Since its conception in the mid-’00s, the go-to F2P (Free To Play) monetization model has undergone many changes. Currently, the industry-standard model harbors a hybrid approach with two or more internal income sources: ad revenue, IAPs (In-App Purchases), and subscriptions. When people discuss F2P / GAAS (Game As A Service) subscriptions, they commonly default to battle pass, meaning VIP subscriptions are often overlooked.
For those unfamiliar, a VIP subscription is a recurring monthly cost that rewards the player with regular benefits and exclusives. Similar to the battle pass, VIP subscriptions are likely to increase engagement in addition to revenue by providing QOL (Quality Of Life) and cosmetic benefits such as:
- VIP badges
- Faster progression
- Shop discounts
- Cashback
- Increased reward regularity and value
Ultimately, VIP subscriptions are a low-cost, quick-to-test alternative to the battle pass. If designed well, subscriptions have the power to live in harmony with one another, uplifting revenue potential in a significant way (see Fortnite’s Crew Pass or Call of Duty Mobile’s Ground Forces).
The Importance of Diversity
To sustain and scale a mobile game’s revenue, its IAPs must appeal to as many player psychographics as possible with plenty of space and systems to expand in the future. VIP subscriptions diversify how a player can spend.
Take a look at Call of Duty Mobile, for example, which features a battle pass but also an additional monthly subscription (known as Ground Forces). Although we can’t pinpoint exactly how much revenue is attributable to subscriptions, we see a revenue spike in revenue on release week for Ground Forces, as shown below:
These results may indicate that although there is an interest in this type of subscription — especially on release week — not all players got the ROI they expected, thus resulting in a drop-off in subscriptions. Although the feature may not have profited entirely as expected, the show of interest delivers a reason to develop it further, reinforcing that the VIP subscription (and thus monetization diversity) has potential in the genre.
Influencing & Enhancing Other Monetization Avenues
Not only are subscriptions a substantial revenue source in their own right, but they also have the power to upsell and support other revenue sources:
Ad Revenue
VIP subscriptions are particularly popular in casual games such as Ketchapp’s Knife Hit (see below). Becoming a VIP in Knife Hit grants subscribers regular free content, exclusives, faster progression, and the removal of ads, allowing them to play without interruption.
Similar to interstitial ad placements (which, we should acknowledge, are under fire on Google Play), the timing of subscription advertisements is critical. Interstitial VIP advertisements are a fantastic way to entice free players to convert, especially in games with a short core loop (i.e., social casino and hypercasual games). These advertisements are most effective when they target players at times they’re most likely to spend:
- After the player has lost a close match or is close to a reward – moments away from gratification.
- Post-gratification (i.e., progression or reward) when they want to continue engagement.
Let’s say your game has an average hypercasual session time of 16 minutes and serves 40 ad impressions per session on interstitial ads alone.
At an average of 2 sessions per day, the team would accumulate a profit of $0.40 a day or $2.80 a week if the player were to play every day. Of course, this is a best-case scenario and is unlikely to reflect most players. If we use Knife Hit’s pricing as an example, at $3.99 a week, the player would have to play over double the average to accumulate the same revenue.
Player churn is a big issue in the hypercasual genre, and if you look at the reviews, you’ll see one of the reasons why. Subscriptions give players agency over mitigating this issue and thus improving their experience, likely reducing frustration and churn while increasing LTV through securing the maximum achievable ARPU rather than the potential.
Subscription / Battle Pass
Subscriptions offer a recurring revenue option outside the battle pass, though you can also use them to enhance them. Having multiple subscriptions is a great way to double down on player sunk cost fallacy — the idea that since players have sunk cash into the game, they’re now more likely to deepen engagement to get their money’s worth.
Fortnite’s Crew subscription is an excellent example of this. For a slightly larger monthly fee, engaged players can join Fortnite Crew rather than purchase the battle pass, giving them an additional bundle of exclusive content and enough V bucks to subscribe the following month. This offer entices new and existing players with a significant discount on purchases, appealing to multiple different Bartle types.
IAPs
It’s not uncommon to see VIP subscriptions offer store discounts and cashback on purchases as a bonus; examples can be seen in Zooba: Zoo Battle Royale and Legendary Game of Heroes. Incentives for store purchases can significantly impact ARPPU beyond the initial monthly fee. It’s good to remember that once over the initial spend; customers are more likely to repeat the purchase.
