The Secrets of Machine Zone's Success Part 3 - Monetization and the Future of 4X Games
This multi-part series will deconstruct Machine Zone's super successful games and look into the particular mid-core genre dominated by the company. Make sure you'll get the latest post by signing up to the weekly newsletter.
A Look at 4X Games' Monetization
In part 2 this series, we looked at the core design of Machine Zone's 4 X games. We delved into the infrastructure they put into place that allows for emergent social gameplay atop a near infinitely scalable game economy and permanent losses that pushes people into spending to catch up. But Machine Zone and their 4X games are notorious for having some of the best LTV's of any games in the mobile industry. This article looks at how they achieve that and what the future for 4X and Midcore games could be.
Moving You Up the Ladder
You can't talk about Game of War without talking about its monetization. Quite simply put there is no other game in the world that monetizes better on a per user basis. In fact, I would be shocked if the ARPDAU of the game is less than $1. Just look at this quote taken from an interview between Game of War Real Tips and Stayalive77, one of the top players in the game:
There is no doubt Stayalive spends a TON of money on Game of War. I asked if he has spent over a half a million, “ya ya, ya ya. It’s a very expensive game.”
Half a Million of Dollars! Into a single mobile game. And this was a few years ago when the quote was made. The player is now rumored to have spent double that amount in the game. But just let that settle in for a second to truly understand the scale of the economy and sinks in this game. That's not even possible in 99.9% of games out there and a testament to the design that a well built 4X game can achieve.
Whilst it may well disgust you to think about that money being spent, remember that people can choose to spend money in the way they want to. For example, if I go out with my friends in London for a really epic night such as someone's birthday I might spend £200. However, a celebrity like a footballer or a movie star might spend something like £50K in an evening if they were really blowing off steam. And whilst that might sound outrageous to me, that is their prerogative and something you just have to accept in a capitalist system. And so you have to begrudingly applaud Machine Zone for making a game where it's even possible to motivate players to want to spend that amount of money. If Game of War was a nightclub... there'd be a queue two miles long to get in!
The monetization strategy and design of Game of Way is fairly unique and exceptionally well executed. Most games have flat price points that are balanced around a central economic constant such as time. For example, if 10 Gems are worth 1 Minute in real game time, then you can use that as a basis to create curves to balance price points around to anchor players to certain packages. It's a tried and trusted technique used in a multitude of games and one which Supercell absolutely nails. However, Game of War doesn't use this approach at all.
In Game of War, players are bombarded with offers and bundles for a crazy number of items and resources. However, the genius here is that each offer is tailored to each unique customer via very clever tech and surfacing. You see, in Game of War, monetization can be described as a "staircase" where the game wants you to keep moving upwards over time. Think about a Casino. They will often give you free chips, free drinks, and food to make you feel welcome and happy. A casino wants you to be happy and wants you to be fun so that you will spend. Then once you spend, they want you to spend more! Did you just get a thrill out of winning $2K, even if eventually you end up losing it all? Well, how about the feeling of winning $4K at an even bigger table!?
Because the game economy is infinitely scalable, the game can offer you insane deals. This means that if you haven't converted yet, the offers can go up and up until you do spend. Then cleverly once you have spent, that bundle and price point is removed. So once you have spent $4.99, you can never get a bundle for that price again, it will cost $9.99 instead, and so on and so forth. Once you've converted once you are comfortable at that spending level and it's only a matter of time before you will want to spend again, which is now at an increased level. Take a look at this story from Kotaku of someone spending almost a million of Dollars (!) of stolen money in Game of War to understand just how skillfully this has been executed.
This goes further by targeting players based on circumstance. Haven't played in 6 months? Then when you return you will be given a truly insane offer to get you right back into the game, which is clever because it's better to get $2.99 from someone who would otherwise delete your game than no money from them at all. Or if you have just been zeroed by a colossal attack, you can be offered the gear or items to launch a killer counter punch which you will be highly motivated to do.
On top of this, the game also has a killer VIP system which is derived from Casino and other real-money based games and encourages the player to keep spending. Not only can you become a VIP but you can climb the ranks of the VIP tier system to keep progressing and to keep getting even larger and more powerful boosts. On top of this, you are given VIP status and it makes you look like a true killer in a sea of players on the world map. And in a game that is all about power and the social status that comes with that power, makes you a hot shot. It even gives you access to several convenience features such as the ability to fast open all chests or to instantly combine all pieces of gear. These are things that once you have the power to do are very frustrating to lose hold of and it's very interesting from a UX perspective that MZ chose to sell these as perks instead of making it part of the regular flow.
When you consider all of the systems in place in the game and the aspiration to be the most powerful, it's no surprise that so many reviews for the game mention the fact that you need to keep spending money to keep up with the top players, because it's true. As the game facilitates the power of being a bully with endless power creep and permanent losses, a kingdom that was once mighty can be small-fry a month later. But as players have built up social esteem with other players in their alliance and made their own reputation in their kingdom, players don't want to get left behind and to be seen letting others down. Thus the social aspect of the game drags you back in and motivates you to keep spending.
