Pay to play in freemium mobile games: a compensatory mechanism

Abstract

Purpose

A rarely discussed type of indulgence good is “virtual” goods featured in freemium games, one of the most important platforms for online retailing. The freemium business model becomes popular amid the growth of mobile games and smartphones. The purpose of this research is to look into the factors that influence the intention to play freemium games and purchase in-game virtual goods, as well as to compare male and female millennial gamers in Indonesia, Southeast Asia's largest mobile gaming market. This research discusses the phenomenon in the context of compensatory consumption.

Design/methodology/approach

This quantitative research used an online questionnaire for data collections. A total of 275 millennial mobile gamers were selected via purposive sampling. In total, there are six factors incorporated in this research: utility, self-indulgence, social interaction, competition, the intention to play freemium games and the intention to pay for virtual goods. This research used structural equation modelling (SEM) via AMOS software to test the hypotheses.

Findings

This research reveals that (1) utility is a negative predictor of the intention to pay for virtual goods, (2) self-indulgence is a positive predictor of the intention to play freemium games, (3) there is a mediation effect of the intention to play freemium games on the relationship between self-indulgence and the intention to pay for virtual goods, (4) social interaction is a positive predictor of the intention to pay for virtual goods, (5) competition is a positive predictor of the intention to play freemium games, (6) there is a mediation effect of the intention to play freemium games on the relationship between competition and the intention to pay for virtual goods and (7) the intention to play freemium games is a positive predictor of the intention to pay for virtual goods.

Research limitations/implications

This research has several limitations: first, half of the study’s millennial respondents were students whose gaming expenditures might depend on their parents or guardians' willingness to accommodate their gaming activities. Therefore, there might be some biases in the intention to pay for virtual goods. Second, the numbers of female respondents outweigh male respondents (44.4% males), hence the sample representativeness issue in a slightly male-dominated gaming industry in Indonesia. Third, the game genres the millennial respondents mostly played were the battle royale and the shooter games. Other game genres (e.g. puzzles) might involve a different mechanism. Lastly, the authors measured the compensatory consumption concept indirectly, such as by measuring variables associated with lack of time (utility), the need for virtual achievements or online recognitions (competition), mood-related issues (self-indulgence) and lack of belongingness (social interaction).

Practical implications

Game developers and online retailers (e.g. Google Play Store, Android App Store and Microsoft Store) should incorporate competition, indulgence and social interaction elements when designing and promoting freemium games. Based on the results of this research, a combination of these three elements improves the likelihood of purchasing virtual goods via online retail platforms

Originality/value

This is the first research to demonstrate a link between online retailing and compensatory consumption, particularly in the context of freemium games. This research extends the literature on online retailing in the context of freemium games, which has received little attention. In addition to theoretical support, this research provides new empirical evidence for previously unexplored and unsupported relationships.

Citation

Syahrivar, J., Chairy, C., Juwono, I.D. and Gyulavári, T. (2022), "Pay to play in freemium mobile games: a compensatory mechanism", International Journal of Retail & Distribution Management, Vol. 50 No. 1, pp. 117-134. https://doi.org/10.1108/IJRDM-09-2020-0358