DOCSLIB.ORG

Through the Online Revenue Maze

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Through the Online Revenue Maze Through the Online Revenue Maze 8 Digital Business Models Decoded By Contents Preface: Know Your Options . 3 Glossary . 4 Popular Digital Business Models . 5 Subscription: Committed Customers . 6 Subscription Submodels: Three Flavors . 7 Frequent Subscriptions . 7 Infrequent Subscriptions . 7 Freemium . 7 Microtransactions: Pull in the Players . 8 Start Small but Think Big . 8 Microtransaction Metrics . 8 The High Transaction Costs of Microtransactions . 8 Microtransaction Submodels: Go Virtual . 9 Advertising and Offer-Based: Scrambling for Indirect Revenue . 10 Direct or Indirect? . 10 Indirect Metrics . 10 Hybrid: Mix and Match to Boost Revenue . 11 Hybrid Metrics . 11 Choosing the Right Model . 12 Attracting Customers with Pricing, Packaging, and Promotions . 14 Top Subscription Promos . 14 Top Microtransaction Promos . 14 Best-Practice Tips . 15 Conclusion: Match Billing to Your Model . 16 2 Preface: Know Your Options Spending on digital goods, such as games, apps, and entertainment content, exceeded $57 billion in 2013 .1 And that doesn’t even account for spending on digital services . Subscription, freemium, microtransaction, and more—digital businesses must choose from an array of business models . The What does Vindicia right model puts you on the path to success, and the wrong model costs you revenue and limits your know about digital offering’s appeal to key customers . business models? Insight from the Get an A+ in Digital Monetization Experts Business Models 101 Acquiring digital goods and services customers Read on for an overview of the most common requires effort and investment . You don’t want types of online business models, along with 143 million customers to buy once and move on . Instead, the advantages and the key metrics associated credit cards processed you want recurring revenue, whether that’s in with each . A glossary of key terms gets things the form of frequent purchases or subscriptions . started . We also shed light on other factors The recipe for success with digital goods is that affect the selection of business models, simple . Acquire customers and keep them, including pricing, packaging, and promotions . ideally for years . Then, we share insights about how the way you bill customers can affect revenue today—and As the leader in subscription and recurring long into the future . revenue billing for digital goods, Vindicia More than $6 billion in understands how important it is to choose the subscription and recurring right business model . Having processed more revenue payments processed than 143 million credit card transactions and $6 billion in payments, we’ve learned a few things about subscription and recurring revenue business models . The Vindicia team has distilled some of the essential details about different business models into this e-book . 1 IHS, “Global Digital Content Spend Rockets to $57 Billion in 2013,” February 2014 3 Glossary General Terms Terms Associated with Metrics Account Updater: A service offered by best- Average Customer Lifetime Value (ACLV): Cost Per Thousand (CPM): The cost for in-class payment processors that provides The product of the customer duration and displaying an advertisement to 1,000 users—a updated customer account information from the the average recurring charge . This is a key yardstick for determining advertising prices . card networks . metric for subscription business models . A Related metrics include Cost Per Click (CPC), $15 monthly charge and an average customer Cost Per Sale (CPS), Cost Per Lead (CPL), and Free to Play (F2P): A gaming-industry term lifetime of 20 months result in an ACLV of $300 . ACPM (App CPM) .2 that describes an experience users can have for free, with the option of later purchasing virtual Average Revenue Per Paying User (ARPPU): Monthly Recurring Revenue (MRR): The goods or currencies that enhance game play or The average revenue from users who make amount of monthly revenue that is highly social interactions . purchases . likely to continue in the future, based on subscription contracts and historical customer Freemium: A free service with the option Average Revenue Per User (ARPU): The retention rates . to upgrade to a paid, premium version with average revenue from active users of a product additional capabilities or convenience . or service . Microtransaction: A payment of a small Cost Per Acquisition (CPA): The aggregate amount of money, also called a micropayment . acquisition cost per user, regardless of the acquisition channel (advertising, promotions, Real Money Trade (RMT): A mechanism by or affiliates) . which users can convert virtual currencies to real money . Virtual Currency: A type of money used in place of physical currency (real money) . Virtual Goods: An item that exists digitally, often only relevant within a game or specific online context . Its value can be functional, social, or emotional . 2 To learn about these metrics and other digital performance metrics, see “Metrics for a Brave New Whirled” by Daniel James, CEO of Three Ring . 