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Video: How Chinese browser games get players to open their wallets Exclusive

[Note: To access chapter selection, click the fullscreen button or check out the video on the GDC Vault website]
October 3, 2012 | By Staff

October 3, 2012 | By Staff
More: Social/Online, Business/Marketing, Exclusive, Video

While free-to-play games have been a major trend in the West for quite some time, no market relies on the microtransaction-based model quite like Asia's. Free-to-play games originally emerged from this territory, and Asian game studios have learned quite a bit about how to maximize the success of their online games.

At this year's GDC Europe, Reality Squared Games CEO (and ex-gold farmer) Jared Psigoda took a moment to share what he's learned about Chinese free-to-play browser game design. While the design practices in China are quite different from those in the West, one thing's for sure: Chinese browser games can certainly generate a lot of money.

Psigoda explained that these titles have become especially adept at attracting "whales" -- or highly-engaged players that sometimes spend upwards of $100,000 on a single game. This small subset of players can easily make up a large portion of a game's revenue, and attracting them has become a major part of Chinese game design.

And how do browser games hook these whales? They make it easy for them to keep spending money. That is, they start players off with low cost, accessible microtransactions, and slowly ease users into larger, more significant investments.

"In Chinese browser games specifically, the [cost of virtual goods] increases with your level, or how powerful your character is," and the price of new items will increase exponentially as players progress through the game, Psigoda said.

"A lot of Chinese games have the problem where players will get to a certain level…and then [the cost of virtual items] will skyrocket, and it ends up killing the game," he added. But the ones that offer a smooth pricing curve often become the ones that attract players willing to spend loads of money on virtual goods.

"I'm a gamer myself and it's hard for me to justify purchases like that, but you see it all the time in China. This is not rare."

Throughout his presentation, Psigoda offered even more insight into how the free-to-play market succeeds -- and sometimes fails -- in China, and provided a number of tips to help developers learn from the region's triumphs and mistakes. You can check out his whole talk for yourself by watching the above video, courtesy of the GDC Vault.

About the GDC Vault

In addition to this presentation, the GDC Vault offers numerous other free videos, audio recordings, and slides from many of the recent GDC events, and the service offers even more members-only content for GDC Vault subscribers. Those who purchased All Access passes to events like GDC and GDC Europe already have full access to GDC Vault, and interested parties can apply for the individual subscription Beta via a GDC Vault inquiry form.

Group subscriptions are also available: game-related schools and development studios who sign up for GDC Vault Studio Subscriptions can receive access for their entire office or company. More information on this option is available via an online demonstration, and interested parties can send an email to Gillian Crowley. In addition, current subscribers with access issues can contact GDC Vault admins.

Be sure to keep an eye on GDC Vault for even more new content, as GDC organizers will also archive videos, audio, and slides from upcoming 2012 events like GDC Online and GDC China. To stay abreast of all the latest updates to GDC Vault, be sure to check out the news feed on the official GDC website, or subscribe to updates via Twitter, Facebook, or RSS.

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Ramin Shokrizade
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It makes perfect sense that Jared used to be a gold farmer. I was one of the early successful gold farmers and that early group really got a sense of what players were willing to pay for early on.

Despite the 97% failure rate of products in China, the one thing they do really well there is that they build their games around their monetization design, and the game design is secondary. Every game there has a monetization tech working on it, and in some cases they have one for every *server*. Here in the West if we consider monetization at all it usually means applying analytics to games after they are designed and we totally lose the opportunity to design our games to monetize. If the West could take monetization design more seriously, or if the quality of game design in the East could improve, some truly amazing (and profitable) games could be the result.

If you want to know why a company would need to open up 224 servers per week, this is explained in detail in my "How 'Pay to Win' Works" paper:
The information for this paper was mostly gathered from playing Chinese browser games, some of which I was the top player on all servers while researching (for those that think I only understand Western markets). This was on a $20 per server budget.

As Jared points out, games in China are so cheap, and so quickly copied, that the emphasis is on very fast ROI. There is no emphasis on player retention and thus their use of monetization models that reduce product lifespan are not a problem. Companies in the West that use similar techniques and then lose most of their players in the first month should not be surprised.

