After Pokemon go was released in US it took less than a day before it was making more money than all the other apps in both Apple’s and Google’s app stores. It has earned 14 million dollar in revenue since launching in a week; PUBG is even more successful, it has over 100 millions downloads. But users didn’t have to pay a single rupee for the game. All that money was coming from Optional purchases, people were making as they played.
This is known as FREE-Premium or FREEMIUM apps, a business model that in the past few years has largely wiped out the market for paid games.
Now game developers have to monetize the gameplay and to do that is by using and understanding psychological behaviors.The first thing these games do is set up a Virtual currency so that it doesn’t feel like you’re spending real currency, even though you are. This is same as people find it hard to spend money when they’re paying in cash than using a card.
Games add yet another layer, In Candy Crush you pay for lollipop boosters with gold bars and you pay for gold bars with your credit card, which is already distanced from actual payment. And on top of that, they don’t make the exchange rate simple. It’s not 50 gems for 50 rupees. They’re always something weird like 80rs will get you 12 diamonds and that sort of exchange rate is the same thing you see, tourist spending more money that they are not familiar with. If incense costs 80 pokecoins and a bunch of 550 pokecoins costs 400 Rs, how much real money does incense costs? Yeah, I don’t know either. So you’re spending money that doesn’t seems real and it only takes less than a second because the App store already had you’re credit/debit card information. The whole payment process is designed to be painless. Other parts of the game, however, are designed to be painful. developers intentionally add inconvenience in the game, so that you can purchase convenience.
Players pay money to avoid pain points on the game, which makes developer add more pain points on the game.
Ultimately though, only a tiny percent of players pay, and these are so-called “Whales” players who will pay hundreds, sometimes thousands of dollars in the app. Now, this means that for some of these games; non-paying users, which is most people, are actually pouring time into a game designed to hit the pain points of a small susceptible group of players.
In app purchases give developers a reason to keep updating the games, and they are collecting tons of data- things like where you get stuck, where you close the game, which features are popular. They can also change the prices based on individual profiles. So, if it seems like you’re about to quit, they’ll offer you a discount.