WHYGAME YOUR COMMERCE NEXT RELEASE ESSENTIALS NEEDS AN IN-GAME STORE

WHY YOU SHOULD ADD AN IN-GAME STORE TO YOUR PUBLISHED OR UPCOMING

The current landscape makes it challenging for both developers and publishers to thrive. Not only have recent development and production costs gone through the proverbial roof, but there is also more competition in the marketplace now than ever before. Ironically, both conditions are a result of gamers' increased quality expectations and all the perpetual tech updates for PCs, consoles, and mobile devices.

When a developer or publisher launches a video game into the wild, they're really just taking a leap of faith. Will they become one of the successful few, or will their work disappear into the sea of new releases?

Armed with the right game commerce strategy, any studio has the potential to transform a passion project into quite a successful business venture, as well. A cornerstone of such a successful strategy is the in-game store. This is because integrating an in-game economy provides added value to the players and generates additional revenue for the studio.

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WHAT IS AN IN-GAME STORE?

An in-game store is just what it sounds like: a marketplace within a game where developers and publishers can sell digital items to players. Digital items can be anything, such as:

• cosmetic only, like character skins, animated emotes, or pets

• unique items, only obtainable through the store

• virtual currencies, used only inside the game

• XP boosters

• battle passes, or season passes

• entirely new content, such as DLC and expansions

• bundles, which can include a mix of currencies and items

• subscriptions

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This in-game economy creates a direct relationship between the company behind the game and its players, allowing both casual gamers and fans to support the business. It's also a great way for developers and publishers to boost engagement with their more dedicated players.

More importantly, an in-game store is a means for developers to keep making money long after launch. Especially for games as a service (GaaS), audiences expect titles to be supported for a long time, which can be a daunting task. If a specific game isn’t generating enough revenue to support its maintenance or further development, it naturally becomes difficult to justify its continuation.

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BUILD FOR YOUR BUSINESS MODEL

There are a variety of different ways to make money from games these days. Generally speaking, these are divided into two kinds of business models: premium and free-to-play. Below we explore each of these to show how an in-game store can benefit either model.

Premium

Simply put, this is when users pay to access the game before they start playing. Most commonly, this involves a single payment up front for content, either buying an experience outright as a physical copy or downloading it from a digital platform.

Typically, this means that consumers can play the purchased game with no further barriers. When they part with their money, they know that they will be able to play for a certain period of time or enjoy all the available content, and not have to worry about spending any more cash to do so. This is arguably the most traditional way of paying for video games, and as a result, consumers feel a certain level of comfort with it.

Other genres like MMOs often employ a subscription business model whereby players spend a certain amount of real-world currency every month or year to play a game. This gives users a degree of flexibility. If they know they won’t have time to log into the game for a while then they can stop paying, and won’t be able to access the content until they reactivate their subscription. The subscription model is gaining more and more momentum in the video game space, as people are increasingly more comfortable with it thanks to on-demand streaming services like Netflix and Spotify.

In this business model, developers and publishers can use in-game stores to sell and expansions, such as new areas to explore in the game or new missions to undertake. They can also sell cosmetic items and season passes, which grant access to packs of content.

It’s worth noting that price is important here. Unlike their free-to-play counterparts, consumers have already paid money to access the game.

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If you charge too much in comparison to the perceived content value, it’s very easy for the audience to think you are greedy and simply just trying to make easy money at their expense.

Free-to-Play

In contrast to premium titles, free-to-play (F2P) games require no upfront payment to access the game. Historically, this business model was most commonly employed by mobile games, but it’s since been used by games like , , and , all of which boast huge audiences. Other developers choose to support their games with ads, forcing users to watch or interact with marketing materials at regular intervals. Players can usually opt to purchase access to a paid tier that removes the ads.

Freemium games, a common type of F2P games, usually offer a majority of their content with no purchase expected. They tend to keep premium features behind a paywall, or require players to spend a lot of time actually playing the game to unlock content, like characters, maps or cosmetics.

In-game stores are one way that free-to-play titles make their money. If you have a big enough audience, you only need a small portion of your customers to spend money to keep your business afloat. In the past, companies have observed that only about 5% of users spend real-world money in-game. Yet, that will likely be the source of your most significant revenue stream. A studio's most generous individual financial supporters, often referred to as "whales," typically contribute as much as $100 per month on a single game.

