Battle Pass Who? We’ve Got Direct Stores
One revelation of the Apple v. Epic case is that 67% of revenue is from the Item Shop.
More on the Economics of Battle Pass: Resting Prices, Forecasted Level and Complete Pass
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…
The Environmental Economics Approach to Liveops Content Management
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…
A Simple Model of Cosmetics and Why They’re Hard to Sustain
In Six common mistakes when moving to live-service games and free-to-play, Ben Cousins argues that cosmetic-only monetization is a mistake:
The Economics of Battle Pass Are Broken. Let’s Fix It.
Monetization’s modern paradigm is defined by a direct store and battle pass (BP). After years (and ongoing) criticism of loot boxes, Fortnite re-wrote the rulebook in a way that seems to make both developers and players happy. However, it’s important to consider that at sufficient scale any monetization scheme looks like a winner. It’s unclear…
Why Do FPS Players Like Small Maps?
It’s the incentives, stupid. Players want to unlock content and the most efficient way to do so is to maximize how many FPS games control progression speed: SPM or score per minute. Score is usually a formula composed of objectives and kills. The key is that it’s uncapped: there’s not a fixed amount of XP…
Can We Get Players to Tell Us Their LTV?
Eric Suffert acutely describes the dangers of extending payback windows. At every t+1 the accuracy of LTV declines while the variance in cohort profitability increases. LTV, however, is not an exogenous variable and clever design can incentivize players into revealing their long-run time horizons within a game. Consider the design of a many subscriptions: you…
The Collective-Action Problem of F2P Clans Remains Unsolved
There’s a compelling aspect to achieving group oriented goals: being apart of something larger than yourself. Lots of F2P developers harp on the importance of social features. Yet the social experience in many games is abysmal. Lots of teammates or clanmates don’t seem interested in participating instead preferring to “free-ride”, putting forward little effort but…
Why do contestents break the rules in Netflix’s Too Hot To Handle?
Economists like Tyler Cowen or Brad DeLong are too self-respecting to study reality shows. Fret not, this economist has no such self-respect. Previously, we examined the economics of the reality show genre but just as interesting are the economics of the a particular reality show’s design. To Hot Too Handle introduces of the most interesting…
1950’s Peruvian Coke and Gacha
In the 1950’s, Peruvian inflation forced Coca-Cola to charge more per bottle of Coke. Unfortunately, their vending machines required physical updating to accept a new and larger domination. Instead, Coke devised a probabilistic system: the machine would charge the same amount as before, but randomly refuse to give a bottle. This raises the expected price…