The development of video games is an amazing type of art – it combines visuals, audio, storytelling, and active participation of gamers. This art gives many opportunities for creative self-realization, but at the same time, it’s super demanding.
The situation has always been this way. Just as some enjoy playing games, others have tried to make such creative businesses profitable. But how do developers succeed in monetizing their products and still allow the very art to exist?
Here you’ll find some proven methods of earning on games. They work best for both players and development companies. Check them out if you want to know what to expect from playing a game or how to earn money from a game you are going to develop.
Table of Contents
Method 1: Traditional – a Direct Purchase
Everything started with this straightforward approach. In fact, there were no other options in the 1980s and the beginning of the 1990s. If you want to play a game – you have to buy a cassette with it, cartridge, or a disc. The developers would get direct revenue, and the success of a game was measured by the number of sold copies.
For many players, it’s a perfect method. You get a complete experience for your money, with no further tricks from additional purchases. Usually, developers try to fill their paid products with as much content as possible.
For game companies, this method has evolved twice. The first one wasn’t very successful – such as selling games along with hardware. Tamagochi by Bandai wasn’t just a device, it had a game inside of it. Various classic consoles are also a package of games, connected to a gizmo (NES/SNES and PlayStation Classic, Sega Genesis Mini).
The second evolution was introduced by Valve and their digital distribution platform Steam. This step changed the gaming world. Retail purchases have since become secondary. Most revenue comes to developers just from selling digital licenses. This means that gamers don’t need a physical copy – just pay and you can download your game.
Method 2: Double-Edged – Microtransactions
The biggest problem of the first, traditional method is its one-time nature. Gamers pay a specific sum, and that’s it. This scheme doesn’t allow ongoing games to exist. Yet the developers of such adventures need regular income to support their game and provide players with new content.
This problem was solved with microtransactions. In 1997, the game Achaea, Dreams of Divine Lands introduced two types of in-game currencies:
- One type of money could be obtained by the playing process. It opens limited possibilities.
- Another type can be only purchased with real money. This included some special outfits and unique skills which were available only via this currency.
The idea turned out to be very successful, so much so that many other developers implemented it in their games. In fact, it’s the prevalent monetization method in the modern gaming industry.
The problem is that it carries a very high risk of spoiling the experience of players. When game designers think mostly about how to get more money, many internal mechanics start whirling around this only goal. Quite a few really good ideas have been destroyed by the desire to earn more.
At the same time, some companies have found a very good solution to keep the effectiveness of this in-game monetization method and still release great products. They started selling strictly cosmetic items that do not affect the actual gameplay.
One of the games with such a purchase option was The Elder Scrolls IV: Oblivion. In 2006, Bethesda Softworks offered their players a Horse Armor Pack, a costume for a horse that cost around $2.50. It wasn’t a great addition to a single-player game, but that was the start of a new tradition.
With multiplayer games, the phenomenon of cosmetic items has become much more popular. Players purchase skins willingly to demonstrate their style and emphasize their in-game status.
In 2011, Valve boosted monetization in gaming to a new level by allowing players to trade items with each other. Everything started with items in Team Fortress 2, and now the feature has been implemented in other popular Valve products.
For example, you can buy CS:GO skins or sell Dota 2 items from your inventory for real money. Valve gets in return for allowing such transactions a significant increase in player retention and daily active users. Because of this, CS:GO and Dota 2 have remained among the most playable games on Steam.
Method 3: A Ticket-Like – Online Subscription
Building an items based economy is a great way to monetize a gaming product. Still, some companies prefer making their virtual world totally separated from the real one. Such ongoing games as World of Warcraft live long and prosper thanks to the subscription scheme.
If you want to play this game, the idea is to pay a specific sum and get access to it for a limited amount of time. It’s as easy as pie.
We don’t see too many games using this method though. Even if developers offer a trial period or free accounts with limited possibilities, the subscription becomes a significant barrier for many players. Other games with such a method are:
- Final Fantasy XI
- Eve Online
- Darkfall: Rise of Agon
Many games with subscriptions also offer premium accounts with various cosmetic items – to offer more fun to players. Still, the lack of any official way to trade them for real money creates grey markets, and the developers lose potential revenue.
Method 4: Indirect – Advertisements
The Internet has brought many changes, including the way people play games. Mobile technologies gave portable playing devices almost to everyone – just take your smartphone and you now have countless games. The Internet and mobile devices opened up a new method of game monetization, through advertisements.
Developers need only to integrate a pre-made solution, and the ad service of Google will show players various promotional videos. After a short distraction, you can play for free and even get some helpful items (like in Subway Surfers).
Small distractions are not always the best solution though. Ads annoy many players, and the revenue from them is limited. Quite often, developers give a choice – to either pay for in-game items or watch a video.
Method 5: Materializing – Sell Merchandize
Some games are more than just one product – their success initiates a huge franchise with many installments in the series. And the companies earn money on everything connected to that IP.
The best example here is the Pokémon series. Sales of plush toys, mini-figures, and clothes have made this franchise one of the most profitable ever – $64+ Bn just from the official merch. Gamers can enjoy playing these games and then enjoy having these creatures in the real world.
Method 6: Additional – Release DLC
For developers, it’s often cheaper and faster to release additional content for already existing games than produce something new. Players also like DLCs – they’ve got a new reason to delve into the same world, meet their favorite heroes, and discover new twists of a fascinating plot.
Downloadable content is a good method of making even more money from a successful game. Most big titles, both story-driven and ongoing, have paid additions. Often, DLCs include cosmetic items, new characters, locations, and missions.
Some games sell DLCs in the form of Season or Battle Passes. It’s a hybrid of subscriptions, microtransactions, and downloadable content. The most successful developer here is Epic Games. Their super popular game Fortnite Battle Royale earned $2.4 Bn in 2018 and $1.8 Bn in 2019.
Method 7: Co-operative – Be Part of a Game Subscription
This subscription type is different from paying to play one specific game. Here, players get a huge range of gaming titles to enjoy for a reasonable monthly price.
Such a video game monetization method was introduced quite recently by big corporations that make deals with individual developers and share revenue with them.
- Game Pass – a subscription from Microsoft that includes a lot of games for the Xbox One and PC.
- PlayStation Now – it allows you to play various PS2, PS3, and PS4 games on the PlayStation 4 or PC. It’s mostly a cloud gaming service, but you can install some games onto your PS4.
- EA Access / Origin Access – a multitude of games by EA in one subscription for the Xbox One, PS4, and PC.
- Uplay+ – various games by Ubisoft on PC.
Developing games must definitely bring money – otherwise, gamers would never get the same quality, innovative, and exciting entertainment. But many companies still have problems developing this aspect. It would be wise to use the help of experts to overcome possible difficulties and develop a video game monetization model that would be profitable for the company while not destroying the joy of players.