Unlike paid-for experiences, with F2P games you can certainly charge a bit more for virtual goods. You can choose to offer cosmetic items, access to additional content — like Hearthstone’s card expansions — as well as random in-game goodies. For singleplayer games, like Candy Crush, you can sell items that give users an advantage or allow them to progress further. However, if your game is multiplayer, like Fortnite, make sure that there are no items for sale that give one player an unfair advantage over everyone else. That will make the overall experience unenjoyable and you will likely face understandable backlash from your player base.

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That being said, the digital items you have for sale should act as an advert for your in-game store — a visual signal to other players that there's additional content available for purchase if they're interested. Cosmetics are a great way to accomplish that, as they can be very eye-catching and tempting for players who want a different in-game "look" or simply seek a quick, easy way to financially support the game.

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DOING FREE-TO-PLAY RIGHT

The F2P business model is one of the most contentious in the games industry right now. Games that operate in that manner are inherently risky. Unlike premium titles, the developers and publishers behind F2P games don’t receive money upfront when people decide to play their game. They have to wait, often quite a while, before their players begin spending money to support their venture.

As a result, there are two different kinds of free-to-play commerce methods. The most common means of implementing free-to-play in a game is known as “pay-to-win.” That method often forces players to spend money in a game by locking many stages of content behind paywalls. Alternatively, pay-to-win games reward players that make purchases with significant in-game advantages, like better weapons, over those that don't.

Pay-to-win games generally work quickly to squeeze player wallets as hard as possible, so they can extract as much money as they can, while they can. The game studio or publisher might make decent revenue from their players during this time, but the net result is often a customer who feels unsatisfied and taken advantage of. Many or in-app purchases in these kinds of experiences come with a very low-cost barrier. That means some players – in the elation of the moment – will buy a lot of those cheap(er) items in a row, only later realizing that they actually spent a lot more money than they intended to.

There are many, many examples of how not to implement free-to-play in your game. Those are usually created by companies who are just in it to make a “quick buck.” Our recommendation? Don’t be those companies.

A more player-centered design philosophy is not to make users feel forced into spending money in a F2P game. In contrast to pay-to-win titles, a player-centered approach allows developers to create something that their players can enjoy, no matter if they've paid or not. Although it may seem counter-intuitive, that approach results in a more sustainable experience, where the players aren’t frustrated into spending money and ultimately end up leaving the game altogether. Gamers can often enjoy premium content for free simply by playing for long enough. Payment options should allow players to progress at a faster pace, but shouldn’t give them anything that free users won’t get eventually.

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These games shouldn’t feature paywalls where people feel they have to spend money; this only serves to frustrate users. Developers and publishers need to realize that a F2P game is a journey. It’s about making sure the players feel valued and that you are creating an experience that they want to return to. They want to feel positively about your game. It isn’t about squeezing as much money as quickly as possible out of a customer. It’s about providing your players with a game that they enjoy and that they want to spend money on. That in turn will draw more players to your game and more loyal fans.

Remember, your players won’t have paid anything to access the experience in the first place. If they’re truly having a good time, then they’ll be more than happy to spend a bit of money to support your hard work and to add to their in-game experience.

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DO I NEED AN STORE?

While the scope and scale of in-game store success will depend on several factors — like what kind of game you've developed and how many players you have — in broad terms, you can count on earning revenue from your in-game store.

The amount of money generated in this manner has grown significantly since its inception. In 2012, SuperData estimated that virtual goods and currencies generated about $15 billion in revenue around the world. As of 2019, this figure was estimated to be closer to $109 billion.

Free-to-play spending, alone, accounted for 80% of all digital games revenue in 2019. That money came from selling virtual goods, currencies, and anything else capable of being stocked within an in-game store. That's a big deal.

Regardless of what kind of game you create (free-to-play, premium, or another format) you can harness the power of the growing video game economy with your own in-game store. The F2P figures are particularly striking, however, since they signify an undeniable trend: in-game stores work.

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IMPLEMENTING AN IN-GAME STORE

If you want to have an in-game store in your project, then it becomes important to think about it very early in your development process, maybe even at the concept stage.

