Monetisation isn’t really a topic that gets most gamers’ blood pumping – at least not in a good way – but it’s the lifeblood of the games industry itself, and in the past few years, it’s been at something of an impasse.
There are a number of opposing forces pushing and pulling the discussion over how to monetise video games: there’s the reality of increasing development costs, matched against the equally important reality of decreasing consumer discretionary spending (at least in the short term), complicated by high inflation actually driving game prices down in real terms.
There’s the need to reach as wide an audience as possible, which is hampered by having financial barriers to entry, balanced against the need for monetisation to be at least intrusive enough to get average revenue per user up to a point where each additional player isn’t actually contributing to a spreading pool of red ink on the balance sheet.
Moreover, there’s a disjunction between players’ dislike of most ongoing revenue models, and their expectation that games should be supported with new content and updates long after launch regardless.
That’s already a complex set of parameters to consider for anyone trying to figure out a business model for their game, and it’s complicated further by the ticking time bomb that legislators and regulators around the world have thrown into the mix; systems like loot boxes and gacha mechanisms, which a few years ago were the favoured approach of many companies trying to cut through the Gordian knot of monetisation, have now attracted enough governmental attention in enough countries around the world that it’s pretty clear that they’ll no longer be a viable option at some point in the near future.
There’s not a whole lot of variety, because pretty much everyone and their dog has decided that the Battle Pass is the ideal way to monetise
Like all monetisation decisions, it’s a numbers game. It just takes a few major markets to crack down on a few key aspects of loot box monetisation, and the whole business model ends up being more trouble than it’s worth on a global level.
Few people outside of a handful of industry boardrooms will be sad to see the back of these models, which were rarely anything but an annoyance and often crossed a line into being overtly exploitative, but their slow disappearance knocks out a range of potential answers to the core question of how to make games commercially viable.
There are a few ideas knocking around, some more or less popular than others. Most companies are moving to a $70 price point for their headline games, a move which Microsoft – a laggard thus far – will follow with its Xbox titles next year.
Unsurprisingly, this isn’t very popular at all, and the argument that inflation means that even $70 games remain significantly cheaper in real terms than they used to be doesn’t sway many consumers – who might point out, not entirely unreasonably, that a lot of $70 games also want you to shell out extra cash up front for "premium" or "day one" editions that often feature content whose removal from the base game seems hard to justify, while still others offer a "season pass" for a few chunks of DLC content that can end up costing almost as much as the game itself.
At the other end of the spectrum, many companies are trying to remove that up-front cost entirely – reasoning that a $70 price tag is a hell of a barrier to entry, and likely a major limiting factor in building the audience for a game – and instead exploring a variety of free-to-play (or more accurately, free-to-start) monetisation options.
I say "a variety"... In truth, there’s not a whole lot of variety in this space right now, because pretty much everyone and their dog has decided that the Battle Pass is the ideal way to monetise these types of games. Just as most online games have a "meta" which determines which characters, cards, or strategies are most effective at a certain point in time, the business model meta right now is clear – loot boxes have been nerfed hard, and battle passes dominate.
In the decade since Dota 2 introduced battle passes as limited-time systems focused around competitive esports events, they have become absolutely ubiquitous, with the extraordinary success of Fortnite’s battle pass being the catalyst that saw battle passes suddenly sprouting out of every nook and cranny.
The business model meta right now is clear – loot boxes have been nerfed hard, and battle passes dominate
Every damned thing has a battle pass now. Aside from Fortnite’s pass still going strong, Call of Duty has one, Apex Legends has one, Genshin Impact has one, Overwatch was recently revamped to add one, Halo Infinite has one, and even mobile games have started adding battle passes. Clash of Clans has one, Brawl Stars has one, and now even Marvel Snap has one. Give it a few months and your fridge will probably start encouraging you to level up and unlock monthly rewards by remembering to refill the ice maker and buy milk.
On paper, this isn’t necessarily a bad thing. If anything, battle passes seem like a positive step away from the loot box model – they are relatively low-cost, and focus on encouraging a lot of players to pay a small chunk of money every few months, rather than on enabling a very small number of players to spend large amounts of money on the game (with few controls or safeguards to handle instances where those players may be children, for example). In principle, the battle pass is a very light touch kind of monetisation, and consequently should be safe from the attention of regulators and legislators.
They are generally optional, with games being perfectly playable without paying for the pass (although this is arguably a bit less laudable in cases where the game itself cost $70 up front, and you still have the nerve to hold out your hand for another $10 for a battle pass right out the gate). Moreover, in the majority of cases the items which you unlock through battle pass progression tend to be cosmetic rather than gameplay-changing, so they are purely discretionary and not required for you to enjoy of the game itself.
That’s the positive view – and for some battle passes, with Fortnite’s industry-changing pass remaining the gold standard, all of the above holds true. However, not all battle passes are born equal, and it’s fairly clear that some companies are still struggling with the battle pass concept in general – because its successful implementation requires embracing some counter-intuitive ideas about monetisation, as well as ensuring that you have a very specific mindset regarding the people who play your game and the value that they bring to it.
Get these basic notions wrong, and you can end up with a battle pass that feels exploitative and unrewarding even despite all the positive aspects which make this a better business model, from a consumer perspective, than many of the alternatives.
Those mistakes can be seen in a lot of instances, but there’s been something of a perfect storm in the implementation of Overwatch 2’s battle pass – a pass which should in theory have been welcomed with open arms by the game’s community, since it replaced a deeply disliked loot box system and opened up the game to a huge group of new players by making it free-to-start. Instead, the game’s battle passes – the second of which launched this week – seem to have inspired anger and ridicule in equal measure.
