The Psychology of Freemium Gaming: Economics and Exponential Growth

Have some bonus XP for reaching the second stage of the series! You are now Level 2.

The game of the day here is Mafia City, a business management game created by 68games. In Mafia City, the aim is to create a Mafia character and grow from a petty criminal to a master of the city.

The campaign of MC didn’t get off to the best start for me, as it initially consisted of a lot of handholding. Single-action commands, bright flashy “click here” arrows, continual rewards, you name it. My main reason for continuing in the campaign was the sense of achievement I got from succeeding at the practically failure-proof early missions, which produced so much XP that I reached level 20 on my second day.

For completing the first paragraph, you receive 50XP.

Photos from

All of this progress crashed to a halt at some point around level 25, when I was told to go to the gym to raise previously ignored stats. This goal, thanks to now-strictly-enforced energy and time limits, took me two weeks to complete, a major contrast to every previous goal, which all took about two seconds. Levelling also slowed dramatically, taking me almost a month of casual play to get from level 25 to 30. This is a massive contrast-  this type of almost-exponential growth for higher level is endemic to freemium gaming.

For completing the second paragraph, you receive 50XP. You are now Level 3.

This type of levelling curve is not unique to freemium games. For example, a brand new game in the first Mass Effect will take a character from Level 1 to between Level 45-50 of a possible 60. A New Game+ will take the player up to Level 58/59, while reaching Level 60 requires an entire third playthrough. That’s an incredibly steep rate, and ME1 isn’t the only game to have that sort of mechanic.

The difference between doing this in retail games and freemium games is really just a matter of the time taken and importance placed on it. In retail games, this type of curve is part of the endgame, rather than being a main focus. Someone who doesn’t want to level grind doesn’t have to, as they will have already experienced the plot and put many hours of gameplay in. In freemium games, this type of level-grinding can often be unavoidable, part of the main game itself. The use of level-spiking (a sudden jump in difficulty or ability required that does not follow the typical progression curve) is also more prevalent in freemium games.

For completing the third paragraph, you receive 10XP. You need another 190XP to progress.

Consider the statement above. My sudden dropping of the XP gained from a task, as well as rephrasing the sentence to focus on what the player is missing, probably evoked a small amount of confusion, despite it not having the impact of a real game.

Psychologically, this skews the numbers and changes the players focus. This is because people react more strongly to loss than gain.

Kahneman and Tversky, one of the most recognisable teams in cognitive psychology, have published a lot of work on the psychology of economic decisions. They argue that that gains and losses are valued from references points instead of absolutes, and that loss creates a steeper change in values than gain. For an economic-based explanation, look here.

This means that people process risks irrationally, and can make a different response depending on whether the decision is framed to emphasis loss or gain.

In gaming terms, gaining a level means feeling a little more powerful, while losing a level means feeling a lot less powerful, enough to counteract the effects of gaining multiple levels. It also gives games leeway in how they explain their in-app purchases. This can be linked to something called the mere ownership effect. This psychological bias means that if you owned an object worth £200, you would almost certainly prefer having object over the £200, due to the enhanced subjective value the object has because it is your object.

These ideas of enhanced value from ownership plus loss aversion combine in a useful way for game designers.

Players may state that they do not want to outright buy power. However, what if they are given power from the outset, rewarded with continual success and progression, only to have that taken away from them at an arbitrary point? If the option of buying a restore, revive, or boost is now made available, this changes everything. It isn’t paying for an unfair advantage any more: its repairing an injury to the ego, a protection from further psychological loss. A payment option presented in this way, especially a cheap (>£1/$2) one, can be made to feel like the player is making an empowering choice, even if it is actually an impulse purchase made to relieve the minor distress of losing power.

The ability to make someone feel like they are calling the shots, when they are actually being led into a decision, is a common thread across dependencies, and something that will come up again in more discussion on freemium tactics. Also, as you’ll see from the rest of the series, biases and the ability to rationalise decisions come in useful for both playing and discussing freemium gaming.

That’s all of your reading energy depleted for today. Please rest, or buy an energy refill, before joining us for the next post.

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