Hey everyone! My sincerest apologies in such a huge delay between part one and this post. I'm sure many were busy with family & holidays, and it was no different for myself. I was helping maintain our long-standing tradition of spending Christmas enjoying the wonderful slopes of Mammoth Mountain in California!

Here's a photo I snapped at the top of the mountain, before enjoying some great runs down to the bottom:

If there are those interested, I may do a separate post with some photos and such of the past couple years we've spent there, but that's irrelevant to the current topic, so let's jump right in!

Quick Recap

Last time, I went over some basic ideas, topics, and terminology to make sure everyone is on the same page. I apologize if this was repetitive for some of you, and my hope is that a consistent linking of my gaming-related posts will help to guide those who need some context & background to the right place so I don't have to consistently have an entire post dedicated to it. Nonetheless, I touched on the general background of Marvel Heroes & Gazillion, the ARPG genre & its foundations, F2P games & microtransactions, and the games-as-a-service model.

On to the "juice" of the matter :)

Monetization Strategy & F2P Challenges

In Part 1, I outlined how F2P games hedge lots of risk versus P2P games when it comes to a business timeline. This, of course, does not come with a giant bag of risks and challenges either. As with any content people pay for, your players need to actually see value in it. Even though most people will never pay you anything during a F2P game's life cycle, it doesn't mean they don't acknowledge that value.

One major challenge is making sure you offer MTXs that don't embrace Pay-to-Win (P2W) mechanics. P2W is a term the community associates with something someone can buy to give them an advantage in the game, thereby rewarding and enhancing the game experience for those who have the cash to spend. Keeping in mind the stats I shared about a vast majority of people in F2P games that will never spend any money ever, this alienates 87-93% of your user base instantly. And, with most games being GaaS oriented - or always online, thereby leaning on the strength of a large, active set of players at all times to make the experience fun - P2W models will cripple games. Games that pursue such models actually have data that more closely mimics pay-to-play games, since they generally boom & bust - relying on a massive surge in revenue initially, some big spenders to keep them afloat for a little while, and then a shutdown of operations.

If a successful F2P game is to expect a healthy life cycle and a happy user base, item offerings need to make players feel like they've spent money on something worthwhile while not alienating the rest of the players who didn't spend money (or feel like they are pressured/obligated to spend in order to have fun, since that barrier was removed when they were told the game was free to play). I touched briefly last time on in-game items being broadly separated into two categories: durable & consumable. As you might guess, players love durable items because they can buy them once and own it forever. Consumables have mixed reactions depending on what they are and what benefit they provide.

You might start to see a bit of a trade off here when it comes to operating a successful business and keeping players happy. The store balance of item type needs to be in order while supporting the business timeline. What % of store items are durable vs. consumable determines your business strategy and how you allocate company resources to development of those features. Ideally, you'd want a store that is more or less balanced between durable and consumable items, although durable items often end up taking up more share. As such, if you have a store that is mostly durable items, your job is to develop and release that content on a cadence that will allow your business to continue, since once people buy this item they own it forever.

This was one MASSIVE problem with Marvel Heroes' model. I'm going off of a fan wiki page, since the Marvel Heroes websites & forums have since been shut down, but they have the store vendor information including quantities of each type listed. In the link, there's the cost in "G" which was their premium currency. Essentially, 100G = ~$1 USD, and store items ran from 50G - ~1,800G ($18). While I don't have exact numbers, the overall spread is still spot on. I'll list each out, mark it as durable or consumable, and assign it a total % share of the item offerings in the store:

• Costumes (Durable) - 69%
• Heroes (Durable) - 12%
• Pets (Durable) - 3%
• Team-Ups (Durable) - 8%
• Fortune Cards (Consumable) - 4%
• Ingredients (Consumable) - >1%
• Misc (Consumable) - 2%
• Consumables (i.e. Boosts, etc) - 1%

If you're looking at the above %s and are scratching your head, don't feel strange. The store was 92% durable items. Here's what that looks like at a granular level, per above:

Here's what that looks like at a high-level view of durable vs. consumable:

I know it might seem dumb to show you a 92/8 pie chart, but sometimes visualization puts things into deeper perspective. This means, if you are to run a successful business, you NEED to churn out new Costumes & Heroes. Pets & Team-Ups (or followers/companions) were cool - and actually most serious players had all of them because each had different bonuses that applied better in different builds - but they weren't the primary money drivers. Costumes (visual changes to your hero, which were always derived from a past Marvel story line/comic) and Heroes (actual different playable characters, with their own set of powers, skill trees, and voice over (VO) lines, were the primary drivers. I'll take a moment to discuss Heroes specifically, because Costumes encompassed a similar production path but with less depth, although still very challenging in their own right.