Many players are nonplussed about the decision to lock new hero characters behind a long in-game grind unless you pay for the premium pass, which fundamentally breaks the idea that passes should be about cosmetic items, not gameplay-changing items, and removes the core defence of battle pass monetisation, namely that there’s never anything in them you actually need to play the game.
That would likely still have been an issue even if Overwatch 2 has a great battle pass otherwise, but it does not. The quality of the cosmetic items on offer is dubious at best, each pass only offering a handful of character skins (meaning for many players, the pass won’t include skins for any of their preferred characters) and being padded out with various low-value items like "weapon charms" (which hang off your weapon in first-person view so, okay, at least you can see them) and "souvenirs", which are pointless objects you can summon out of thin air to show to other players for… reasons, one assumes.
Give it a few months and your fridge will probably start encouraging you to level up and unlock monthly rewards by remembering to refill the ice maker and buy milk
That’s already a recipe for player discontent – a pass that doesn’t offer much value, but which you have to buy if you want to be able to play as all of the game’s hero characters – but it’s compounded by an issue that many people who aren’t familiar with battle pass models might find highly unusual, if not verging on ridiculous. That issue is the anger about the fact that you don’t earn in-game coins from completing pass levels, and thus can’t buy the next season’s pass with coins you earned completing the previous season.
If you’re mostly accustomed to traditional monetisation models (you know, the old-fashioned notion of selling a thing to someone for money), this probably seems like an insane thing for people to be angry about – and an insane thing for games to have implemented and turned into an expectation in the first place. Yet this model is precisely the one which Fortnite, one of the most successful games of all time and certainly the most commercially successful example of a battle pass system, has been using for years.
The problem is conceptual, and it goes far beyond Overwatch 2, touching issues that have been faced by a wide selection of games that have tried to implement battle passes in recent years – with varying degrees of success.
Many developers and publishers think of a battle pass as being an evolution of a subscription model; just like you used to pay a certain amount each month to be able to access World of Warcraft, now you pay a chunk of cash every couple of months to "subscribe" to a game via its battle pass, with the cosmetics and progression system you get in return being merely there to sweeten the deal.
In this paradigm, players who don’t play are freeloaders. If you think like this, it’s reasonable to take both a carrot and a stick approach to getting people to buy the battle pass, encouraging purchase with good quality items but also discouraging non-purchase by locking away key content, like new heroes, behind either a battle pass purchase or a long in-game grind. In this mindset, people who haven’t bought the battle pass are still valuable in the sense of being potential customers, but the more someone plays your game without buying the pass, the more your monetisation model has "failed."
Comments from Overwatch 2 players [are] wishing for the return of loot boxes; given how much players hate those, that’s a damning indictment of just how badly it’s possible to mess up a monetisation system
This, however, is not the mindset behind the most successful battle passes – including Fortnite’s. These games treat the pass not as an evolution of subscription revenue, but as an evolution and streamlining of microtransactions from F2P games. The developer would, of course, like you to buy the pass – everyone likes revenue – but the approach taken is almost entirely carrot, with little or no stick.
The battle pass is a nice-to-have item, like a cosmetic in a classic F2P model, and the developers work hard to make it as appealing as possible by putting good quality skins and so on inside the pass’ progression tree.
However, there is a recognition that those who don’t buy the pass aren’t just freeloaders, or potential customers waiting to be converted into paying customers; they’re actually bringing immense value to the game just by their presence, giving the game critical mass, reducing queue lengths in games with matchmaking, and providing social benefits that help to ensure their friends stay in the game. Anything you do to "punish" those players for not buying the pass could just as easily be herding them towards the exit, where they’ll take all that value with them to a competitors’ game.
In this way of thinking, letting people earn enough currency through the current battle pass to get the next pass for free actually makes a ton of commercial sense. Developers who take this approach recognise the existence, and importance, not just of "money whales" but also of "time whales" – players who will spend an enormous amount of time in your game, boosting its engagement numbers and likely creating content and community around it, but who are cash-poor and resistant to spending much money on the game.
The problem is conceptual, and it goes far beyond Overwatch 2, touching issues that have been faced by a wide selection of games that have tried to implement battle passes
By contrast, money whales have disposable income to spend, but are time-poor. They spend money on the game, buying battle passes and other items, because doing so gives them access to the same items and customisations as the time whales.
In a traditional way of thinking, the idea that the people who spend the most time in your game should be the ones who pay the least is hugely counter-intuitive – but by keeping cash-poor, time-rich players engaged and happy, you encourage much more engagement from the cash-rich, time-poor players who want to own the desirable cosmetic items they’ve seen their time-rich compatriots flaunting around the game.
Battle passes are the current meta of the industry’s business model – but like all metas, this one will pass, and it’s easy to see where the problems will lie. There are already too many of these things, and unlike most forms of monetisation, they’re strictly a zero-sum game; buying battle passes in multiple games is a time commitment almost nobody can afford, and it after watching the clock run out on a battle pass or a season of content that you’ve barely been able to enjoy due to work or personal commitments, few players will be willing to make a similar purchase again.
There’s going to be inevitable attrition from this business model overall, and many battle passes will fail simply because they’re going head to head with a rival in a zero-sum competition for players’ time and attention, not just their money. Nevertheless, there’s a huge amount of potential in this system for the time being – but companies have to make sure they’re doing a battle pass system for the right reason, and with the right mindsets.
In recent weeks, I’ve even spotted comments from Overwatch 2 players wishing for the return of loot boxes; given how much players hate those, that’s a damning indictment of just how badly it’s possible to mess up a monetisation system when you don’t fully understand the reason why you’re implementing it in the first place.