The Problem With Cosmetics-Forward Monetization

It’s tempting to run a gamer friendly, cosmetics-forward strategy for your live service game. But you can’t have a League of Legends sized outcome without a League of Legends sized audience. This is the lesson learned by Velan games as it shuts down Knockout City after one year as a free-to-play title.

We talk all about Knockout City, Live Ops monetization and more on This Week in Games #223

In a recent interview with, Velan co-founder Guha Bala spoke openly and honestly about monetization lessons learned as the games June 6th closure approaches. “Knockout City got off to a strong start when it was published as a mid-priced premium title by Electronic Arts, with an additional boost thanks to its inclusion on Xbox Game Pass… It sold fairly well but not well enough to as a mid-price premium title to continue to support an additional flow of content.”

Then comes the part I warned countless consulting clients about a decade ago when I was doing monetization consulting. “We’d made an early commitment also to make it cosmetics-only microtransactions, not going the loot box route or other kinds of routes – and certainly no pay-to-win because it’s not the healthy essence of a competitive game,” Bala said.

In the interview, Bala goes on to blame inflation, currency devaluation and other macroeconomic conditions. Yes these effects are really and everyone in the games industry is hurting from their impact. The macro rules our lives, and its resulted in reduced profits, layoffs, project cancelations and closures and a reduced pace of VC funding. The macro is causing pain to people around the world, and that pain is being passed on to businesses and through those businesses to their employees and players.

But this is the critical lesson to take away from the Knockout City experiment: “a cosmetics-based, free-to-play game, while it’s really appealing to us as gamers, requires massive scale to be economically sustainable.”

A decade ago, many consulting clients paid me to ignore this advice, and were ultimately unsuccessful. You can copy League of Legend’s or Fortnite’s monetization model if you have their audience scale. So explain to me how you are going to get there. What is your marketing strategy? How are you going to attract millions and millions of people to play your game? What is the cost of attracting those players?

For many, “launch it and they will come,” was the answer. “Launch it and they will come” works in very, very rare cases.

I applaud Velan on making, by all accounts, an excellent game. Just building and launching an 80+ Metacritic game is a herculean task. I also applaud Bala’s openness and transparency. This is a really excellent interview and you should all read it.

My point isn’t to dunk on Velan. I just want to emphasize that when designing your live service business you need to carefully consider both sides of your biz model. (1) What will attract players to your game and (2) why will those players spend money? And unfortunately, if you hate gacha, if you hate pay-for-advantage or pay-to-win, then you hate what is proven to work from a business sense and you are more likely to fail than to succeed.