The Best User Acquisition in the Business
Mobile games once started out being very casual with village games, endless runners and puzzle games taking top spots. But over time more and more midcore games were released and started dominating the chart positions. It became apparent that midcore players were far happier to spend serious sums of money in game they played. So armed with that knowledge, it led to a fight to find those high spending users and get them to install and play your game. And Machine Zone have proved over the years that this is an area where they are almost untouchable.
In the world of Free-to-Play, success is largely determined by two numbers your Cost per Install (CPI) and your LTV (Lifetime Value). With the depth of spend potential and social pressure to spend, it should come as no surprise that 4X games have the best LTV's in the business, and this means that Machine Zone can be ruthless when it comes to out bidding rivals to acquire traffic. In fact, they are notorious for it, with rumors that they brought ALL YouTube traffic when Mobile Strike launched in order to propel it into the top 10 grossing games as fast as possible.
Quite how many people MZ employ to run user acquisition is unknown, but their power across all advertising networks is frightening. It's not uncommon to hear of bids of $60 per user and a simple look at the adverts in any F2P game will more often than not contain a vast array of their games. Whilst it might be easy to think "well sure they can just outbid everyone else," this doesn't do the company justice. They run way more creatives than any other company and are constantly updating and optimizing them down to the local maxima to keep them fresh. They clearly are doing better than any other company to optimize their user acquisition and it's even rumored that they have their own proprietary technology to help them best identify big spending users to make sure they get them.
The power of their UA is best seen in their ability to fend off other competitors in a very competitive genre. Many companies have cloned Game of War and improved upon them with better visuals and features, but no one has taken top stop away from them. Though it's possible that the company is spending at break-even or worse to monopolize their position at the top of the charts, the company's potential market cap of over $10B makes it obvious that there is a method to the madness.
However, despite their proficiency in the dark arts of User Acquisition, it's interesting to see that of recent MZ have changed their strategy somewhat. New title Final Fantasy XV: A New Empire uses the Square Enix IP and though there is a revenue share agreement in place it would not surprise me if MZ has wanted to focus their efforts on games with a higher margin as high fantasy in notorious for having the highest CPI's of any genre. It's also notable that since the turn of the year MZ has really been going into full harvest mode on Game of War, dramatically increasing the release rate of new gear and upsetting a number of their players.
It may well be that after years at the top and billions in revenue, it's time to cash out and move onto the next title. The competitiveness of this sector can't be downplayed and that MZ both took the crown from Kabam and retained their position on top for so many years despite so many rivals trying to catch them is hugely impressive. Just to show you how big this category could be worth, Israeli based Plarium Games were acquired for a staggering $500M in the time this article was published, with most of their revenue in their portfolio coming from 4X games such as Vikings: War of Clans.
Even the infamous Zynga attempted to eat into Machine Zone's cake with a Mafia Wars version of a 4X game. Unfortunately, this game never passed through the soft-launch period as the company decided to discontinue it. While some people have blamed the visuals, the IP or Zynga's lack of experience in the genre the real reason may be in user acquisition costs. Having seen a lot of theme testing in user acquisition we've noticed that the crime theme is often a poor performing theme, which results in higher CPIs. When the cost of user acquisition is higher than those of the competitors and when the monetization is the same at best, there's no point in going live and entering this super competitive market. Looking at the genre's that Machine Zone has reskinned Game of War into, it again shows their understanding and power in the UA market to know which theme is best to make their game around.
Final Fantasy XV: A New Empire
Machine Zone's latest title saw a collaboration with Square Enix of Japan to use their Final Fantasy IP. I find this game a very interesting case in it's own right as despite being a straight clone of Game of War and Mobile Strike (albeit with prettier graphics), it's doing great. In fact despite an initially low review score and incurring the scorn of gamers worldwide for essentially making the least "Final Fantasy-ish" game to use the IP ever, it's found enough installs to move up the charts steadily. Whilst I hope it does not lead to other famous IP's diluting their brand by directly copying an existing game, it proves that their are still huge audiences that have not played 4X games that can be reached. I also think it's proof that many of the mechanics of the game are ripe to be plucked and put into totally different genres. It reminds me a bit of how Call of Duty: Modern Warfare evolved the FPS genre on console with it's perks system that is now commonplace in almost all FPS games.
The Future of Midcore
One thing that I love about the mobile market is that it's still a puzzle that we game makers need to figure out. Just look at the following for diversity in the marketplace:
Whilst a number of these titles have been around for a long time, there is diversity among the gameplay types represented. We have casual puzzle games with Candy Crush, smash hit IPs game with Pokemon (ARG) and Dragon Ball Z (RPG), Build and Battle with Clash of Clans, 4X Games with Game of War / Mobile Strike and Clash Royale represents Synchronous Battle gaming. That's a lot of different genres appealing to many different target demographics. I think this shows that there is plenty of room for both innovation and evolution in the market as both Pokemon Go and Clash Royale have created entirely new genres and Gardenscapes has created innovation in what was thought to be the already figured out casual market.