Marvel Heroes was different than many ARPGs in that it deviated from the standard model of having you choose at character creation what type you wanted to be. Typically, you'd select from some generic classes like Warrior/Barbarian (Heavy Melee), Rouge/Scoundrel (Light, Agile Melee), Wizard/Conjurer (Magic Caster), Witch Doctor/Summoner (Debuff/Creature Summoner), or Paladin/Healer (Buff/Healing Caster/Melee). While each Hero in Marvel Heroes generally encompassed one of those types, they were still vastly different from each hero and many were hybrids of the main archetypes outlined above.

Marvel Heroes was clear about their commitment to release one hero a month along with other content, and that was - in my opinion - one of the largest pitfalls for the game. At the turn of the year, in an attempt to retain players and realize revenue early on (and thereby foregoing much in the future), Marvel Heroes would sell "Advance Packs". These would essentially give buyers access to every hero to be released during the year, with unique costumes (also TBR), and other goodies like unique boosts & currency. Since players were buying into unreleased (and sometimes unannounced) content, this helped keep them invested and anticipating what was to come. The obvious problem here is that once you take money from players for something like this, you are locking yourself into a timeline that supports that sold content, and it severely restricts your ability to shift resources to develop other key game content down the line.

Creating all-new heroes was no small feat, either. Think of the level of depth it takes to create something like the Barbarian in Diablo III. There's character VO, modeling, animations, visual effects (VFX), active & passive skills, item development & tier progression (level 5 items, level 20 items, max level items - each fitting into the primary stats that benefit that hero type, strength and vitality specifically in this instance). Those are conceptualized, built, and then everything is tested before it ships (goes live). That's for ONE character, and while the 58 Heroes all drew from the base archetypes of other games, they still needed their own development of things I just mentioned. Now think about how that had to be delivered on a monthly cadence, with each Hero being completely different in every way, all the while fitting into the Marvel universe. That is one HELL of a task, and it's nothing short of incredible the team was able to keep that up for a few years.

Brand Partnerships: A Blessing & A Curse

There's one small bit I want to touch on that you might have glazed over at the end of that last paragraph. Each Hero had to fit into the Marvel universe. This is another thing I'm convinced made it too difficult for Marvel Heroes to climb out of its sinking hole. Undoubtedly, aligning and partnering with a brand like Marvel has incredible prospects and is an enormous draw for a potentially massive audience. People LOVE Marvel movies, the comics, and playing as their favorite Heroes. Who else would pass up an opportunity to kick butt as Iron Man, Thor, The Hulk, Spiderman, or even Dr. Doom? I sure didn't and many others didn't either.

But there's a reason why Marvel is the successful brand that it is. They explore other media outlets, and allow the contractual release of licensed content. However, Marvel's entire business is propped up on their ability to make sure that every bit of content released is aligned and consistent with a spiderweb of lore that has arguably transcended a level of detail that can be feasibly mastered by anyone. Nonetheless, they make the rules and understandably make great efforts to protect their brand, which means any licensed content must be severely vetted before going public.

This included Heroes, Costumes, Team-Ups, Pets, any new game story content or modes, or basically anything that went into the game. Outside of the game, all forward-facing assets (Facebook images, Twitter images, advertising images, etc), social media posts (yes, text), official statements - all had to be approved by Marvel before going out. Each of these had varying ranges of approval times, ranging from a couple days to 2-3 weeks. If it sounds crazy, it's because it is. But with a brand as huge as Marvel, you HAVE to do this. Please don't mistake me here, I am not knocking Marvel. Their brand was stamped all over our game and everything we did. That's just making sure your brand is being represented properly, and it's why they're successful they way they are today.

It did make business absolutely tough on our end, and that's one challenge to consider if you're ever considering entering into a licensing agreement with a major brand. I didn't even mention that for each Hero being created for a monthly release that each voice over line, each animation, each visual effect, each description on every skill (including the skills themselves), and the names for every item that they could possibly wear - all had to be approved by Marvel and done so that the Hero could be released on time.

That's also leaving out Costumes, which were also heavily vetted. I remember seeing one Costume had a rejection with a note that gave a specific color shade to use (which I couldn't actually tell the difference, but we never argued and just forwarded to the designers) and a separate note that said "Crotch bulge size is too big, please reduce size and resubmit". Yes, crotch size. It was a bit of a laugh at the time, though.

So as a small studio who has committed to one Hero a month, Costume(s), in-game events, content aligned with movie releases like The Avengers: Age of Ultron, and producing other new game content, you can see how this can quickly turn to utter insanity. There were numerous times when the Hero or Costume we'd had down to final approvals - scheduled to launch the following week - was rejected and needed to be resubmitted for a turnaround time that would put us past when we'd planned on releasing. From a communications standpoint, it's not much of a challenge when your players are informed and not given hard release dates for said content. From a business standpoint (going back to my point about being able to project a better long-term timeline for KPI like revenue) that makes it a much bigger challenge.