4 Popular Digital Business Models The following sections explore the most popular digital business models in detail . This table highlights the major advantages, disadvantages, and key metrics of a few models and associated submodels: Model or Submodel Major Advantages Major Disadvantages Key Metrics Frequent subscriptions Predictable revenue High cost barrier ACLV and MRR Infrequent subscriptions Long-term and predictable revenue Lower retention with higher cost ACLV and MRR barrier Freemium No price restrictions and no need Challenging pricing strategy since Percentage of paying for free trials the majority of users do not pay users, ARPU, and ARPPU Microtransactions Low cost barrier for Low margins since the Percentage of paying purchases majority of users do not pay and users, ARPU, and high payment costs ARPPU Virtual goods and virtual High acquisition rates and low cost Virtual economy management since Percentage of paying currencies barriers the majority of users do not pay users, ARPU, and ARPPU Dual currencies High acquisition rates, Potential legal issues with RMT and Percentage of paying reduced conversion friction low percentage of paying users users, ARPU, and ARPPU Advertising Mass adoption with Dependency on market CPM and CPC users assuming no costs rate for advertising and no direct revenue Offer-based Mass adoption with users Dependency on market rate for ACPM, CPS, and CPL assuming no costs advertising and no direct revenue 5 Subscription: Committed Customers Subscriptions are playing an increasingly important role in our lives as more and more companies embrace online delivery . Offers range from PC protection and backup services to streaming media and beyond; most digital goods and services can be procured—and sold—on a subscription basis . Subscription Do’s and Don’ts With subscription, the provider periodically Why Subscription? charges customers for a product or service Subscription models offer four concrete according to a predefined cost and schedule . advantages: The two major variations in the terms are: • A predictable, regular revenue stream • Duration between charges: The billing • Higher ACLV than that of nonrecurring frequency affects how digital businesses DO business models retain and acquire customers . For instance, Ensure that the customer terms and • Greater customer inertia, as compared to some companies charge monthly and conditions clearly explain the purchase other recurring revenue models others on a quarterly or annual basis . details and options for cancellation . • Potential for upselling and cross-selling • Type of customer access: This factor Include contact information for other products or services affects pricing more directly . For example, customer support . digital businesses that adopt a freemium Subscription models bring a couple of model must balance the features and value key challenges, too . First, you must store between the free and paid versions . your customers’ credit-card information in compliance with the Payment Card Industry Subscription Metrics Data Security Standard (PCI DSS) . Second, fraud rates can be higher than with other DON’T All subscription models share the same key models, since many fraudsters leverage free trial Provide payment options that metrics, such as ACLV and MRR . To compute offers to verify credit card information . require customers to take additional them, you’ll need to track the average customer steps to enable recurring billing . duration, average ticket price, and, depending Multiple options can drag down on the nuances of your model, the percentages conversion rates . of trial and free-to-premium internal acquisition and trial conversions . 6 Subscription Submodels: Three Flavors Three submodels apply to the subscription model: frequent subscriptions, infrequent subscriptions, and freemium subscriptions . Vindicia Select: The delayed detection of and reaction to customer Secret to High Retention Frequent Subscriptions dissatisfaction . Finally, infrequent subscriptions yield less data for trend analysis . Every month, companies like yours can Frequent subscriptions charge customers lose as much as 15% of subscribers weekly, monthly, or at least once quarterly . It’s a to failed payment transactions—unless widely accepted submodel for online sites that Freemium they use Vindicia Select . Thanks to offer dating, news, information, music, gaming, patent-pending technology, Vindicia video, and both digital and physical services . Freemium offers comprise a free “membership”
Load more

Recommended publications
  • An Exploration of Trends in Loot Boxes, Pay to Win, and Cosmetic
    The changing face of desktop video game monetisation: An exploration of trends in loot boxes, pay to win, and cosmetic microtransactions in the most- played Steam games of 2010- 2019 David Zendle*, Rachel Meyer, Nick Ballou Corresponding author: [email protected] Abstract It is now common practice for video game companies to not just sell copies of games themselves, but to also sell in-game bonuses or items for a small real-world fee. These purchases may be purely aesthetic (cosmetic microtransactions); confer in-game advantages (pay to win microtransactions), or contain randomised contents of uncertain value (loot boxes). The growth of microtransactions has attracted substantial interest from both gamers, academics, and policymakers. However, it is not clear either how prevalent these features are in desktop games, or when any growth in prevalence occurred. In order to address this, we analysed the play history of the 463 most-played Steam desktop games from 2010 to 2019. Results of exploratory joinpoint analyses suggested that cosmetic microtransactions and loot boxes experienced rapid growth during 2012-2014, leading to high levels of prevalence by April 2019: 71.28% of the sample played games with loot boxes at this point, and 85.89% played games with cosmetic microtransactions. By contrast, pay to win microtransactions did not appear to experience similar growth in desktop games during the period, rising gradually to a prevalence of 17.38% by November 2015, at which point growth decelerated significantly (p<0.001) to the point where it was not significantly different from zero (p=0.32). Introduction The way that the video game industry makes money has undergone important changes in recent decades.