So what's next for mid-core? Well despite Final Fantasy XV getting off to a good start globally, it's quite some distance from breaking the top 10. It's also notable that since the release of the game and the shift away from UA for Game of War and Mobile Strike that those games have now fallen out of the top 10 grossing games as users start to churn from those games en mass. Is it possible that the general public's taste in mid-core games is evolving again?
Since the release of Supercell's Clash Royale, we've seen that there is a sizable audience looking for synchronous PvP games are more moment-to-moment focused and less about deeper surrounding systems. Looking at markets around the world we can see that in China the top grossing game is a MOBA. Both China and Korea also have huge MMO titles in Fantasy Westward Journey and Lineage II. Whilst Asian culture is totally different to the western culture, MMO's have been popular in the past, with Everquest and World of Warcraft being great examples. If Game of War has taught us anything it's that players ARE willing to spend long periods of time on their mobile device so who's to say that a "true" MMO would not succeed? I personally believe that at some point in time a mobile MMO with town style lobbies and 3D player avatars akin to World of Warcraft will eventually be a hit at some point. Someone just has to build it and get the users in first.
Another trend seen over the last 12 months is innovating again within the 4X genre through something I am labeling as a "5x" game. With the 5th "X" standing for "eXcite." Whilst MZ 4X games do not have a battle game, many other developers are trying the concept with success seen in Lords Mobile by IGG and innovative use of traditional RTS mechanics in the Zynga's flagship mid-core title Dawn of Titans. Though Dawn of Titans has not performed well in the market, Lords Mobile is frequently in the top 25 -50 grossing positions around the world.
As mid-core players get used to more and more complexity, it brings back one of the fundamental parts of the mobile game design to the forefront - session design. Machine Zone has gone on record to say that they have seen players sit through very long sessions (hours+) playing their games, and it's something I have seen across multiple different games myself.
However, in the West, I think the best mobile games push you through their core loops quickly, but make sessions so addictive you want to do it more than once. For example in Game of War to come in and set up the next set of actions you need to complete takes no time at all allowing for a short bite-sized session. The longer play habit is also available but it's not the core to playing the game and hence why adding a battle could be problematic. Likewise, Clash Royale has no restrictions at all for playing the game endlessly, but using its genius Chest Unlock system and making sure that each game takes a maximum of 3 minutes means that it's still super easy to have a short but meaningful game session that brings you back. Hit games in China are moving away from this rule and going for far longer sessions, something that has been tried with VainGlory in the West, but not yet resonating with customers. I do wonder if we will see a shift towards long form gaming or if the bite size session will still prove to be the winning formula.
It's also worth mentioning Synchronous Battle Games as a "new" type of genre that is fast gaining traction in mid-core. A number of developers have tried to chase the MOBA crowd onto mobile but most thought it was not possible until Clash Royale exploded onto our screens and set the charts alight. Hot on its heels are a number of games that are getting more and more hardcore and I am sure at least one breakout title will appear next year with Synchronous gameplay, with Supercell's own MOBA / Vertical Shooter style game Brawl Stars one of those possibilities. With rising user acquisition costs and a few key companies monopolizing the market, the "word-of-mouth" factor is huge and it's something that I feel games with eSports potential can cover. Supercell is putting a lot of effort into coverage of Clash Royale and 30 of the top 100 games in China are eSports style games. This is not yet as red an ocean as traditional mid-core but it will definitely be a big battleground in the next 1-3 years.
Mobile 4X games have shown us that complex games with super deep mechanics that are intrinsically social can win big on mobile. Despite being very scary to begin with and almost inaccessible, these games can get players to stick for a very long period of time. In fact, it shocks me that there isn't a version of the game that broadens the funnel right out and rethinks the accessibility of the early game because clearly as of here and now 4x gameplay mechanics are popular to a small but heavily monetizable audience.
As for what's next, it's possible that the 4X space as we know it is starting to show it's age. Whilst I would expect a few more titles in this style to come out over the next 12 months, it appears that tastes are beginning to change. And for those other developers that do still want to go toe-to-toe with Machine Zone, their technology, user base and expertize in the area mean that you are fighting a hard battle to take share away from them, especially with CPI's to acquire these players going through the roof. As a result, I think games by smaller teams with a heavier emphasis on core gameplay will become more and more popular as these games are easier to develop and have a better word of mouth potential to grow over time. However, it won't stop some from trying though and I can see 4X games becoming even more hardcore and concepts from the East such as real-time 3D lobbies becoming a thing. As an example, what would happen if Blizzard made a mobile MMO?
Finally, as this article is about Machine Zone, I want to end with a video given by the CEO of Machine Zone Gabe Leydon in 2013 just as the game was launching. It's a great watch to get an insight into how the game was made and why, and proved to be a great piece of research for this article. Even from the video you get a sense of the passion from him that went into making the game. And regardless of what you think about the company or the games, you can't question the success the company has had or the impact their titles have made on the mobile app stores.