Nothing is as misunderstood as loot boxes in gaming (virtual currency is a close second). Critics decry them as a normalization of gambling that preys on weak impulse control. Strip away the moral panic, and a sanguine explanation emerges: loot boxes solve two vexing economic problems.
Inflation, ads, and webstores reverse nearly every trend in gaming—and then reverse it again. These aren’t rounding errors either—they’re GDP-level phenomena (literally), and the inability to account for them is warping our perception of reality in the gaming industry.
At 350 million monthly active users (MAU), Roblox boasts a user base rivaling the combined size of Steam, Xbox Live, and PlayStation Network. However, this impressive engagement comes hand in hand with an exorbitant 70-80% platform tax. In any case, Roblox is too big to ignore. Its bigness forces Roblox and non-Roblox developers to grapple…
Previously confined to PC turn-based play, mobile free-to-play transformed 4x into sprawling persistent world MMOs. The combination was and continues to be electric; what other genre can admit to $1M LTVs? Each X, EXplore, EXpand, EXploit, and EXterminate invites an unparalleled level of feature width and depth. Its LTVs are not driven only by spend…
A good deal of odd and folk-lore design priors float around gaming; my two favorites are free hard currency and time-limited cosmetics predicated on FOMO or fear of missing out. The FOMO model suggests developers ought to stuff their game with time-limited content, once the timer is expired the content is gone forever (or for…
A recent Twitter thread highlighted a popular Gamer™ belief: Nope, they are mostly used to obfuscate real prices and can’t store value — Nicola Visonà (@VisonaNicola) May 25, 2021 Even within gaming studios, I encounter a similar sentiment. Proponents of this position claim “firms use virtual currency pricing as a behavioral trick!” With virtual currency,…
One revelation of the Apple v. Epic case is that 67% of revenue is from the Item Shop.
The previous model of battle pass (BP) focused on average daily monetization cap (ADMC) as the key lever in driving more monetization from BP. Special attention was paid to the role of tiers and we’ll continue to do so here. One of the more interesting shortcomings of BP is the inner temporal nature of the…
In 1931, American economist Harold Hotelling published the seminal paper The Economics of Exhaustible Resources. Harold described a problem many firms face: how much of a non-renewable resource should they sell at any given time? This problem is more apparent when thinking about managing an oil supply but just as relevant when considering how to…
Professional sports give us something to aspire too. Players are celebrated as heroes and children grow up wanting to become them. It’s no secret that the internet, and games in particular, have found even more ways to engross us in the world of sports. But the terms of that engrossment are not incidental, they’re crucial.…