How free games are designed to make money

After Pokemon Go was released in the 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’s already earned $14 million in revenue
since launching last Wednesday — not even a full week.”
But users didn’t have to pay a cent for the game. All that money was coming from optional
purchases people were making as they played. This is the world of Freemium apps — a business
model that, in the past few years, has largely wiped out the market for paid games.
Now game designers have to monetize the gameplay and one way to do that is by applying some
fundamental lessons of behavioral psychology. 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 a variation on something we’ve known
for decades – which is that people find it harder to spend money when they’re paying
in cash than if they’re using a card. “So when you pay cash for something, you
see it leave your hands and you get a very immediate sense of how much your cash reserves have
dropped, how much your wealth has dropped.” Games add yet another layer. 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 then on top of that, they don’t make
the exchange rate simple. It’s not 50 gems for 50 cents.
“They’re always something weird like 1 dollar will get you 12 purple diamonds, and
that sort of off kilter exchange rate is the same thing you see with people spending — tourists
spending money that they’re not familiar with in foreign countries.”
If incense costs 80 pokecoins and a batch of 550 pokecoins costs $4.99, how much real
money does incense cost? Yeah i don’t know either.
So you’re spending money that doesn’t seem real and it only takes a second because
the app store already has your credit card. The whole payment process is designed to be
painless. Other parts of the game, however, are designed
to be painful. A key finding of behavioral research is that
people tend to experience unexpected losses more intensely than comparable gains. That
can inform the timing of purchase prompts. In Puzzle & Dragons, players progress through
a dungeon before facing a boss, and if they die, they stand to lose all the rewards they
just earned. That’s when they’re presented with the option to save their coins and their
points by spending magic stones, which you can by in the store with real money.
Other developers actively embed inconvenience into the games, so that you can purchase convenience.
In Clash of Clans and Game of War, everything you try to build has wait times that get progressively
longer but are skippable, for a price. “So they build incentives to remove pain
points into the games and then if they want that, then they have the incentives to insert
pain points into the game.” Ultimately though, only a tiny percentage
of players actually become payers. And a small percentage of payers are those so-called “whales”
— people who will pay hundreds, sometimes thousands of dollars in the app.
The marketing firm Swrve estimates that about half of the revenue for mobile games is coming
from less than a half of a percent of all players.
Which means that for some of these games, non-paying users, which is most people, are
essentially pouring time into a game designed to hit the pain points of a small, susceptible
group of players. If you’re really having fun, that’s fine.
But it might be worth rewarding games that find another way. As of now, the monetization
in Pokemon Go is unobtrusive, it’s kind of tucked away. And that lack of manipulation
is a pretty good reason to buy some lure modules and some incense. One argument in favor of free-to-play games
and in-app purchases is that they give developers a reason to keep updating the games. And they’re
collecting tons of data in order to inform those updates — things like where you get
stuck, where you close the game, which features are most popular. All that data can help them
keep making a game that you want to keep playing. But it also means that they can tweak the
prices based on individual profiles and behavior. If it seems like you’re about to quit, hey
here’s a discount. Or if you’re the type of person who will spend a lot of money, maybe
they bump up the prices a bit. They can even look at how fancy your phone is and what country
you live in and set the prices accordingly. According to one survey, 40% of game developers
said they were setting different prices for different players. But the survey was anonymous
and it’s pretty hard to tell which games those are.

100 comments on “How free games are designed to make money”

  1. Final Fighter X says:

    Its called bs dlc that should have been included within the original release and sale of a game…

  2. ravi badola says:

    Ok at 1:48 , its elementary unitary method to calculate what incense cost , and you are saying you dont know how much that is ? For real?
    I am seriously doubting the video maker now :p

  3. David says:

    Disgrace to the video gaming industry.. 😔 Cannot play games with several in game currencies, instantly off putting to me

  4. Lucas Bonardo says:

    Senator, we run ads…
    -Mark Zuck

  5. Norbertas C says:

    Incense costs $0.7258181816

  6. Unknown Fox says:

    Check out EA game

  7. Sprytez says:

    Ads like how you make money

  8. FOush says:

    When free games makes more than paid games


  9. - AboodGamingYT - says:


  10. minecrafter dude -_- says:

    This is called PAY TO WIN

  11. iNOscoped JFK says:

    Talk about vbucks….

