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Why are so many games converting to a free-to-play model?

By on July 13, 2011

In the wake of the recent spate of formerly subscription-based MMOs adopting a free-to-play model (City of Heroes, LEGO Universe, Age of Conan, LOTRO), MCV asked me to answer some questions on why this model works so well.

They published some of my answers over on MCV, but my full, detailed answers are below.

Why does this model work?

Free to play

Free-to-play games enable players to play the game, for ever, for free. They can experience the world, level up, socialise and have fun without paying any money. A limited percentage of players (generally somewhere between 1% and 20%) choose to spend on things within the game. These could be things like:

  • time-for-money (you can wait until tomorrow for this crop to grow/training to complete/sword to be repaired or you can buy it now)
  • aesthetics (“everyone in our guild wears purple and green. If you want to join our guild, go and buy some purple and green gear”)
  • status (“Hey, look at me everyone, I’ve got the optical monocle thing”)
  • Short-term power-ups (“I get 10% more experience for the next hour”)
  • There are many other variants – as many as developers can think of and players will buy

Why are so many subscription-based MMOs moving to this model? What effect does it have for their business?

Because it is so much better as a business model.

Everyone knows that subscriptions are a barrier to adoption: you have to persuade people to get over the hurdle of committing to a regular monthly payment. What fewer people  realised is that it was also a barrier to revenue. The people who love your game (or any media property) want to spend lots of money on it just like, for example, the way a committed football fan spends lots of money on his favourite team.

Removing the subscription enables many players to try the game AND enables those people who love the game to buy things that they value in it. Dungeons & Dragons Online said that revenues increased 5-fold when they want free-to-play. For Lord of the Rings Online, it was three-fold. The rapid shift to free-to-play is driven by the fact that enables companies to make a meaningful business serving a much smaller audience than the traditional model.

Is it a long-term solution or a short-term fix?

It’s a massive opportunity, and it’s here to stay. Everyone wins.

  • Gamers get to play games for free, including games they would not have chosen to access before. They can optionally choose to spend money on items that they relate to (whether that’s about progress, competition, status, self-expression or whatever).
  • Companies can get more players to try their games (with no barriers to play) and create content that their biggest fans will value. This means that games no longer need to appeal to a mass-market, lowest-common-denominator audience. They can build successful, profitable niche games.

How does this model clash with the previous one, and with other MMOs that still use it?

I believe that microtransactions work best in free-to-play games, not paid for ones. That they work in paid for ones is not in doubt. World of Warcraft is doing well with its pets and Eve Online has just announced microtransactions too.  However, the paid-for games start with customers who already feel that they are paying for their content, whereas free games have a better “karmic” position of giving so much value – for free – to their customers; players feel less nickeled-and-dimed in a free-to-play version. Companies are experimenting with hybrid models, and I’m sure we haven’t seen the end of innovation in this space.

I also think that most MMOs will go free-to-play over the next three years. Probably not Warcraft, Eve, Rift or The Old Republic. But most other massively multiplayer online games are, I’m sure, actively considering it as we speak.

About Nicholas Lovell

Nicholas is the founder of Gamesbrief, a blog dedicated to the business of games. It aims to be informative, authoritative and above all helpful to developers grappling with business strategy. He is the author of a growing list of books about making money in the games industry and other digital media, including How to Publish a Game and Design Rules for Free-to-Play Games, and Penguin-published title The Curve: thecurveonline.com
  • http://twitter.com/cliffski cliffski

    And yet now we have the silliness of the new CCP game being ‘free to play!’ but you have to pay at the start:
    http://www.gamasutra.com/view/news/35772/F2P_Shooter_Dust_514_Will_Require_Initial_Cover_Charge.php
    What a joke.
    This is worse than the old system, where you got a demo for free. Now you have to pay to try the demo.

  • http://twitter.com/MCRayRay Mark Raymond

    Obviously F2P is a working model, as companies have seen revenues increase when they make the change. However, I think it’s the nature of how you implement microtransactions that may dictate whether it pays off. I think that’s partly what determines the perception of it being obnoxious or bearable.

  • http://www.gamesbrief.com Nicholas Lovell

    I think that the need to pay at the start is crazy. My guess is that CCP (and particularly Sony) want to slow down the initial flow of users so that they can spread the load on the servers – witness how long it took to download the free games after the PSN hack.

    So, I hope, they will soon turn it to true F2P, and the early adopters, who simply paid for some in-game currency they may well have bought anyway, benefited by being some of the first players in this world.

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