To continue our series of “How do businesses make money”. We started off with Whatsapp and today it’s the turn of Clash of Clans.
Clash of Clans is a Mobile App game from a company called Supercell and in 2013 it was estimated that they made $2.5 Million a day. Let that sink in.
So what are revenue models for mobile applications?
- Display Ad
- Incentivized Advertisement – Example : Extra coin for seeing an Advertisement.
- In-app purchases
- Paid application
So out of these, which revenue models does Clash of Clans use?
It uses only one and that’s in-app purchases! You may think to yourself ‘WHAT?’ But that’s the truth. So $2.5 million a day is made because people are spending actual money buying fake money inside the game. This can be explained with one word, addictive. Clash of clans is so addictive that there are reports that some people spend over $12,000 on the game. Here is a Youtube video showing a $12,000 village in Clash of Clans
NirEyal, an Author who wrote a book called ‘Hooked’ about making addictive products said the following two quotes
Companies who form strong user habits enjoy several benefits to their bottom line.
Buffett and his partner, Charlie Munger, realized that as customers form routines around a product, they come to depend upon it and become less sensitive to price.
Clash of Clans is the best example of a company that has a loyal fan base. There are discussion forums for the users where they discuss strategies, tips and other things about the game.
Check out this screenshot from Reddit that talks about a user who has spent over $4,000 on the game. Another user commented saying “ even my car is not worth so much”
Source : Reddit
Here is another excerpt from the NY Times. This article discusses the story of a man called Jorge Yao became the No.1 player in Clash of Clans and was considered a legend. He had his iPads bought over for a good sum by a player from the UAE to have a tactical advantage in the game. And the last sentence takes the cake.
From Quora, a user shared her story about how her friends took her phone and spent money on Clash of Clans to wish her for her birthday.
This article may seem less about business models and making money and more about game addiction. The truth is, very similar to Whatsapp, Clash of Clans have succeeded in creating a great product. They did not bother about advertisements within the game, they focused on quality and user experience and that has made all the difference.