In general, when marketing to a prospective customer, you have around a 13% chance of persuading them to spend. However, customers have a 60-70% chance of making a repeat purchase once converted for the first time and (hopefully) see value in doing so. Scopely has reinforced this, stating that its ARPU for subscribers was steeper than non-subscribers, thus resulting in much higher overall LTVs for these players. VIP subscriptions are a great way to see sales uplift on various other IAPs and subscriptions within the game — great for increasing value and scalability without a heavy dev load.
Best Practices
Best-in-class subscription design looks to multiply a game’s overall revenue and engagement. Below are some best practices to consider when developing and maintaining a VIP subscription.
Accessibility
Purchase accessibility is essential when attracting customers within a wide userbase; this is especially true of global products where the economy differs by region. AFK Arena is an excellent example of a game with accessible subscription options, as shown below.
Subscriptions can be purchased weekly at a low price or monthly at a higher cost (but at a slightly discounted rate). This gives players looking to spend less a conversion point that meets their desired spend, while offering deeper spenders an attractive discount.
Another example can be seen in Rise of Kingdoms, which has many different subscription plans catered to the players’ needs. As you can see in the example below, a wide variety of subscriptions last seven days rather than the traditional thirty and can be stacked upon one another.
The Gem subscription is the top seller among these plans; it stretches over 30 days and costs $9.99. Upon purchase, the player receives 2,200 Gems and 650 more per day if they log in daily; this accumulates to 19,500 gems throughout the subscription. For comparison’s sake, if they had spent $49.99 in the Gem Store instead, they would only get 12,000 Gems. The Gem supply offers players the excellent value of $30 less and 8,500 more Gems. This clever innovation is reflected in Rise of Kingdom’s global revenue of $474M.
Breadth Over Depth
There are two main differences between IAPs and subscriptions.
Firstly, IAPs focus on ownership and permanence, while subscriptions focus on exclusive experiences and content. IAPs add depth to a product through collection and progression, while subscriptions act on what is already existent — new challenges, reduced friction points, and social status.
Secondly, IAPs often provide direct and instant benefits with a purchase. In contrast, the most effective subscriptions have players earn their benefits with time, progression, and skill. Subscribing acts as an all-access pass to exclusive awards.
Tying subscriptions to player action develops an engagement loop that incentives players to boost session times and offers a reason to return daily. Furthermore, this structured consumption diffuses feelings of buyer’s remorse as the benefits of the purchase are consumed over time rather than all at once, elongating the value gained.
Tiers & Engagement
Linking certain subscriber benefits to the player agency (i.e., progression, loyalty, time, and skill) is a great way to boost engagement and extend the value of a subscription, rewarding loyalty not only to the game but to the purchase.
Fortnite offers another great example here with their Crew Pass exclusives. Each month, subscribers will gain an exclusive cosmetic item that, over time, forms a complete set. To complete the collection, the player must remain subscribed for consecutive months, else miss out on the gratification of completion. This loss aversion is especially powerful for cosmetically driven games like Fortnite, where social status and collection are key motivations for their audience.
Endowment Affect
Leverage the endowment effect through VIP trials — consumables that showcase the advantages of the subscription for a limited time before taking it away. This can be further reinforced by allowing trials to be gifted. Players gifted an item from another player are twice as likely to spend real money in the game. Not only does it increase the likelihood of spending but the amount spent too. That said, trials don’t have to be items; they can instead be interstitial prompts similar to interstitial ads, as seen in the example below:
Exclusivity & Social Status
Status-focused benefits are best used primarily in PVP (Player vs. Player) games due to the focus on player-to-player exposure and thus pressure to improve and present yourself. Many games, such as Fortnite and Knife Hit mentioned earlier, feature exclusive items within their VIP subscription, thus giving subscribers bragging rights over their non-subscribed peers.
Roblox is another example that subscribes to this design and offers subscribers access to an exclusive feature – P2P trading.
Conclusion
Subscriptions are a clear example of how the games industry has learned from other media — they are instrumental to the rise of video and music streaming — but they also make simple economic sense when looking at the effects on churn, ARPU, and LTV. Over time the games industry has come to understand the value of incorporating subscriptions into their business models rather than just throwing them out as an expectation or additional in-app purchase.
The strength of subscriptions throughout the economy suggests it can become as important or even more critical than IAPs for social games. While advertisements are a viable revenue source for casino, hypercasual, and social games, subscriptions may have a more significant impact in the long-run.
Although not suited for some products or genres, VIP subscriptions are an excellent low-cost monetization feature with high potential that is worth considering. There’s still a lot of design space within the feature, and it’ll be interesting to see how it grows and evolves in the coming years.
A big thanks to Becky Matthew for writing this essay. If Naavik can be of help as you build or fund games, please reach out.
