Video game monetization

Game developement

Short description

This article takes a closer look at the different payment forms and monetization models for video games.

Video games as goods

Monetization generally refers to the conversion of goods into money through sales or rentals. However, video games are digital goods and, as such, are not entirely comparable to tangible goods. Moreover, video games are consumed through use rather than depletion. In-game content, such as weapon skins, has gained such significant value that it has led to the creation of separate markets, which can only be regulated or controlled to a limited extent by law. Over the past few years, certain forms of monetization have become established in the video game industry, which will be introduced in the following sections.

How do you pay?

Traditionally, video games are purchased with cash at physical retail counters. However, most game purchases are now made online. For these transactions, a credit card can be used directly, or prepaid cards can be utilized. These cards are bought with real money in stores, and the printed code is used to top up the corresponding user account. Game downloads and in-game purchases can only be made online, which excludes direct cash payments.

Subscription

Subscription models for video games involve regular payments (usually monthly) to access online gameplay or other services. Most publishers and software providers have adopted the subscription model. However, games based solely on subscriptions are becoming less common. Instead, flat-rate models are more popular, where users pay to access a library of games.

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Advertising

In free mobile games, players' attention is often directed toward advertisements in exchange for payment. This usually involves interrupting the gameplay with full-screen banners or videos. These ads can also be intentionally viewed by players to earn in-game currency. Another method of integrating ads into a game is "in-game advertising," where advertisements are embedded within the game world itself, such as the billboards in FIFA or NBA games.

Sale

Until the mid-1990s, video games could only be sold or acquired through traditional retail sales. Discs were duplicated and offered in printed game cases in stores. The sale of second-hand games was also possible in this way. Since the advent of the internet, video games have also been offered for download online. This sales model has nearly completely replaced traditional retail sales. It was through this shift that concepts like "Early Access" games became possible. In "Early Access," a game is purchased in an early development stage and is improved and expanded through regular updates. With "DLC" (Downloadable Content), the game is also expanded with additional content for a fee.

Transactions

Games based on the transaction model can be considered services that the user must pay for. This is especially true for arcade machines, where each individual game must be paid for separately. In-game purchases are also a form of transaction. These are made through so-called "micropayments" and, for example, accelerate the core loop of the game. Loot boxes and skins can also be included in this category.

Freemium

The term "Freemium" is a combination of the English words "Free" and "Premium." In video games, the core product is available for free, and additional premium services can be purchased. Demo versions of games also fall under this concept.

Questions & Wishes

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