million and a billion impressions a year. (Number of impressions x eCPM / 1,000)
Here is the revenue generated by above top six games through advertisements.
Subscription Based Model
This is the model for the games that have an existing fan base. Lord of the Rings Online, The Elder Scrolls Online, and Star Wars: The Old Republic is based on a subscription based model.
A subscription model provides a guarantee of repeat transactions and hence, games with subscription revenues tends to be valued far higher. Consider Blizzard Entertainment Inc’s World of Warcraft. WoW boasts over 12 million subscribers, and at roughly $15 a month. Given the popularity and fan following of this game, a regular player purchases all the future purchases right in the first month.
Last year, massively multiplayer online first-person shooter games like Final Fantasy XIV achieved over five million registered accounts while excluding anyone who has a free trial account.
Although subscriptions are considered the holy grail of revenue models, it works only for a few game developing companies. For example, PlanetSide2 concluded their services due to evolving business needs and technical requirements (servers) on July 1, 2016.
DLC is additional content created for a released video game. This can be of the several types ranging from aesthetic outfit changes to a new, extensive storyline, or everything comes with an expansion pack.
Electronic Arts are the world leader when it comes to revenue generated through DLC and is hailed as the “the Netflix of games” due to the success of the EA Access club. FIFA point’s packs are the new currency in the world of EA extra content.
They generated roughly $2.2 billion last year (2015) out of which $921 million came from add-on levels, or some Ultimate Team packs, or an extra weapon. At present, EA’s FIFA 17 Ultimate team will cost you somewhere near £508 to 100k in real money.
Destiny is another example of game company exhausting the utility of downloadable Content. This $500 million dollar worth online-only first-person shooter video game, received backlash on how they used expensive expansion packs as “Downloadable Content.”
A 15-year-old Flemish boy has spent a whopping 37,000 euros (roughly $46,700) on the free-to-play iOS title Game of War: Fire Age.
Gaming Industry’s problem with YouTuber’s
Almost all the Youtubers don’t prefer making money through Nintendo’s IP unless they sign up for the Nintendo Creators Program where Nintendo gets a share of the YouTuber’s revenue. There are many other gaming companies that openly permit Youtubers to use their IP’s, gaming footage, trailers for free, but Nintendo is not among them. CLICK HERE if you want to know what precautions we need to avoid Content ID flags from the gaming companies.
So, if the gaming company is not looking to sue a YouTube gamer, then the revenue through a YouTuber depends on upon their managed rights, sharing monetization money, and collaborative promotions.
BONUS – Highest grossing video game franchises
Mario – 528.522 million
Pokémon – 279 million units
Call of Duty – 250 million
Grand Theft Auto – 235 million
Wii – 201.8 million
The Sims – 175 million
Need for Speed – 150 million
Final Fantasy – 115 million
Minecraft – 106.86 million
FIFA – 100 million
Assassin’s Creed – 93 million
Being an artist, movie buff and a media enthusiast, content writing is my career train. I am a proud alumni of Symbiosis Institute of Media Communication (Pune) and currently working for Vidooly.