How This Not-So-Secret Conversion Formula is Making Mobile Game Makers Billions

Discover how two mobile game makers cracked the conversion code on “freemium” games.

As a conversion geek, Pisces, and all-around thrifty guy (thanks, Mom and Dad!), I often reflect on my buying behavior. Delightful and frustrating experiences can reveal a lot about what makes purchases happen in-the-moment. It’s a special red flag when I get turned from a “no” into a “yes” or from a “yes” to a “no”. Those shifts are no accident — it takes an exceptional experience to change a set mind.

So, let me offer two recent examples of that took me from a categorical “no” to a repeat “yes” that surprised me… while also revealing an embarrassingly nerdy guilty pleasure: Hearthstone and Clash of Clans. Both are “freemium” mobile games, meaning that they’re free to play, but offer in-app purchases to speed up progress.

I’m generally against paying for anything that advertises itself as “free,” but these games got me to shell out more than I’d care to admit. To exonerate myself a little bit, let me point out that I’m not the only victim of these money vampires. Supercell (the maker of Clash of Clans) grossed $1.7 billion last year and Blizzard made $850 million from Hearthstone.

So what’s the secret? How did they create cash cows in a saturated mobile gaming marketplace? Let me take you on a nerdy ride through their obvious, yet powerful, conversion formula.

01. The Math of Addiction: Challenge-and-Reward Loops

It goes without saying, but any game has to make you want to keep playing to be successful. This usually involves hooking you into a “challenge-and-reward loop” where you’re faced with tasks of increasing difficulty that each have a relative payoff.

Intermittent reinforcement is a powerful habit former that game designers often talk about in terms of the “ratio of reward” or “reward schedules” — i.e. how much you have to play to get the payoff.

Clash of Clans and Hearthstone both have this core mechanic tuned to an incredible degree. They deliver the perfect balance of challenge and reward by matching you with other players of equal skill and giving you powerful prizes when you win. You get better with every victory, but you’re always faced with a worthy opponent.

02. Manufacturing Scarcity, Or How Silly Do You Feel Buying “Virtual Gems”?

Making any freemium game profitable requires scarcity. Without it, you’d have no incentive to buy anything! Both are free to play, after all, so to earn money they introduce resources that you can buy to speed things up — and these are what set the stage for you to empty your bank account into their greedy lil’ maws.

In Clash of Clans, you expedite constructing buildings and training armies with “gems,” while Hearthstone lets you buy additional cards using virtual gold. You can earn these resources by playing, but it’s difficult and time-consuming. Progressing without them is made artificially slow in Clash of Clans. So buying gems and gold in increments of $5, $10, $20 and so on becomes a welcome shortcut that lets you play more and win rewards faster.

03. The Tyranny of Instant Gratification

According to BJ Fogg, there are really three forces at work in any behavior: (a) your level of motivation, (b) how difficult the behavior is, and (c) a trigger. This maps perfectly onto the formula:

(a) The fun you’re having, slowed progress and scarce resources build your motivation to buy.

(b) Being able to skip ahead for a few bucks offers an easy, cheap shortcut to more enjoyment (so-called “micro-transactions”).

(c) And finally we get to urgency, which gives you that powerful trigger.

Clash of Clans builds urgency exceptionally well by using timers that countdown to the completion of buildings and troops, as well as to the start of wars and invasions. Leveling up just in time to crush an opponent is a satisfying experience — and one that can be yours for the low, low price of $5 a pop!

Hearthstone, by contrast, relies less on time-sensitive gimmicks. It doesn’t build urgency so much as tap into impatience and the desire for instant gratification. Hearthstone does the latter beautifully: each purchase has a satisfyingly physical feel as you open each set of “cards”.  You also don’t know what you’re going to get, which lends an exciting gamble that the game enhances by making you click each card to flip it over and find out what you received.

04. Social Proof Through Competition

The last reinforcer worth calling out is the social component in these games: competition. Intrinsic motivation can wax and wane, but it’s hard to back down from competition. Even in their cooperative aspects, seeing what heights other people have risen to can inspire us to up the ante.

In both games, you can play against an AI, but the games have been engineered to give you better rewards for playing against real people. Add to that the excitement of playing against a real person and you’ve got some highly competitive games that keep players coming back over and over again (and buying more to stay competitive).

Useful Analogs for Marketers

What’s compelling for marketers is that each of these mechanics has been painstakingly designed to make these games incredibly addictive and profitable. Likewise, these are factors we can all be implementing and testing in our own practices:

• Do you have regular touch points with your customers to make sure they’re adopting and enjoying your offerings?
• How about diverse price points that offer a low barrier to entry, along with the premium features, upgrades or services that are worth paying more for?
• Are you creating a sense of urgency around your prospects’ buying decisions by solving a critical pain point or offering time-sensitive promotions?
• How can you show off existing customers’ success to your prospects?

All of these are helpful questions for any marketer, and in particular for SaaS offerings and other free-to-try products. So the next time you’re surprised to see yourself opening your wallet, pause for a moment, watch your thoughts, and see what’s driving your decision. You might see some of the same mechanics at work.