  12. sdhbfhkds says:

    To answer the question posed, an incense cost 0.73 cents when the pokecoins are purchased 4.99. Then there's the economics of buying more coins to save on cash. I've regrettably once spent 50 euros on riot points thinking that I'll be able to get more skins and have more value.

  13. David Bautista says:


  14. Fume says:

    Fortnite VBucks

  15. Jazz E says:

    I did the math 80 * 4.99 / 550 = $0.73 for 80 poke coins

  16. 1000 subscribers with no videos says:

    Youtubers spend alot money

  17. Patrick Mittel says:

    If something takes long to build, i close the app and play again the next day. TRY AGAIN, SUCKERS

  18. An anonymous little boy says:

    1 word:

  19. Bob Make says:

    ea sponsors this video

  20. Medlawar _980 says:

    is this a surprise

  21. Melon Man says:

    ive spent thousands of dollars on roblox

  22. Aksiyon Bizde says:

    Like EA, but their games are paid.

  23. Aksiyon Bizde says:

    Exactly what Fortnite is.

  24. Caшa Шeвчeнko says:

    Onother great video

  25. Fourtive says:

    A D S

  26. weebie says:

    It’s like destiny

    But destiny isn’t free

    And u have to pay money for content

  27. Sa10k says:

    At 3:28 when android Merged with apple 😂😂😂

  28. Mystery Playa says:

    Everyone will regret when they reach 50 and realize they spent millions of bucks on something that they no longer care about nor own.

  29. Chad Suga says:

    this is why you don't play mobile games! they have bad graphics and make you buy stuff (I'm talking about you to fortnite)

  30. The Resolute says:

    You forgot about rise of kingdom…..

  31. Fat Panda says:

    Can a app that gives me money be free?

  32. Elijah Hamill says:

    Incense cost $72.56

  33. The New Vcvrpj says:

    Moral: Never play pay to win game
    That bait ur credit card

  34. Kitso Jerrald says:

    make a video about lords mobile

  35. Sal is tonight’s Big loser says:


  36. jimy zylar gaming says:

    i have expensive games
    but i searched is apk
    so ita free but google play keeps annoying me

  37. AprianexGaming says:

    Free games: Y E E T *throws alot of ads*

  38. случайный парень says:

    Thank god i know lucky patcher

  39. Stewie Griffin says:

    if i see that i have to pay money
    i lose all motivation to play the game
    am i the only one?

  40. FartN'Loud says:

    i can't stand video game apps…. even the good ones. I hate playing on my cellphone, 3DS and switch in handheld mode. I prefer large screens and no app games.

  41. adultmoshifan87 says:

    Freemium is worse than cancer. It needs to be outlawed!

  42. Really mental pig says:

    This is why I play offline console games.

  43. Pros 2 says:

    Make a new vid and explain this:
    How u r scamming us to earn money by making us watch this vid

  44. An Dre says:

    only spend money on games I played for years like roblox

  45. Vladimir Nedeljković says:

    There are 2 things I appreciate about Pokemon GO regarding the in-game shop:
    1) you get 50 coins for free each day if you're an active player – by guarding gyms you earn coins, and gym battles are an essential part of the game everyone does anyway. So that's free in-game currency, just for playing.
    2) you don't really need anything from the store. Yes you can buy incense and lures, but they are bonuses, not essential items you can't progress without. The only thing you truly need is to expand your storage, and that costs 200 coins, and the price stays the same. So 4 days of playing will get you there. I appreciate that. I appreciate that you truly can play the game and not pay.

  46. sppgplays says:

    just like fortnite

  47. [カトウ] says:

    Dota… releases new crate

    Million flow into their bank account

  48. Dingo 1337 says:

    To shorten the video, M I C R O T R A N S A C T I O N S.

