Multiplayer Online Battle Arena (MOBA) games have rapidly risen to amongst the most popular online games – so much so, that they are predicated to become the largest category of online games this year.
In a MOBA, two teams of players (typically 5 vs 5) attempt to destroy the base of the opposing team. Each player controls a single character, who grows in power as the match progresses (progress is wiped between matches) and teamwork is the key to victory.
The market leader is Riot Games’ League of Legends, followed by the clear number 2, Valve’s Dota 2. Other successful games in the genre include Hi-Rez’s Smite and Blizzard’s Heroes of the Storm.
In this post, I examine how MOBA games are monetized given that all of them are free-to-play titles. There might also be something interesting to learn on the crowdsourcing front here.
How much revenues are MOBA games generating?
The market leader, League of Legends, is raking in around $123 million per month at an ARPU (average revenue per active user) of $1.32. Meanwhile, the runner-up DOTA 2 is making around $18 million per month at an ARPU of $1.54.
The other competitors are more difficult to find figures on. Smite has more than 10 million total players, but the number of active players is not known. The developer, Hi-Rez, had $25 million in revenues in 2014, and given that their other titles are quite old, almost all of that had to come from Smite, then reaching up to 5 million total players.
The revenues for Blizzard’s Heroes of the Storm are also difficult to estimate, but based on a number of figures released here and there, we can give it a try. First, Hearthstone, Heroes of the Storm, and Destiny combined have over 70 million registered players and over $1.25 billion in life-to-date revenues until the end of Q2 2015. Hearthstone and Destiny combined had over $1 billion in life-to-date revenues by the end of Q1 2015, and $850 million in life-to-date revenues by the end of 2014. Therefore, Hearthstone and Destiny brought in revenues of approximately $150 million in Q1 2015 and together with Heroes of the Storm the figure was $250 million for Q2 2015. Hearthstone revenues earlier this year were estimated to be at $20 million per month, in which case the Q1 revenues for Hearthstone would have been around $60 million with $90 million for Destiny. Assuming that neither Hearthstone nor Destiny have declined (and there is no reason to assume they have based on the earnings reports), this places the maximum revenues for Heroes of the Storm at $100 million for the quarter ($33 million per month).
That seems very high, but we can approach the issue also from player count point of view. Destiny had 20 million players at the end of Q2 2015, Hearthstone had 30 million mid-Q2 2015, and Heroes of the Storm had 9 million people registered for the beta early this year. Thus, 11 million new players have registered in addition to these figures to Hearthstone and Heroes of the Storm combined. Assuming that Hearthstone has not reached a new significant milestone (which would possibly be published), we can estimate Heroes of the Storm player numbers to be around 11-17 million registered players. Still, this does not give us the number of monthly active users, so it remain difficult to estimate revenues. Given typical MOBA ARPU (average revenue per active user) of less than $1.50, this estimate would give an optimistic scenario for Heroes of the Storm of $25 million per month and a pessimistic scenario (with 20% user retention) of $3 million per month. This may have been an exercise in futility though, as the figures for Heroes of the Storm are hard to come by.
To conclude the current state, the MOBA scene is ruled by League of Legends, which dwarfs all of its competitors. Nonetheless, DOTA 2 is doing great as well, and there is also room for other games that can still bring in several millions of dollars per month.
Where does the money come from?
With all major MOBA titles being free-to-play games, they need to work on continuously convincing their players to part with some of their money. The market research firm EEDAR examined MOBA monetization, and came up with the following figures for shares of revenue across the industry:
- 36% from avatar cosmetics
- 20% from hero unlocks
- 13% from experience and currency boosts
- 10% from non-avatar cosmetics
- 5% from randomized items
- 5% from modes
- 4% from esports-related items
- 4% from account services
- 2% from announcer packs
- 1% from portraits
For individual titles, there are some differences in the monetization models.
The most important source of revenue is perhaps a little surprising: avatar cosmetics. Think about it, the largest individual source of revenue consists of items that have no actual effect on the gameplay. The urge of people to personalize their characters is a strong one, and players typically spend a lot of time playing a specific character that they like in particular, so customizing it to their liking is perhaps only to be expected.
Most games also release new playable heroes at regular intervals and sell them for a higher price initially and for a lower price later on. As the heroes are available both for soft currency (currency earned in-game) and for hard currency (currency bought with real money), the games are in theory free to play. However, in practice the amount of playing needed to keep up with the cadence of the hero releases is such that hardly anyone can buy all the heroes with soft currency.
The regular hero releases are supported by a rotating pool of free-to-play heroes, which entices players to purchase heroes after they have got a taste of them during the free-to-play period.
Of the four games discussed here, League of Legends, Smite, and Heroes of the Storm all use hero unlocks as a significant part of their monetization model. However, Dota 2 has taken a different approach, as all heroes in that game are free to play.
The third way to monetize MOBA games is to offer experience or currency boosts that enable players to progress in the game faster.
Dota 2 as a monetizing innovator
It is interesting to note that even though players do not need to buy heroes in Dota 2, its ARPU is actually higher than League of Legends’. This is often attributed to Dota 2 appealing to a more hardcore audience, who in turn are more willing to spend money. Nonetheless, hero unlocks are clearly not a must-have even in this genre.
There is also another potential explanation for the success of Dota 2 from an ARPU point of view: crowdsourcing. In Dota 2, it is possible for anyone to create new cosmetic items and upload them to Valve’s workshop for potential inclusion into the game – and if selected, for a share of the profits generated from that item. This business model enables Valve to include much more items to cover any possible taste, and thus make it easier for players to find cosmetic items that they enjoy.
Other ways in which Dota 2 has been an innovator in monetization include crowdfunding tournament prizes by selling in-game items that give a certain percentage of sales to the prize pool of a specific tournament. The sales of The International 5 compendium, for example, amounted to over $67 million, of which 25% was added to the prize pool of the tournament. Smite has followed suit with a similar model.
As a final way of utilizing the crowd, Dota 2 also features a free-market system for trading in-game cosmetic items between players. Much like the trading economy that grew around Magic the Gathering (different genre, I know), this trading economy has also lured in people, some of whom are turning in a profit as traders.
The monetization models for MOBA games are rather stable, with Dota 2 standing out for its involvement of the power of the crowd. It is no wonder, then, that when the new mobile MOBA, Vainglory, implemented its first monetization features in July, they chose to go with premium skins – by far the most successful monetization element of current MOBA games.
It would be interesting to see if any developer could outdo Valve when it comes to crowdsourcing content for their games, as Valve is not known for stellar communications toward their content creators, and this could present an opportunity to increase the ARPU of a competing title.
Picture is from Blizzard’s Heroes of the Storm press kit