Hunting the Whale: How Game Developers Target Gamers' Wallets

This afternoon Papaya's Oscar Clark gave a presentation entitled "The Design Secrets of Successful Freemium Games," which offered some insight into how mobile companies use data and social hierarchies to create profitable titles.

Early in the presentation the mantra of "gamers who play together pay together," laid the groundwork for a clinical look at how developers at Papaya use social discovery, low pressure sharing, retention, and social capital to unlock "true fan"potential. In case you are wondering what a "true fan" is, they were very clear that this is a presumably less offensive term for what the industry calls "whales."

A whale in the freemium market is the term for a hardcore user. Appropriately, the term originated in the gambling industry, referring to wealthy gamblers with a high tolerance for losing large amounts of money. Whales are a very small portion of the market – in this case he cited that they account for about one to four percent of the user base of a product. However, whales account for greater than 60 percent of a game's revenue. These "true fans" generally make in-game purchases of virtual goods and services to make a game easier. Clark displayed data that showed a whopping 86.9 percent of purchases were dedicated to accelerate play.

Fun and enjoyment were certainly mentioned as reasons why players become whales, but Clark also pointed out that free users create social reinforcement that leads to the creation of whales. In fact, he feels that these compulsive feedback loops were essential to smart and successful game design. These comments were accompanied by a graphic of a rat trapped in a Skinner box, a device and social experiment that is worth understanding as it has widespread implications in game design at all levels.

He went on to explain that a good freemium game design must make the first dollar purchase easy and rewarding, offer a well established path to spending $10 dollars, and the ability for "true fans" to spend a $100 dollars a month. Yes, he said "$100 a month."

It is no secret that gaming at all levels is a business designed to entertain us and, of course, make money. However, sitting in on a clinical discussion of how game consumer's wallets are targeted offers an eerie glimpse at the way users are viewed in a world where data and dollars dictate game design.

Papaya is no different than many other game companies in the mobile, social, and premium space, and Clark's willingness to discuss how successful freemium games are made should not make Papaya a target of hate from gamers. The goal of this piece was not to eviscerate developers for the practice, but give gamers a look into the cold, hard economics of the freemium games they play – and the understanding that, when you play games like this, you could be the whale swimming with the sharks.