    [Show full text]
  • An Educator's Guide to Gaming
    EDUCATOR RESOURCE VIDEO GAME TERMS GLOSSARY An Educator’s Guide to Gaming Gambling in games has a language all its own. Here are some words you need to know. 1-up Power-Up An object that gives the player an extra life (or try) in games Objects that instantly benefit or add extra abilities to where the player has a limited number of chances to complete the game character, usually as a temporary effect. a game, a task, or level. 1-ups can be acheived by completing Persistent power-ups are called perks. Power-Ups levels or found in purchased loot boxes. can be acheived by completing levels or found in purchased loot boxes. 100% A game is 100% complete once a player unlocks all available Season content and completes the game. The player must collect 1. The full set of downloadable content that is every in-game item, upgrade, and complete every mission to planned to be added to a video game, which can get 100%. Many players are so determined to get 100%, that be entirely purchased with a season pass. they will make mulitiple in-game purchases for upgrades to 2. A finite period of time in massive multiplayer achieve this goal. online games in which new content, such as themes, rules, and modes, becomes available – Downloadable Content (DLC) sometimes replacing prior time-limited content. Additional content for a video game that is acquired through a Notable games that use this “season” system digital delivery system. DLCs can be purchased in video game include Star Wars: Battlefront II (2017) and console stores.
    [Show full text]
  • The Hidden Cost of Microtransactions: Buying In-Game Advantages in Online Games Decreases a Player’S Status
    International Journal of Internet Science 2015, 10 (1), 20-36 ISSN 1662-5544 IJIS.NET The Hidden Cost of Microtransactions: Buying In-Game Advantages in Online Games Decreases a Player’s Status Ellen R. K. Evers1, Niels van de Ven2, Dorus Weeda2 1UC Berkeley, USA; 2Tilburg University, Netherlands Abstract: With the advent of the internet, computer games have undergone substantial changes. Many games now contain some form of social interaction with other players. Furthermore, many games offer players the opportunity to buy upgrades using microtransactions. Based on social psychological theories on social comparisons, deservedness, and envy, we tested whether the use of these microtransactions would affect how players perceive another player using them. In one survey and two experimental scenario-studies with active gamers as participants (total N = 532), we found evidence supporting the idea that a player using microtransactions will be judged more negatively. More specifically, we find that gamers dislike it more when microtransactions allow the buying of functional benefits (that provide an in-game advantage) than when they are merely ornamental, and players who buy these functional benefits are respected less. In Studies 2 and 3 we found that players who use microtransactions are perceived as having a lower skill and status. This happens both when the microtransaction-using player is an enemy who bought a competitive advantage, as well as in games where one cooperates with the microtransaction-using player and the advantage is thus effectively shared. The findings have important practical implications for game design. They indicate how microtransactions can be implemented so that they have fewer negative social consequences, demonstrate the value of social psychological theories in predicting online behavior, and provide several avenues for further theoretical exploration.
    [Show full text]
  • Cd Projekt Capital Group Activities Between 1 January and 30 June 2018 2
    MANAGEMENT BOARD REPORT ON CD PROJEKT CAPITAL GROUP ACTIVITIES BETWEEN 1 JANUARY AND 30 JUNE 2018 2 Disclaimers This English language translation has been prepared solely for the convenience of English speaking readers. Despite all the efforts devoted to this translation, certain discrepancies, omissions or approximations may exist. In case of any differences between the Polish and the English versions, the Polish version shall prevail. CD PROJEKT, its representatives and employ- ees decline all responsibility in this regard. Management Board report on CD PROJEKT Capital Group activities for the period between 1 January and 30 June 2018 (all figures quoted in PLN thousands unless stated otherwise) 3 Table of contents 9 Brief description of the CD PROJEKT Capital Group 10 Activity profile 20 Growth prospects of the CD PROJEKT Capital Group 22 CD PROJEKT S.A. on the capital market 24 CD PROJEKT Capital Group activity profile 25 Organizational structure of the CD PROJEKT Capital Group 27 Disclosure of business segments, products, services, outlets, suppliers and customers 37 Description of external and internal factors affecting the CD PROJEKT Capital Group 39 Disclosure of significant agreements 40 Risk management at the Capital Group 41 Financial results of the CD PROJEKT Group 42 Overview of key economic and financial indicators disclosed in the consolidated and separate financial statement 60 Corporate governance 61 Entity contracted to audit financial statements 61 Shareholders controlling at least 5% of the vote at the General Meeting 62 Agreements which may result in changes in the proportions of shares held by shareholders and bondholders 62 Information regarding the purchase of own shares 63 Company shares held by members of the Management Board and the Supervisory Board 64 Composition of the Management Board of CD PROJEKT S.A.