  49. Huskypup756 says:

    Me: uses mom’s credit card on vbucks
    Also me: I’m about to end this woman’s whole career

  50. Supreme Patty says:

    In app purchases

  51. Pinky Manggaeteok says:

    That's why I don't play game ,even BTS World

  52. P Siodmok says:

    Loot boxes

    It's called surprise mechanics

  53. deeps says:

    Valve f2p games (Dota 2, CSGO, TF2) are great because they're not pay to win, skins are well just cosmetics and completely optional

  54. 10 G says:

    I bought money thru lucky patcher

  55. Chamoth Wanniarachchi says:

    I need a credit card even for trial use someone help

  56. Bikesh Shrestha says:

    Lucky Patcher enters the Chatroom.

  57. Arkin Jameer Liwanag says:

    You can get gems in clash of clans by removing Obstacles

  58. Sam Pound says:

    98% of fortnite players buy stuff

  59. Lucas Burgos says:

    I spend money on Fortnite useless

  60. Avik Nayak says:

    This is the reason I don't play mobile games.

  61. Nabeel Gm says:

    Those pubg players who open crates for real money….. They're dumbest..

  62. Jett Fischer says:


  63. Anonymous says:


  64. T Mal Music says:

    I can't even imagine how much PUBG is earning everyday

  65. John Smith says:

    The Fortnite community made Fortnite sooo much money by roasting no skins 😂

  66. Ryan Gruis YT says:

    Fortnite….. cough cough

  67. Ктшник :D says:

    What? You never played tuber simulator?

  68. Lightning BoltZ says:

    Tell it to roblox

  69. sharat gupta says:

    Such a sham(e)

  70. Rashid k says:

    And also they collect data of users and that data is pretty profitable to sell to other companies

  71. Rowin Janssen says:

    Some game developers already found another way, it’s called advertisement

  72. Hamza Baloch says:

    I haven't paid a single penny but still my th lvl is coc is 10

  73. ramegni says:

    This is basically fortnite

  74. Powerpanda gaming says:

    to bad this came out before fortnite

  75. Lalith says:

    Fortnite got 7 billion which is a free game

  76. Phoenix Furry says:

    So like that’s why creators in roblox earn money when people spend virtual money?

  77. spunk v says:

    1:49 I think that incense cost $0.727

  78. Mono The Kuma Bear says:

    Moneytoon Is Also A Freemium App

  79. zahran m. says:

    I never spent money on games

  80. Dr Commenters says:

    EA:i dont see any problems here

  81. Andre Zamora says:

    Meanwhile,Im just stealing my moms credit card…..

  82. shoaib akhtar says:

    This video is before of PUBG era

  83. HierisMilan says:

    1 V-Buck in FORTNITE is €0,01 that’s not so hard

  84. BALD CAT says:

    Bruh then how do u expect these companies to live and there is a way for u to enjoy without paying

  85. Zevo Gaming says:


  86. The Havoc banana says:


  87. Jasing Marma says:

    At that point, When game wants your money only best solution is….


  88. hein htet says:

    I'm glad our country don't have this

  89. Christopher Lara says:

    If you make your game not have the pain points then your players will want to play it like a console game and make more money by selling it for 15 dollars

  90. elmo says:

    Wow!! Amazing!! Games cost money even when its a free app its almost like thats the point nothings free in the real world vox

  91. tea time commenter says:

    who actually pays money on these games

  92. Kristian Berget says:

    It's three years since pokemon go was released o_O

  93. Dynapze Gaming says:

    And this is why I play pay to play games

  94. parkourvsgame bro's says:

    This is a reason I hate Fortnite.

  95. Talmeha Khurrum says:

    Here's some good non pay 2 win games Hades star,polytopia,among us and rebel inc

  96. Enrique Thompson says:

    Which games them are? All of them anymore

  97. Mighty Shadow says:

    Not everybody fall for that trap tho

  98. Someone Lazy says:

    The moral is, don't play games anymore.

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