Moving Consumers from Free to Fee in Platform-Based Markets: An Empirical Study of Multiplayer Online Battle Arena Games.

This article investigates how product differentiation strategies influence the conversion of free users into paying customers in freemium multiplayer online battle arena (MOBA) games, focusing on the mobile game Arena of Valor. It identifies three types of character-based product differentiation—character competency, character variety, and character appearance—and examines their effects on players' purchase behavior through the lens of consumption value theory (CVT) and perceptions of game fairness. Empirical results from a two-wave longitudinal experiment and multiple cross-sectional experiments reveal that while all three differentiation types enhance perceived individual values (monetary, social, enjoyment) and thereby promote in-game purchases, character competency and variety differentiation also reduce perceived fairness, which can negatively affect purchasing. In contrast, character-appearance differentiation positively influences purchases without undermining fairness. The study highlights a dual-path mediation model where individual values and fairness exert competing effects on purchase behavior, offering practical guidance for freemium game developers on balancing differentiation strategies to optimize revenue while maintaining a fair gaming environment.