For those who are not familiar with the gaming industry would most likely wonder how video games make money these days? We don’t always need to pay for games like we used to, buying cartridges and disc. Now, we see a variety of monetization models that cater to different types of players and platforms.
Being a gamer, I’ve not only spent time playing but also money buying character skins, battle passes and sometimes (regretfully) a bit too much on loot boxes. That’s how I know the game developers make good money even though the games are free.
The video game industry is massive. We’re talking about a multi-billions industry. Whether it’s a single-player game you purchase from Steam or a free-to-play MMORPG titles you see widely available, there’s a strategy behind every game’s monetization model.
If you’re a new gamer or just curious about how this all works, I’m glad you’re here. This is me unleashing my geeky side of researching, compiling information and putting it all here in this post.
Common Monetization Models in the Video Game Industry
Back in the day, it was simple. We bought the game and that was it. We got the whole gaming experience for a one-time payment. As the gaming industry evolved, the ways the video game developers make money follow suit. Now we have free-to-play games, subscriptions, in-game purchases, and more. Each model supports developers in different ways, but they also come with their own pros and cons for us as players.
In this section, I’ll break down the most popular ways video games make money, the pros and cons to the gamers, and the example of games using the model. Additionally, they’re ranked by how common they are in the current gaming landscape:
1. Free-to-Play (F2P) – Most popular
You can download and play the game without paying anything upfront. While F2P games offer in-app purchases, it’s optional and you can pretty much play the game to completion or for years without paying. Otherwise, you can choose to support the game by purchasing character cosmetics, battle passes, limited edition items, or boosts. This model is typically used for multiplayer games.
F2P is currently the monetization model that dominates the industry since it lowers the barrier to entry. Millions of gamers will try out these games since they don’t have a to pay a dime. F2P games like Genshin Impact and Fortnite have a massive player base. The developers are relying on a certain percentage of these players to spend money on virtual items, subscriptions or in-game currency.
Pros:
- Accessible to everyone – large potential player base for gamers to play together. F2P games tend to be in co-op or multiplayer mode. This is one way the developer can ensure the publicity through word-of-mouth.
- Often feature regular maintenance, updates, and new content.
Cons:
- Can pressure players to spend money that eventually lead to overspending.
- Some games lean towards pay-to-win, where spending money gives an unfair advantage.
I love the freedom of trying F2P games without commitment. If I don’t like it, I can just hit the uninstall button but if I enjoy it, I can continue playing it for years to come. I just need to resist the temptation of spending on unnecessary cosmetics (okay, most of the time).
2. Premium Games (One-Time Purchase)
This is a classic monetization model that has been around for a long time. Players pay upfront for the entire game. There’ll be no in-app purchases or ongoing subscription fees. However, popular games tend to come up optional DLCs or expansions for players to purchase. This model is typically used for single-player or indie games. Some examples of premium games are The Witcher 3 and Black Myth Wukong.
Pros:
- One-time payment and you own the game.
- You get the complete experience upfront.
- No FOMO because the entire game content will be the same and still be there even if you choose to play at later time. For online MMO, you may miss out some time-limited events or side quests.
Cons:
- High upfront cost especially for AAA titles.
- Limited replay value if there’s no extra content. Once you’ve completed the game, that’s it.
I still love buying premium single-player games for their rich and complete experiences but some games cost quite a lot (up to USD 60-70) so I’ll be on the lookout for weekly deals in Epic or wait for sales in Steam.
3. Subscription Models
It’s pretty self-explanatory. Players pay a monthly or yearly recurring fee for access to the game and its content. Xbox and Playstation have game pass/ membership for players to sign up to access their library of games. But of course there are also titles that use subscription model for their game such as World of Warcraft or Final Fantasy XIV: A Realm Reborn.
Pros:
- Excellent value for frequent gamers.
- Often includes a lot of exclusive content without extra fees.
Cons:
- Stops working if you cancel your subscription.
- Costs add up if you subscribe to multiple services.
As a PC player now, I have not personally subscribe to any game because I don’t want to be tied up or pressured by the need to play just because I’m already paying a monthly fee. However, if I do play often on Playstation5, then it makes it more worthwhile for me to sign up for the Plus membership.
4. Ad-Supported Games
This is typically common in casual mobile games where the game shows you ads in between gameplays and also offer rewards for watching ads. These games typically can be downloaded for free. Popular mobile games that do this include Candy Crush. There are some games that are supported by ads but give you the option to go ad free if you purchase the game.
Pros:
- Completely free for players.
- Minimal spending required.
Cons:
- Interrupts gameplay.
- Ads can feel repetitive or invasive.
I rarely play ad-supported games because the interruptions annoy me. If I do like the game, I would prefer if they have the option to purchase it so I don’t have to see a single ad anymore. If they don’t, then I’ll hit the uninstall button.
The video game industry is constantly evolving, and so are the ways it makes money. Understanding the various monetization models not only helps us appreciate the effort developers put into creating games but also empowers you to make smarter spending decisions.
As gamers, we have a lot of influence. When we support games with fair and ethical practices, we encourage more developers to follow suit. At the same time, being mindful of our own spending ensures gaming stays fun and doesn’t turn into a financial drain.
Whether you’re just starting your gaming journey or you’ve been in the scene for years, always remember to play for fun and spend responsibly. After all, a good game is about the experience, not just the extras you buy.
