For the past decade, the dominant business model in the gaming industry has been Free2Play.

This model entails giving the game’s base experience away for free and then monetizing the player base through ads and in-app purchases, referred to as “microtransactions”.

Over time, this model has become increasingly adversarial towards players, employing predatory monetization schemes and catering to “whales” instead of the average user. Despite its voracious nature, this business model has been enormously successful, helping to build a $159 billion dollar industry that’s now more than twice the size of the global movie and music industries combined. 

This tremendous growth really took off in 2007, when the iPhone was released and smartphones started to become ubiquitous. Today, mobile gaming alone is a $77 billion industry, representing 48% of the total gaming market.

Predatory monetization

Mobile games in particular apply certain monetization tactics to psychologically manipulate players into buying “bundles” of game items. Players are given a selection of purchase options, usually ranging from $1.99 to $99.99, which include loot boxes, character boosts, and in-game currency that will help them progress faster and stand out more in-game.

Despite prices being arbitrarily set by the developer, the larger bundles are typically advertised as providing three-to-five times the value for purchasing in bulk. They are marketed aggressively through push notifications and at strategic points during character progression.

This model eventually devolves into a “Pay2Win” environment where those with the most disposable income, called “whales”, will have an objective advantage by buying their way to superior gear and faster progression time. The best items are usually only available through randomized purchasing via loot boxes (with a