The Art of Social Gaming Monetization: It’s all about fostering the whales

Most gamers see no tangible value behind virtual goods, whether they’re limited or rare or exlusive or just plain cute. It’s not worth a penny to them.

While not often profitable to social game developers, these guys are nonetheless necessary to a successful ecosystem. They’re the guys who help make a game popular, and with popularity comes whales and super whales—and that’s where the money is.

Game developers see pixel-made goods as treasure chests of gold, so long as they can addict a few whales. In the gaming industry, “whales” are virtual currency and goods addicts who spend as much as $1,000 annually on in-game addons. And “super whales” are know to spend upward of $5,000 per year.

Both rare breeds, but combined they account for a tremendous portion of some company’s profits. It is estimated that anywhere from 1 to 5 percent of any given social game’s players spend any many on “freemium”-model games, in which it’s free to play but in-game addons cost money at the player’s choosing and discretion. And of that small percent, only about 1 percent are whales, with an even more finite number being classified as the elusive “super whales.”

It seems scary to rely on such a small percent of a game’s user base for a majority of profits, but there are advantages. The low barrier of entry helps grow player populations fast. It’s a starl contrast from games like Blizzard’s World of Wacraft, which costs about $100 to buy the game plus its three expansions, and then an additional $15 every month. Here, you have to be willing to fork out big money upfront and more money down the line, periodically, forever.

Success in exploiting—or better yet, creating—whales and super whales lies in the game’s model. No one will spend real money on virtual goods if they cannot easily identify a meaningful gain. There are a few ways to do this.

One strategy is to get the player hooked before they feel any need to spend money. Or instance, NimbleBit’s Tiny Tower lets you do everything for free, but as the game progresses, it becomes slower and slower to do things. A few real dollars helps spur things along. So at the beginning, it’s all good. You enjoy the game, maybe even get a little addicted. Then your tower gets big and construction time slows and your elevator takes forever to bring people to the top floor. Now that the player is already highly engaged with the game, it’s quite conceivable that they will spend $5 to boost their experience.

Another strategy is to offer extra packages or expansion-like products to a game. Instead of making all game features available initially like with Tiny Tower, a game may tease you with the basics before encouraging a player to buy an expansion or the full game. This is usually how it works with “Lite” games. Users don’t often like paying money upfront for a game they may not like. But if the player enjoys the half-experience enough, they’ll consider forking out a buck or five for the full deal.

There are numerous other strategies, with new ones popping up all the time. Social gaming is in its earliest infancy and has a lot of room to grow. But whales only gorge on the choicest of meals, so competition is fierce to have one’s game become their favourite fodder.

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