I was working on a freemium web and mobile video game targeting an audience of children and teens. Up to this point, the monetization model had been purely subscription-based, but the publisher wanted to boost revenue by introducing a premium currency and an in-game micro-transaction shop.

This involved massive structural changes to the game. Many features and items that were previously subscriber-only were unlocked to non-subscribers in exchange for premium currency. On top of that, basic progression loops were integrated directly into the premium currency spend cycle.

Six months after the premium currency and purchase shop launched, revenue was down, and the publisher was getting seriously concerned. Other products in the industry had implemented these exact changes with great success. Why was ours flagging?

Other products had an advantage over ours: their player was also their customer. Because our game focused on children and pre-teens, we had two very different audiences we needed to reach and appeal to: Players and Parents.

As a freemium game, attracting players was reasonably easy—kids can't buy games on their own, so they gravitate toward free products. However, as a primarily web-based game that had only recently entered the mobile space, we didn't have great penetration into the mobile storefronts where parents can make quick, frictionless purchase decisions on behalf of their kids.

I suspected this lack of mobile penetration might be driving the revenue decline, so I started my investigation by looking at our performance across mobile platforms.

I very quickly realized that this wasn’t the issue. Yes, currency sales were significantly higher among mobile users than browser players, but sales on mobile were still... very much not good. Plus, we weren't just seeing a lack of a boost from premium currency sales; we were looking at a fairly significant decline in overall quarterly revenue.

I quickly pivoted to weekly and daily sales data, thinking something else must be afoot. Lo and behold, right when the premium currency update went out, I found that subscription sales declined substantially.

Premium currency was somehow cannibalizing our subscription sales without generating enough currency sales to make up for it. This left us with only two real possibilities: either we hadn't properly secured the new currency and players were "hacking" the game via browser memory editing to unlock everything for free, or we were dumping way too much free premium currency into the ecosystem.

The cheating rate in the game was a known quantity, and historically very small, so I started by looking for overly generous currency sources. We had seeded free currency in several places because we didn't want to lock non-paying players out of basic progression. Completely locking them down would run counter to the spirit of the update; we wanted to entice them with a tease of subscriber privileges, hoping they would lobby their parents for a subscription or a quick currency purchase.

To give free players reasonable access to the currency through play, rewards were integrated into the daily login calendar (a retention feature), daily and weekly goals lists, and Live-Ops events. The rewards schedule for each of these features was tuned so players only needed to complete a certain percentage of tasks to get their payouts.

The catch? All of these features were calibrated completely independently of each other. They were developed by different teams, and no one had been given overall responsibility for the health of the premium currency economy!

It turned out that if players collected all of the free premium currency available to them—something I calculated could be done with just a couple of hours of total monthly play—they would earn 50% more currency than they actually needed to progress in the game. This left them with more than enough surplus to spend on things that used to be subscriber-only perks and items.

Something still didn't really add up, though. While many, many players were now earning enough premium currency to buy subscriber perks, the actual number of players spending it turned out to be quite small. They could get the perks, but they weren't. Worse, they weren't leveling up anymore, either.

See, while the game included teens in its intended audience, I don't think there were actually very many teens playing. Teen gamers usually have access to PlayStation, Nintendo, or PC games that are much more exciting and engaging than ours. Our audience was primarily made up of kids and pre-teens, and their understanding of mobile gaming tropes isn't always thorough.

It started to look like a double-edged sword: we were being generous enough that the older kids who understood premium currency didn't need a subscription anymore (and there's reason to think these players made up an outsized proportion of our existing subscribers), but we had also completely failed to educate our younger players on the purpose and value of the new currency.

To make matters worse, we had replaced many of the in-game ads and prompts for the subscription with ads for the premium currency. We had drastically reduced the conversion funnels marketing our primary revenue vehicle—the one players and parents actually understood—in favor of a system the kids didn't know how to use.

Following this investigation, we ran a series of A/B tests to explore our options. First, we removed premium currency from the daily login calendar and the daily/weekly goals lists entirely. Next, the free currency available through Live-Ops events was reduced and redistributed, forcing players to play deeper into the events—and thus log more hours and engage more fully with the game—to get the full payload.

We also A/B tested a few other structural changes. One drastic test involved shutting off the premium currency and its related features entirely, though that didn't produce an improvement. What did work was redirecting many of our in-game conversion triggers back toward marketing the traditional subscription option. The biggest impact, however, came from producing simple video ads and in-game explainers that broke down how the new currency and economy actually worked.

Overall, the investigation and subsequent experiments paid off. We saw a complete rebound in our core subscription sales, a 14% increase in premium currency participation, and an 11% boost in overall play intensity.