The best way I could describe our marketing, being one of the members of that tiny team, is reactive marketing. We always had a plan, but it so frequently got disrupted due to rejections for things so minor (again, see my point about it being necessary from Marvel's point) that we were seemingly always coming up with things to put on sale and gather assets last-minute (also needing rush approval) to avoid a massive money gap. Hero rejected? It won't go live, what do we do? Costume(s) rejected? What other costumes can we put on sale?

Also, we haven't even nodded at the fact that people generally play small groups of Heroes, mostly of the same type or those that they are fans of. If the new Hero/Costume coming out doesn't appeal to those who don't already own it (which was a large share of active users who bought Advance Packs, generally members of the Golden Cohort - which I'll clarify shortly), they won't buy it. The sole driver of the business assumed the new content would sell, but not everyone wants to play Jean Grey in her new costume (even though she was seriously badass in the game) or Star Lord following the first Guardians of the Galaxy movie in theaters.

We eventually found ourselves more frequently running premium currency deals, which typically do very well. But larger frequency in those types of sales devalues your #1 base driver of your revenue, and eventually sales fatigue happens. Sales fatigue basically means sales happen so often they mean less and less to your players, and they start anticipating them more, thereby spending less on a regular basis and waiting for the next one to come up. That is a recipe for death in a F2P game, especially if it's concerning your premium currency. The business model starts shifting from a focus on new content (which was the original plan & driver) to propping up the business on sales, which generally alienates your Golden Cohort users, and the death spiral begins.

What is the "Golden Cohort"

Ok, so I've now mentioned this term a few times. What is it? The Golden Cohort is your segment of users who have been with you since the beginning, and they drive a vast majority of your business for the life of the game. They are, by far, the most engaged people. This is another blessing/curse scenario. If you are to look at lifetime value (total amount spent, ever) of users in your game, organized by the month they were acquired and spanning over the life of the game, it might look something like this (this is purely me punching numbers into a spreadsheet, and is NOT actual data):

The X-Axis here is months after launch, with negative numbers representing the months leading to the launch month, denoted by "0". That revenue initially can be realized due to pre-sale content packs, which often gains access to early sessions like closed/open beta testing in addition to the promised exclusive content. As you can see, ~45% of your TOTAL revenue for the entire life of the game comes from people who play/pay in the three months leading up to the launch, at launch, and the following month. The spikes you see down the line are major content updates where you might expect lots of user acquisition efforts and press coverage, bringing more new players & buyers into the game. Again, this is a very, very rough estimate to get a picture across to help illustrate my point. In reality, the bumps become less significant and it tails off much more significantly, so your Golden Cohort might actually be ~60-75% of total lifetime revenue.

What's good about this is it's pretty easy to discover what your users want, because they are the ones sticking around and understand the game the most. What's bad about this is that your "vocal minority", while they might provide solid feedback and positive input, are now the "vocal majority". You must constantly cater to them, since they drive your business - lose one of them and it's not just "another user gone". Once the GC users start dropping off, it's a dire situation.

Furthermore, in catering to that small group, you're catering to a group of very experienced players and often don't have the time to invest into what will make the game a better experience for new players which will help the game grow and extend the lifetime of the game, including improving the overall experience for all players since there's a larger player base. Why is it that new users don't retain and drop off so quickly? What's a sticking point? Is the game too hard at first? Are there too many systems that they are overwhelmed by and can't get acclimated to? Are there too many Heroes to choose from? Do they use their one free Hero unlock on someone and find out they don't like that Hero?

These are all questions that help great games stand the test of time and prevent users from coming in, churning out, and never coming back again. You have one opportunity to capture a player. It's highly unlikely that they come back once they've decided the game was undesirable, so it's best to get it right the first time. But if you have no resources to dedicate to optimizing this because you're stuck on a pre-determined timeline catered to those who you've made a promise to, you simply won't be able to. Over time, that experience inevitably becomes dull for even your most invested players. While efforts to expand the experience to other player bases might normally be welcomed, thinly spread resources can easily shift focus from your core group of players and they'll lose interest entirely.

Which is exactly what eventually happened with Marvel Heroes.

Alas, Part 3 Must Exist

I hope for Part 3 (not to be drawn out in cadence like Part 1 to Part 2) to be the end of this series. My hope in the segments is to prevent this story being chore of a read and more manageable with the content it dives into. For this iteration, I focused on monetization strategy, partnership challenges, and the "Golden Cohort". Next time, I'd like to wrap up with some in-game pitfalls that segmented an already niche market and dive into some late-game strategy faults that I believe were the nail in the coffin for Marvel Heroes.

Please keep an eye out for that in the very near future. It's been exciting and fun for me to dive into this topic, and I'm curious to hear your thoughts & feedback as always! Thanks for all your support, you all are the best!