All live games must serve the Engagement Cycle. I capitalized it because it's more than just a concept. It's an actual mechanism that's responsible for the biggest money-making transformation in the games industry. There's a reason companies like Activision-Blizzard, EA, Take-Two Interactive, and Ubisoft all adopt live services into their games. I'm sure you can guess why (that microtransaction cash).
Live services are hallmarks to any modern games company and represent billions in earnings, and Activision is second only to the might of Tencent (non-platform holders, of course. Sony and Nintendo make more). They understand the Engagement Cycle almost better than any other games company--hell, they helped create it--and have the business down to a science.
Activision-Blizzard routinely earns billions every year on the backs of digital microtransaction earnings gleaned from live service games. A full understanding and total evolution of the Engagement Cycle is responsible for this constant cashflow.
In Q1'20 alone, the company earned $956 million from microtransactions, up 20% YoY and driven strongly by Warzone's success. Activision made up roughly 53% of its quarterly earnings from live services.
If Warzone is an experiment, then Activision are the scientists that made a ground-breaking discovery.
The ultimate endgame to the cycle is to monetize engagement that's created by a successfully organized, replayable, and fun online game with continually revolving content. The idea is to make a never-ending experience that churns engagement through social play, which makes players sticky in the network, and then monetize them after they make the time investment.
There's five main parts to the Engagement Cycle:
- Social Hooks
All of them are extremely important and must be followed in a specific order to maximize earnings returns. This cycle applies to both premium live games like Anthem, Fallout 76, or even Final Fantasy XIV, as well as free-to-play games like Warzone, Apex Legends, and Fortnite.
This is the start of the cycle, the entry point, the gateway to billion-dollar microtransaction earnings. A game can't be engaging if it's not fun, and a game can't be monetized if it's not engaging. Most live games are action-based because action-oriented fun is easier to facilitate in a chaotic shooter than, say, a long-winded RPG (it's also more accessible to the masses, too).
Often developers overlook this critical point, and that's ultimately why some live games fail and must constantly start over until they get it right (Bethesda, for example, tried to monetize Fallout 76 before it was any fun).
Fun can be addictive, and that's really a huge asset to the structure. Make your game addictive, and gamers will keep playing to replicate the original fun experience. The battle royale environment is a big driver for fun, challenge, and a kind of addictive winner-takes-all motivation.
2. Social Hooks
Once fun is established, a game must then have a social framework that ties its players together. This is tremendously important. Developers want to create an environment where players can organically interact, trade, play, and generally bounce off of others. This is traditionally handled with chat systems, voice chatting, lobbies, invites, clans--the works. These features should all be 100% native to the game itself and shouldn't require any extra downloads.
The idea is to create a pocket of social interaction among the wider scope of the world--almost like a private sort of world within a world--where like-minded players can group up and come together. Destiny 2's player encounters come to mind, as does World of Warcraft. The social hooks create bonds, which pull players back to the experience. You're more likely to return to Call of Duty, for example, if you have a good team of friends. Devs need to create an atmosphere where gamers can create rivalries, friendships, and general interactions with others.
Some games released today do this very poorly--Halo's re-release on PC, for example, don't have native voice chatting switched on, which is a massive detriment to any sort of social play. Gamers must use outside programs like Discord to set up their communications.
This ties right into fun and social hooks (as does every other part in the cycle). It's absolutely critical that devs put in some sort of deeper and layered progression system into their game. This blueprint needs to be nearly never-ending, which Call of Duty has pulled off to a tee with its CoD points structure and Battle Pass earnings tier system.
This is actually a sticking point for a lot of developers. Some, like BioWare, simply don't understand live game progression. Anthem failed marginally because of its badly designed loot system, which interrupted the critical progression scheme.
Players must constantly be rewarded and empowered while also being challenged and led to new content, whether it be a new fancy armor set, a new gun, new skills--something always has to be on the horizon, and it has to be presented in an engaging and understandable way. The path must be clearly shown and identified, or else gamers will pull away. It's a tremendously precarious balancing act, and not every publisher can pull it off.
Destiny 2's massive overwhelming flux of progression-based missions is a big example of interrupted progression. Bungie is simply throwing too much stuff at players at once, and they move on to other games. Warzone does a good job at rewarding players with tons of content after a match and balancing the critical level-up schemes.
Ideally, the progression system should organically fold with the social hooks, e.g., rewarding players for playing in groups and tackling playlists.
Live games live or die based on their content offerings. It's not enough to have a fun, socially-connected game with strong progression. Without content, gamers will move on, and the playerbase dies. Without a playerbase, the monetization potential dries up, and the developers must either restart from the beginning, roll out a game-changing update, or move on to a new project.
It's extremely important the games are built with content in mind. Devs must have multiple content roadmaps laid out in a kind of seasonal blueprint. The most obvious example of this is Warzone and Modern Warfare's season pass, which serves up tons of new maps, guns, and other goodies in digestible chunks over time.
Progression must also be blended with content--the content doesn't mean anything if it doesn't further the progression systems that help motivate players to keep grinding for unlocks.
Because of the finicky hit-or-miss nature of content, most games have multiple contingency plans set in place just in case things don't go according to plan. Some games, like Final Fantasy XIV ARR, Battlefront II, even Fallout 76, have evolved tremendously since launch. Even No Man's Sky pivoted from a singleplayer to a live-driven game (but that game doesn't monetize, which still blows me away).
Content must flow like a river. It can't stagnate with too little current, but it can't run too fast, or players will be swept away and drowned.
Finally, we've come to the real bread and butter of the cycle.
Monetization is the entire reason any of this exists. Everything in the cycle serves monetization. Building engagement is worthless if you can't monetize it, and there are a few ways publishers and devs go about this.
First, we have full game sales. Sometimes multiplayer modes don't have any microtransactions (although it's very, very rare these days). Instead, they serve as a means to spark game sales. The more people play a game, the more buzz it generates, and others might buy it to jump in too.
There's really two different types of monetization, or "transactions": Macro- and micro-transactions.
We all know what microtransactions are. Lootboxes, pay-to-win "optional convenience items," and even cosmetics have been demonized and for good measure. EA, in particular, makes a killing off of its Ultimate Team sports game lootboxes. The industry has largely shifted towards the more acceptable cosmetic monetization front, but in-game purchases are still major hooks in the bait that is fun, social engagement, progression, and content.
Then we have macrotransactions, which include expansions and season passes. The idea here is to serve up a chunk of content, almost like a sub-game, that can be consumed over time.
Warzone and Modern Warfare use both. There are macrotransactions with the battle pass, and microtransactions sold via the in-game CoD Store.
Monetization is likewise a tricky thing to pull off.
In a live game, you spend one of two currencies: Either you spend time or you spend money. The games are scaled in a way so you're incentivized to pay money instead of paying time. Games are literally built from the ground up with monetization in mind, and all the systems serve it in some way.
If the other pillars of the Engagement Cycle are present, then gamers are already invested heavily in the progression and social schemes. The idea is to keep gamers playing through these mechanisms because the longer they play, the more likely they are to pay in the long run.
Monetization turns the wheel and spins the cycle anew, funding new content, new systems for engagement, new progression schemes, social hook interactions, and new updates to inject more fun into the experience. And so the wheel turns, both gaining and losing momentum through the revolutions.
Now that we understand how the Engagement Cycle works, let's take a look at Activision's new four-part plan.