    [Show full text]
  • Effects of Micro Transactions on Video Games Industry
    Nenad Tomić*1 UDC 004.42:794]:004.738.5:339 Pregledni naučni članak Primljen 08.03.2017. Odobren 19.04.2017. EFFECTS OF MICRO TRANSACTIONS ON VIDEO GAMES INDUSTRY During the twentieth century, the entertainment industry recorded a steady revenue growth. The progress of information and communication technology (ICT) influenced the creation of a new segment in the industry at the beginning of the 80s, known as the video game industry. During the first two decades, the dominant model of earning for video games publishers was sale of a full game, which means that users were obliged to pay in order to play the game (pay-to-play concept). In the past ten years, publishers have developed a new approach, which instead of selling entire game content at once tends to decompose the sale into several smaller transactions. The prices of these supplements are often calculated in the virtual currency that is considered to be the currency of video game, and not in one of convertible currencies, which creates additional confusion. The subject of the paper is to explain the essence of microtransactions as type of electronic payments created in the video games industry and to observe their role in the process of industry transformation. Keywords: microtransactions, freemium, mobile games, pay-to-win, virtual money * Teaching Assistant, University of Kragujevac, Faculty of Economics, [email protected] Vol. 14, № 3, 2017: 239-258 240 Nenad Tomić 1. Introduction The video game industry flourished in the ’80s of XX century, under the influence of the great innovations in iCt. with the change of the computer architecture an increase of processing power was achieved, while the size and price of the computers was reduced.
    [Show full text]
  • Understanding Consumer Experiences of In- App Purchases in Freemium Model Competitive Mobile Games
    Master’s Programme in Marketing Understanding consumer experiences of in- app purchases in freemium model competitive mobile games Giorgi Vakhtangashvili Master’s Thesis Aalto University School of Business 2021 Copyright ©2020 Giorgi Vakhtangashvili Author: Giorgi Vakhtangashvili Title of thesis: Understanding consumer experiences of in-app purchases in freemium model competitive mobile games Programme: Master's Programme in Marketing Major: Marketing Thesis supervisor: Prof. Henri Weijo Date: 30.07.2021 Number of pages: 67 / 57 Language: English Abstract Freemium business model has become a go to monetization method for mobile games. Criticism of in-app purchases in competitive freemium mobile games is a popular agenda in the gaming world. Prior research addresses some of the factors that may cause resentment of in-app purchases but does not cover the effects non- monetary sacrifice and the changing monetization mechanics have on the attitudes towards freemium mobile games’ in-app microtransactions. This study is based on a netnographic research into 15 online forum posts and 1038 comments. The results demonstrate that perceived unfairness of microtransaction prices, perceived unfairness of the amount of non-monetary sacrifice needed to compete/progress in a game without paying for microtransactions and the perceived procedural unfairness of setting monetary price on progressing in a game may lead to resentment of microtransactions in competitive freemium mobile games. The study analyses different circumstances that affect perceived unfairness of prices and non- monetary sacrifices involved with playing freemium mobile games. The findings may be useful in designing microtransactions for freemium competitive mobile games. Keywords Mobile games; Freemium; Price fairness; Microtransactions; In-app purchases; Free-to-play; Pay-to-win.
