Hands up who wants an exhaustive and in-depth look at the pricing model employed by Blizzard’s card-battling behemoth, Hearthstone? Yay! I knew you’d be into it! Hold on to your analytical hats, because this is going to be one crazy ride.
If you want to know how to monetise a game, simply and effectively, Hearthstone is really a very good example indeed. It is doing well in the Top Grossing charts and it is using very traditional and well understood principles, but its exact implementation feels very different to most F2P titles. There are no timers or limits on play, whatsoever. Further, it’s adding monetisation to a pre-existing game concept, not starting with the business model and building from there. This is no mean trick - having the tail wag the dog like this and *still* build effective monetisation takes talent and a very solid understanding of the underlying principles of F2P and human behaviour.
Hearthstone uses the basic concept of giving you what you need for free and selling you the things you want. Most games do this by giving you what you need very slowly, then allowing you to skip ahead and get what you want - the things you need NOW - by paying. Hearthstone has no lockouts or energy timers around its core game whatsoever and you are free to play it as much as you like. Indeed the fact you can do this is one of the reasons it is so addictive - there’s nothing to get in the way of the ‘just one more go.’
What is gated is the tools the player has to play the game with. The game is a card battler and players develop personalised decks over time. They are given number of basic cards by completing the basic tutorial and reaching level 10 with each class. To get the more powerful cards, players have to get ‘expert’ cards by opening Packs. Should players fail to find the cards they are looking for in Packs that they open, they can turn unwanted cards into Arcane Dust, one of two in game currencies. The other is Gold, awarded for winning matches and completing quests, which players are given one of per day. These are the important items in Hearthstone - Packs, Gold and Arcane Dust.
Baldly, in Hearthstone there are seven possible transactions, six possible orders and two purchasable objects. The two objects are ‘Arena Entry’ and ‘Pack of Cards’. Arena Entry allows the player entry into the Arena. I know, right? Fighting in the Arena is a uniquely enjoyable challenge in the game and provides prizes - as a minimum a pack of cards and a small amount of one of the two in-game currencies. A Pack of cards gives the player five random cards, at least one of which is guaranteed to be a rare (cards come in common, rare, epic and legendary quality, each rarer than the last).
The six orders are, a single Arena Entry, or one, two, seven, fifteen or forty Packs of Cards. Then there are the seven possible transactions. Arena Entry can be paid for either with 150 in-game gold or £1.49. A single Pack of Cards is 100 in-game gold. Two Packs is £1.99, seven Packs is £6.99, fifteen Packs is £13.99 and forty Packs is £34.99.
Pricing wise, the packs are elegantly tiered. Two are 99.5p each. Two is a decent number of Packs and will provide quite a thrill when opening them. £1.99 is in the ‘a coffee’ range and won’t take much internal persuading. The next step up to £6.99 is interesting, as the packs are now more expensive. 99.85p each, this is clearly a silly amount to buy. This feels like a classic ‘ugly brother’ pricing strategy. As we don’t know how to price packs of virtual cards in our minds, we use relative cues. Which is the best comparative value? Well it’s definitely not the £6.99 pack, so users are pushed either back down to £1.99 or up to £13.99 which, at 93.2p a Pack, is clearly better value.
The shorthand heuristic calculation here is “one pack free”, as the expected cost of 15 Packs is £14.99 (this is despite that theoretical bundle price representing even worse value than the £6.99 price point). That means that the brain doesn’t need to do any sort of intensive calculation to see the better value of this bundle.
By this point, you may as well look to the biggest order of all, the £34.99 forty Pack bundle. At 87.5p a Pack, this is obviously the best value. Again, the easy mental short-cut is “five packs free” with an expected bundle cost of £39.99. So it’s easy to see how the eye is drawn further up the scale by some very simple pricing techniques, most importantly the use of the £6.99 ‘ugly brother’. The real choices are between £1.99 for two or £13.99 for 15 and then £13.99 for 15 and £34.99 for 40, with the better offers always tempting, starting with that £6.99 decoy.
But the best part? The best part is that this is an accident. A quirk of UK pricing. In the US, where the game was developed, the pricing doesn't scale like that, 7 packs are cheaper per-pack than two and this effect is not present. And the effect definitely happens. A glance at the IAP charts in iTunes shows that the 7 pack is the most popular purchase in the US version and the 2 pack the most popular in the UK. What this doesn't tell us is how relatively popular the 15 pack is, and hence if the US or UK version actually takes more money over all. What this does tell us however is that Behavioural Economics works, whether you intended it to or not...
Anyway, so far so good, but there are issues with the longer term potential of this scheme. As there are a finite number of cards available - and only a smaller subset of those are actually useful to any given player - then the utility of each subsequent pack decreases. Unwanted cards are turned into Arcane Dust, which can then be converted into cards of the player’s choosing. Rates of exchange are not great - an average Pack of five cards will give 40 Arcane Dust and one of the best cards will cost 1600 Arcane Dust - so at worst it will take 40 packs to get one Legendary card. Or, conveniently enough, the same number of Packs a player receives in the £34.99 bundle.
This reduction in utility and high pricing means that most players are likely to stop buying packs as the rate of duplicates to new cards decreases. Some players, however, specifically those who are driven to play at the highest level and reach the highest places on the leaderboard, will have to continue to buy Packs, and given they will be paying in the order of £35 for a single card, this can be seen as a strong super-fan monetisation.
And in the future, Blizzard is planning to release single-player content which they will charge for using either in-game or real-world money, so there will still be plenty of well-pitched reasons for players much further down the scale to put their hands in their pockets.
While Hearthstone is unlikely to hold its position near the top ten for long, it should continue to monetise well, and given that this is a game that was designed to be the game Blizzard wanted to make first and to monetise well secondly, this is an astonishing achievement.
When making your own games, look to its simple offers, compelling value, thorough understanding of need vs greed and super-fan monetisation to see how basic concepts can lead to unusual and highly effective monetisation techniques.