An in-game store isn’t simply a place for players to spend money on in-game content. It will have an impact on almost every single aspect of the project’s design. The largest aspect that an in-game store affects is the game's overall economy, as you'll need to appropriately value in-game items and determine how the commerce will work.

The later you implement your in-game marketplace, the more challenging it will be. Introducing a storefront into a game that you have already released is likely incredibly difficult, but not impossible. Keep in mind that you’ll probably need to completely revise your game’s economy. That may potentially cause upheaval in the player base, and possibly even annoy your existing customers in the process.

It's important that you communicate with, and involve, your current players in the development process as much as you can. By giving them a forum to express their concerns, you may also glean their desires and be able to structure an in-game store with content you know they will want to purchase.

The number one thing you need to remember about your in-game store is that it needs to be somewhere players go on a regular basis. It needs to be conspicuous, appealing, and easy to access, preferably in a place like the main screen or menu of your game. The interface of the actual in-game store should also have an easy-to-use layout, so players can quickly understand what they're looking at and how to find exactly what they need.

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It's also worth noting that a lot of time and effort will need to be applied not only in the making of an in-game store but also in maintaining it. The length of time to create a storefront for your project can vary greatly depending on the specific needs of what you want to build. You’re likely to employ at least two programmers at the tune of $10,000 per month just to make the initial platform, not to mention the subsequent maintenance needs. Depending on the scope of what you offer your players — such as, the ability to trade with each other — you'll be looking at a huge investment of time and money.

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WHO USES IN-GAME STORES?

Think about why your audience will want to spend real-world money in your game. Depending on the experience you are creating, a variety of reasons can exist.

For one, they might be interested in buying items that allow them to progress faster through the gameplay, maybe because they don’t have much free time to play and don’t want to grind for content. In other instances, it might be that they want to visually express themselves or stand out from the crowd in a game with cosmetic items or emotes. Some F2P games with esports elements, like Dota 2, even sell items with the proceeds going to prize pools for huge tournaments, like The International. Players can receive bonuses for spending money and become invested in the competition.

You also need to spend time thinking about your existing and future customers. Every in-game store shopper is different, but with enough transactions under your belt, you'll be able to identify segments with similar behaviours. Segmenting these shoppers into categories will not only help you target the right users with marketing campaigns, but will also help you create gameplay and virtual goods to keep them coming back for more.

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But segmentation isn't just about looking for trends in your in-game store's shopping and sales data, it's about knowing what to look for in the first place. Consider the following when building segmentation cohorts, personas, or other groups useful to your game's strategies. It comes down to who, when, how and what.

Demographics Who is spending money in your in-game store — a given shopper's age, gender, and location, for example.

Timing When your shoppers are spending money — the date and time, plus how long it took from the time they started shopping to the time they made their final purchase. Consider comparing this information to your game's popularity at the time of purchase for additional insights and finding potential trends.

Paying capacity One of the most important factors in modern video game market segmentation is how much, and how frequently, your players are spending money in your in-game store

Shopping style When you’re examining who is shopping, when they're shopping, and how much they're spending, it's also important to look at what is being purchased. Popular items, categories of items, and prices of items can help identify trends. Goods with universal appeal across your customer segments are worth studying as much as goods that seem to only appeal to a single segment or another.

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MEET: XSOLLA IN-GAME STORE

Building your own in-game store can be a long and frustrating process without the right tools and back-end support. If you want to reap the rewards of having this kind of a platform, then you might be interested in Xsolla In-Game Store. It's our all-in-one solution to create and house the ultimate in-game economy. A fully-customizable, easy-to-integrate experience with powerful player inventory support and unlimited, secure data storage for just a 5%* revenue share per transaction, with no upfront costs.

Xsolla In-Game Store does a lot of the heavy lifting when it comes to your project’s commerce needs, and gives you the opportunity to spend more time doing what you love: developing and creating content for your players.

To start, create your free Publisher account. Learn more about the Xsolla In-Game Store or contact an expert from our team directly to find out how best to integrate an in-game store for your project. We’re here to help at any stage of your game commerce journey!

*Not including external payment fees (ex. credit card fees).

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