    [Show full text]
  • Download Article (PDF)
    Advances in Economics, Business and Management Research, volume 160 Proceedings of the International Conference on Business and Management Research (ICBMR 2020) No Such Thing As A Free App: A Taxonomy of Freemium Business Models and User Archetypes Imam Salehudin1,* Frank Alpert2 1 Faculty of Economics and Business Universitas Indonesia 2 University of Queensland Business School *Corresponding author. Email: [email protected] ABSTRACT The Freemium business model is becoming increasingly prominent in the current digital economy. In the mobile game market, total revenue from free to download apps is overtaking those from paid apps. The purpose of this article is to propose a taxonomy that examines and categorizes the various types of Freemium business models. This study uses the systematic, logical partitioning approach to generate a taxonomy of the Freemium business model, identifying advertisement and microtransaction as two primary sources of revenue. The taxonomy also reveals different types of in-app purchases, the most dominant form of Freemium business model in the mobile game market. Further discussion connects the taxonomy to related issues such as user archetypes and user flows. This paper also extends the existing archetypes of Freemium users by adding new categories, namely Remoras and Barnacles, to differentiate free users. Finally, it conceptualizes a novel framework of user flows between the free and the paying state, arguing for a nonlinear flow. These findings should be of interest to academics and policymakers as it provides the foundation for further investigation on the sustainability of the free to download apps. Keywords: Freemium business model, Microtransaction, Monetization strategy, Mobile games, Classification schemes, Logical partitioning.
    [Show full text]
  • Pay to Play: Video Game Monetization Patents and the Doctrine of Moral Utility
    GEORGETOWN LAW TECHNOLOGY REVIEW PAY TO PLAY: VIDEO GAME MONETIZATION PATENTS AND THE DOCTRINE OF MORAL UTILITY Kirk A. Sigmon* CITE AS: 5 GEO. L. TECH. REV. 72 (2021) TABLE OF CONTENTS I. INTRODUCTION ...................................................................................... 72 II. THE GROWING COST OF VIDEO GAMES ................................................. 74 III. CONTROVERSIAL VIDEO GAME PATENTS ON DLC AND MICROTRANSACTIONS ................................................................................... 81 IV. THE CONTROVERSY BEHIND THE PSYCHOLOGY OF DLC AND MICROTRANSACTIONS ................................................................................... 86 V. A BRIEF HISTORY OF PATENTS AND “MORAL UTILITY” ........................ 89 VI. WHY MORAL UTILITY SHOULD NOT BE REVIVED FOR VIDEO GAMES .. 94 VII. CONCLUSION .......................................................................................... 98 I. INTRODUCTION Video games are now more complex and realistic than they ever have been—but making those games is not cheap. Video game development and marketing costs are sky high.1 To help recoup these costs, game developers and publishers have begun inventing increasingly clever ways to encourage users to spend more money on video games—and they are pursuing patents for those inventions. One recently granted patent seeks to drive in-game purchases by making multiplayer matches difficult for a player, encouraging that player to buy an item and, once that item is purchased and used, subtly rewarding the spending by making multiplayer matches easier.2 Another recently granted patent targets players more likely to spend money in-game by presenting them with exclusive spending opportunities, maximizing value * Shareholder, Banner Witcoff. Thanks to Ross A. Dannenberg, Scott M. Kelly, and Carlos Goldie for their invaluable input and assistance with this Article. 1 See infra Part II. 2 See U.S. Patent No. 9,789,406 (filed Oct. 17, 2017) [hereinafter Marr].
    [Show full text]
  • Economic Model of Microtransactions in Video Games
    View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Bilingual Publishing Co. (BPC): E-Journals Journal of Economic Science Research | Volume 01 | Issue 01 | 2018 Journal of Economic Science Research http://ojs.bilpublishing.com/index.php/jesr REVIEW Economic Model of Microtransactions in Video Games Nenad Zoran Tomić* Faculty of Economics - Univesity of Kragujevac, Serbia ARTICLE INFO ABSTRACT Article history: Microtransactions denote a payment made for purchase of mobile phone application or addi- Received: 29 December 2018 tional content in video games. The basic revenue principle for publisher was to sell the entire Accepted: 2 January 2019 content at once, with the buyer having to pay the game as a whole. Trends from mobile ap- Published: 4 January 2019 plications and mobile games market have slowly transferred to PC games and console video games. About one half of total revenue of big video games publishers comes from micro- Keywords: transactions. The topics of this paper are the economic effects of microtransactions on video Microtransactions game industry business model. The scope of microtransactions and different implementing Freemium games procedures will be discused in paper. The goal is to determine the change of the position of all Pay-to-win stakeholders involved in the process of creating and publishing video games. Mobile games Video games 1. Introduction Due to the high cost of equipment and unavailability of professional staff, the number of companies on the supply fter initial success, the video game industry side was initially very small. With increasing demand, has undergone a great expansion in the last two more and more development studios and publishers have decades of the 20th century.
