Written by Jacob Amspaugh
If you were like me a few years ago, you had probably never heard the term gacha game. A gacha game is one where you spend a certain amount of in-game currency to obtain a rare item featured on a banner. That item may be a special skin, a new weapon, or even a new character. The game implements a lottery system that gives you a small chance of winning the item you want. In addition to having a lottery system, most gacha games have a guaranteed system where if someone rolls enough times, that player can get the certain item that they want. For example, you might have a 1% chance of getting the specific character you want but if you roll 90 times on that specific banner, you will be guaranteed to get that specific character item on the banner. The guarantee system allows players to justify the lottery system because it makes obtaining a certain character feel obtainable.
One and 292.2 million. Those are the odds of winning the power ball. Now, picture that but in a video game. This, in essence, is a gacha game.
The way the game incentivizes players to spend real money is by placing a certain amount of time on how long banners are available. For example, the new exclusive character you may want is only available for three weeks, and then that character is gone for the foreseeable future. The gacha games do have reruns of old items, but it could take months or even years for the specific item you want to rerun again in game. If you are frugal, you can save for a while and obtain a specific character that you want, but oftentimes, the game features multiple desirable items back to back. There’s only a finite amount of in-game currency that you can get from playing the game for free, so the only way to get more in-game resources is to spend money. A lot of players fall in love with the characters featured on the games’ limited time banners and will do everything in their power to acquire them, including spending money. Some consumers will spend money on the game because they want to have that feeling of accomplishment by winning the lottery inside the video game, which can make it difficult to practice self control.
Most gacha games lure players in by making the game free. Although the game is free, the game developers will intentionally lock content behind having a specific character, waiting a specific amount of time, or having a certain amount of resources to encourage players to spend real money on the game. To bait consumers into spending, the developers will even include enticing opening deals, which subsequently makes players more willing to spend again. A few consumers do not even need the opening deals to spend because they spend to experience the thrill of winning all the characters in the game. Oftentimes, those consumers do not have the money to purchase all the characters and items, but their desire to collect everything leads them to spend more they can afford. Essentially, gacha games prey on consumers gambling addictions to make a profit.
From an economic perspective, gacha games are able to gauge consumers’ willingness to pay. What this means is that consumers who want to spend more on the game can do so, while the consumers that don’t want to spend as much as the other players are also able to do so. Usually, gacha games feature different amounts of in-app purchases for resources used to gamble on the game banners. There could be a $10 bundle of resources for those that only want to spend $10 on the game. For players that want to spend more on the game, there is a $100 option. By matching consumers up with their willingness to pay, gacha games are maximizing producer surplus and therefore, profits.
One of the biggest gacha games of the past year was Genshin Impact which made $1.4 billion dollars in 2021 (Chappel). According to Sensor Tower’s list of top grossing games of 2021, Genshin placed third with fellow gacha games PUBG mobile and Honors of Kings placing first and second each grossing $2.8 billion respectively (Chappel). Seeing as the top 3 mobile games of 2021 are all gacha games, it is safe to say that gacha games’ business strategies amass lucrative profits.
Most of these games are not even that old. Genshin just came out in 2020. PUBG mobile came out in 2017, and Honors of Kings came out in 2015. Compared to previous games like Clash of Clans and Angry Birds, these gacha games are fairly new. However, despite the short time that they’ve been around, they’ve been able to outperform those games’ profit margins. In 2013, Rovio, the studio that develops Angry Birds, only made $216 million across Angry Birds and all its spin-offs . Clash of Clans only generated $892 million (Dickey). There were some games that matched the gacha games revenue numbers. For example, Candy Crush generated $1.5 million around 2012 mainly from ad revenue . However, Candy Crush abandoned their business strategy in 2013 to incorporate more in-app purchases (Madhav). Gacha games took the idea of in-app purchases a step further by incorporating an element of gambling into the game that allowed companies to bring in profits that matched and even exceeded Candy Crush.
It’s important to remember that gacha games exist and are very lucrative at maximizing profits, despite the illusion of the game being free to play. Because those games use the effective strategy of surveying consumers’ willingness to pay, consumers must be careful so they do not spend more they can afford.
Sources
Chapple, Craig. “Record-Breaking Eight Mobile Games Surpass $1 Billion in Global Player Spending during 2021.” Sensor Tower – Market-Leading Digital & Mobile Intelligence, Dec. 2021, https://sensortower.com/blog/billion-dollar-mobile-games-2021.
Dickey, Megan Rose. “Why the Maker of Angry Birds Isn’t Making a Fortune like the Rest of Its Competitors.” Business Insider, Insider Inc, 28 Apr. 2014, https://www.businessinsider.com/rovios-angry-birds-profits-2014-4.
Madhav. “Candy Crush Business Model 2022.” SEOAves, SEOAves, 15 Feb. 2022, https://seoaves.com/candy-crush-business-model-how-candy-crush-makes-money/.