Free to play, loot boxes, in-game currency: we explain how games make money

There are many terms in the video game industry that are not immediate are understandable – and that is no coincidence. This is a better way to hide the fact that there are concepts behind it that are supposed to be used to make money. We explain the most common of these terms.

DLC stands for downloadable content. The somewhat broad term primarily refers to game-expanding content that can often be purchased for money. This ranges from costumes or weapons that can be bought for small amounts of money (see Microtransactions) to completely new game sections that add new stories, characters and levels to the game. So-called “Game of the Year” or “Ultimate” editions, in which the DLC are included, often appear after successful games.

Developers can offer their game for sale on the digital game platform Steam before it is completely finished – by releasing it in Early Access. In the best case scenario, this has advantages for both parties: players can test whether the game is any good for less money. First-class games that are constantly being expanded can be played for low prices. The indie studios, which mainly use Early Access, can meanwhile make money while they are still working on the game. For many, this is the only way to keep a game production going. Village romance is one of those games. You can read here how it was successful.

Fortnite is a very popular “Free to Play” game. (Screenshot: Epic Games)

Especially in mobile -Area, but not only there, “Free to Play” games are widespread. The term suggests that a game can be played for free – but this is often only true to a very limited extent. Free to play in most cases means that a game can be downloaded for free, so access to the game is free. Even the first hours, levels or progress are usually free of charge until a payment barrier opens before the end of the game. This can mean that the game is no longer at all can continue to be played if no payment is made. More often, however, it is the case that certain, very sought-after items can only be obtained for money, or that gameplay progress can be acquired with money (see Pay to Win). Free to play can be a veritable way to distribute your game. Many games offer a surprising amount of scope without having to spend any money. But parents in particular should pay attention to the mechanics of a “Free to Play” game that their children are playing. Because cost traps are not infrequently hidden in them.

Gacha is a paid game mechanic that is special is used in “Free to Play” games. It is related to loot boxes and is based on the machines that can be used to get hold of stuffed animals with a gripper arm for money. Anyone who knows these machines, however, knows that in most cases you will get nothing. In-game currency, which is often bought with real money, enables players to win in-game items such as armor, weapons or spells. The rarer the items, the less likely they will be dragged. These mechanics have the potential to trick addicts into spending more money than they really want. Often the probability of individual objects being pulled is obscured. It is this lack of transparency that often makes gacha mechanics windy.

Of all the terms, this one is likely to be the currently most used as well as the least plausible one. Basically, Games as a Service or Live-Service-Games stands for a game that can be purchased at full price and is constantly supplied with new content over several years. So it’s not just a game, but a service, similar to a social platform that is constantly being expanded. If this concept is implemented properly, games can be more durable as a result. Instead of constantly developing new games, the old ones are constantly being expanded and thus kept alive. In practice, however, this often means that full-price games with a small size and many bugs are pumped onto the market with the promise that they will be constantly updated – that is, the content will be delivered later. Often there is content behind payment barriers in these games, so that additional expenses are added to the full price. The Division or Destiny are examples of successful games of this kind. Anthem or Marvel’s Avengers are games that flopped.

In-game currency is used in many games. Here is an example from Genshin Impact. (Screenshot: miHoYo)

Many video games integrate their own currency in their game world. It can be used to purchase goods such as weapons, medicines or armor. In most cases, the game provides this currency when you win battles or solve tasks. However, especially in “Free to Play” games, this in-game currency is often linked to real money. Although the games then offer opportunities to get the currency without real money, they make access much easier and faster when money is paid. In general, if a game puts an in-game currency between an in-game purchase and real money spent, caution is advised. Even more caution is required if a game establishes several in-game currencies at the same time, making it even more difficult to understand what the exchange rate really looks like. Genshin Impact is an example of a game that has several such currencies.

The topic of loot boxes haunts the media again and again, as the topic is now even preoccupying the courts. The question arises as to whether loot boxes should be counted as games of chance. Similar to gacha mechanics, players cannot see beforehand what is in such a box, for which real money has been spent in many cases. Loot is the term used in video games to refer to items that help players advance. They can often get hold of these when they defeat opponents or solve tasks. Loot consists of weapons, armor or useful upgrades. In order to earn more money, however, in games like Star Wars: Battlefront 2 or Fifa 21, it is packed in boxes that players can buy. At random, they then receive high-quality items – or, much more often, loot that they already own or that is worthless.

Unlike the DLC, players cannot purchase significant parts of a game through microtransactions – they are not new sections or characters, but smaller items or cosmetic changes. These can be bought in the shops that are integrated in many games. Often these are cents, but they can add up. In order to stand out in a match, these microtransactions are primarily integrated into online games and are an important source of income for the studios there. This mechanism becomes annoying in full-price games that demand additional money from the players (see Games as a Service).

Both on the Playstation 4 or 5, the Xbox Series or Nintendo Switch: On consoles it costs money to play most online games. That is why players have to use services such as Playstation Plus, Xbox Live or Nintendo Online – which of course cost money. In addition to the option of using online modes, these services also offer free monthly games or expanded cloud storage for game saves. The console manufacturers now make a large part of their profits from the income from these online services. You can find out more about Playstation Plus here.

Harry Potter: Hogwarts Mystery is an example of a game with “Pay to Win” mechanics. (Screenshot: Jam City)

Pay to Win refers to mechanics through which players can make progress in games for money. Then the time runs faster, sections are unlocked or better weapons are accessible. These options are particularly controversial among gamers because they are similar to cheating. From the point of view of many studios, however, “pay to win” mechanics are a way of manipulating players into being willing to spend more money. “You can be better than the rest for little money” is a psychological trick that can be used as a justification for vulnerable gamers to spend real money. Games with these mechanics are best avoided.

Many online games take place in seasons. Fortnite, for example, brings new content into the game with each season that needs to be unlocked. Special costumes or weapons that stand for the particular season. A Season Pass can be purchased for money and contains all of this content (in Fortnite, however, the Season Pass is called Battle Pass). A season pass can also consist of a package with all additional content such as DLC that has been or will be released for a specific game. If, for example, a new Assassin’s Creed is released, players have the opportunity to purchase all future additional content with a season pass before purchasing the game – at a point in time on which no I can’t even tell what the content will be. A season pass can be worthwhile for players who, for example, would buy all the DLC for a game anyway. Because with the pass this content is offered as a package a little cheaper.

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