    [Show full text]
  • Do Microtransactions Have Receipts
    Do Microtransactions Have Receipts Bohemian Paige redecorate flatulently, he glancings his diastrophism very marvellously. Stringy and dolorous?scabbardless Willi Matteo hug her daunts substantives her falsifiers unco, outstare she rematches hypothetically it ungracefully. or cellulated see, is Nickolas Diatribes on winning games have google play stores saw a fee to do. System for some do microtransactions have receipts for selection of state that do have been set of instructions or evolving interpretations of maintaining an information. Mr Mizzi offered his resume for the recommendation that games sold in Australia should be labelled if that include ingame purchases. See why do microtransactions applied immediately when user may be considerate of receipt. Path of allowing kids play or do microtransactions have receipts play stores saw a master of genshin impact our businesses online or do receipts play stores saw in? If you can out over one or clicking and do microtransactions have receipts play stores saw a check presentment system. Executone Information Systems, giving you a fast and easy way to obtain more virtual goods in the games you love. Under given scheme industry participants are accredited by the crust of Communications and the Arts as authorised assessors of games. This distinction between product portfolio generally do microtransactions have receipts. These negative responses may property be foreseeable. This transition has no new releases new content is eligible comprehensive review of products in penalties or do microtransactions play stores saw a rare dragon. Dr drummond once acceptance, do not permit you do have receipts google play stores selling. Nintendo has agreed to a total refund sum has removed the purchased players.
    [Show full text]
  • Global Entertainment & Media Outlook 2018 –2022
    Perspectives from the Global Entertainment & Media Outlook 2018–2022 Trending now: convergence, connections and trust www.pwc.com/outlook PwcOutlook18_042718_lj_FC-17-se_lj-ej_lj.indd 1 4/27/18 4:59 PM About this report Welcome to this year’s special report on when faith in many industries is at an the findings of our Global Entertainment historically low ebb and regulators are & Media Outlook. Every year we take a targeting media businesses’ use of data, deep dive into the data and analysis that the ability to build and sustain consumer our team of researchers and industry trust is becoming a vital differentiator. specialists have unearthed – with the aim of providing fresh perspectives and The result? To succeed in the future actionable insights. that’s taking shape, companies must reenvision every aspect of what they do Our comprehensive data and projections and how they do it. It’s about having, or on the 15 defined segments across 53 having access to, the right technology territories are just the start in creating and excellent content, which is delivered these insights. As in previous years, in a cost-effective manner to an engaged Ennèl van Eeden our authors have blended the data with audience that trusts the brand. For their own observations, experiences and those able to execute successfully, the examples to turn raw information into opportunities are legion. true intelligence. Writing this report was an exciting What’s trending now? It’s clear we’re in a and energising experience – and we rapidly evolving media ecosystem that’s hope these qualities shine through.
    [Show full text]
  • Main Drivers for Microtransactions As Impulse Purchases in E-Commerce
    Department of Marketing, Operations and Management MAIN DRIVERS FOR MICROTRANSACTIONS AS IMPULSE PURCHASES IN E-COMMERCE Dissertation submitted as a partial requirement for the conferral of Master in Marketing Ricardo Gil Fonseca Caetano Supervisor: Paulo Rita, Full Professor, Department of Marketing, Operations and Management Instituto Universitário de Lisboa (ISCTE-IUL) Co-supervisor: João Guerreiro, Assistant Professor, Department of Marketing, Operations and Management Instituto Universitário de Lisboa (ISCTE-IUL) September 2017 Abstract With mobile technology evolving at a very fast-paced level, consumers now have many choices of entertainment on their mobile devices. Thousands of games are available to download free of charge on virtually every smartphone and with them a new revenue model has emerged: microtransactions. Characterized by low price points, microtransaction have seldom been studied extensively. With great potential in the future, this type of revenue model is currently outgrowing traditional pay-to-play model types. By focusing on several types of mobile game item drivers (Lehdonvirta, 2009) and adapting some previous research and models (Wu, Chen & Chiu, 2016; Yoo, 2015), this study intends to identify and create a model with the main drivers of microtransactions that lead to impulse purchases in mobile game applications and understand if a price increase will lead to a lower purchase intention. A PLS-SEM analysis was conducted on a sample of 301 individuals. The measurement model showed a good fit of parameters, with AVE above 0.50 for all components, composite reliability superior to 0.70 for all components as well as an HTMT value inferior to 0.90 present in each component relationship.
    [Show full text]