The idea of guild levels is great and I have been trying to pitch this to a lot of Western companies, but the idea seems very alien to players who have not played Chinese games. The monetization potential here is massive.

I think the best take-away I can suggest on this excellent presentation is that Western game design is more advanced, Easter monetization design is more advanced, and the most successful products will be future hybridized products. Trying to take the game design from one continent and the monetization design from another continent and just slapping them together will not work. Both need to be modified for effective hybridization.

Cordero W
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Or we can try to not kill game design using monetization at all. There's one reason why arcades died once consoles became common: no one wants to keep placing money into a game to continue to be able to play it.

Ramin Shokrizade
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@Cordero: Having been an employee of Nexon in 2001 when they started the modern microtransaction movement, we ended up parting ways because I saw their approach as weakening the gameplay experience. I spent the seven years from 2005 to 2012 creating monetization models that actually *improve* gameplay. I know that sounds improbable, but I think monetization, if done well, can actually improve the enjoyment and longevity of a product. There are important and useful lessons to be learned from what is happening in China in our industry, but you can't just take what they are doing and bring it here unaltered and expect it to work.

Nooh Ha
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This is a really fascinating insight into the Chinese MMOG market.

Kevin Bender
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A lot of these tactics seem... unethical. My personal favorite is "AFK Mode" where you pay them, by the hour, to not play their game. Oh and with the infinite leveling, if you forget to turn it off, you could be paying them forever. Why would you give your credit card information to these kinds of people?

Dave Ingram
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This is very insightful and interesting, and now I understand why I was always under-powered in Conquer Online back in the day. This also gave me insight into the the amount of socialist influence in U.S. culture today, which is reinforced by some of the comments here.

Andrew Mai
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Very interesting article as well as the perspectives given by comments. As a Game Publisher myself I must agree with various opinions that games are exploited. As long as hard dollars get invested, thousands of dollars spent creating games and lots of money goes into server hardware and whatever comes with running a browser or online game monetization is not the worst that can happen.
As the basic article was about "whales" I do have a slight disagreement by means of preventing people (like gambling) from spending too much on their addiction. But I guess that "self-prevention" in our industry is still far behind as our direct daughter industry gambling.
@Ramin: I would have mentioned Zynga as this is the classic model of microtransactions and its working for FBs sake, Zynga without FB and the masses of users would not be viable on the long run. Actually they have found the ultimate cash cow... and FB is definately partner in crime.
@some earlier commentors: -> Dave: there is some point in your comments, but as all industries the gaming industry is a "pretty young" industry that was enabled while the PC rose over the past 15 years and got a foot in the door with the rise of the internet some 10 years back. Don't expect things to be "self regulated". It will take a long time until local legislation, or individual companies will find a non intrusive way into peoples PC.
As someone mentioned the "housing" bubble... Gaming is a bubble as well and under the line and the end.. only the best will succeed.
However: China has a great potential and I had the chance to talk to some Chinese publishers some days back and must say ... they got great ideas and potentials for upcoming games ... lots of European and US based companies will get wet feet!

Stephen Chow
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Totally agree all facts ...Chinese market is much more similar to JP and KR. Launch with massive and monetization events to drive 7 day ARPPU. Very low conversation rate but high ARPPU, poor retention. Game life cycle usually <=30 days.

The reason why China is popular for web game is because the entrance is very low, but the user exp is very poor and bad. I believe the market will shift quickly to mobile such as Androa and iOS for next 2 year. But developer has to deal with jail break and farmer.

Another example, If you look at JP market mobile card battle game, every month release 100 games on featured or smart phone, it's very similar launch strategy like rolling server and event drive monetization.

This strategy might work in western. Why? Just look at top 5 ranking mobile games in US market: Rage of Bahamut. A total JP team dev and operating a game in western market. The only difference between JP,KR with China is the K-factor, viral and social in JP and KR is much stronger because the CPI is twice than US in JP and KR.