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Whales, True Fans and the Ethics of Free-to-play games

By on September 22, 2011
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The inexorable rise of free-to-play gaming has led to a vast array of criticism of the free-to-play model.

Social, casual, mobile and other free-to-play games have been derided as not being games, as being Skinner boxes, as using operant conditioning to make hollow mockeries of gameplay and as being evil.

The heart of the criticism of freemium games revolves around two issues:

  • Metrics-led design,where game designers build games that deliver to a spreadsheet, rather than aim to delight gamers
  • The exploitation of  whales, where most people play for free, but a few spend a bucketload of money

A recent comment on Twitter from Jurie Horneman has helped me understand the fundamental challenges in free-to-play games, why so many people think it is unethical, and how to reconcile making money in free-to-play with making high-quality, entertaining games.

Whales versus True Fans

Jurrie’s tweet said:

Trufans spend money because of what you do; whales spend money because of who they are

That insight has helped me to separate out the key distinction between the two types of spender.

A True Fan loves what you do. In other media, they are the Arsenal fan who attends every match, home and away. The Rolling Stones fan who has been to a gig on every tour they’ve done for the last twenty years. The Potter fan who has a hardback edition of every book, every movie on DVD, the extra books and a Hogwarts robe.

These are people for whom spending a huge amount of cash on their favourite entertainment brand or experience is value of money. It is about self-expression, or status, or satisfying a collector’s urge, or keeping up with the Joneses, or any number of other emotional or social reasons. The emergence of free-to-play is good for True Fans. They can explore more content, for free, than ever before. They can pick and choose which content, be that games, books, music or whatever, they love and spend lots of money on it, while getting their other content for free. They may even spend less money on content than they did previously, but allocate it more efficiently to the content creators whose work they love.

Do whales all suffer from poor impulse control?

In the famous Stanford Marshmallow experiment from 1972, psychologist Professor Walter Mischel tested the impulse control of a group of four year olds. Each child was put into a room sitting in front of a table. On the table, there was a marshmallow on a plate. The child was told that they could eat the marshmallow if they wanted to. If they waited for twenty minutes before they ate it, they would be rewarded with a second marshmallow.

Mischel then followed the children through school. He found the children with good impulse control (defined as waiting the twenty minutes for the second marshmallow) were “psychologically better adjusted, more dependable persons, and, as high school students, scored significantly greater grades”

(Note the obvious disclaimer for a study such as this that causality and correlation are not the same things.)

Tiny Tower screenshot

Tiny Tower, a highly successful, free-to-play, iOS game is targeted directly at people with poor impulse control. The game is entirely free-to-play, but every action you take –  building a new floor for your skyscraper, stocking the shops with goods to sell, waiting for residents to move in – takes real world time. It is very easy to spend the in-game currency, Tower Bux, to accelerate some of these actions.

At the time of writing, Tiny Tower is the 22nd highest grossing game on the App Store, and shortly after it was released, I wrote a post estimating that Tiny Tower was on track to make $3 million in revenue in its first year.

Its success is, at least partially, down to its ability to offer people the easy route to immediate gratification, something which people with poor impulse control are likely to grab.

Are whales just about poor impulse control?

I don’t want to single out Tiny Tower as an example of an exploitative game. It is a game put together with love and passion by a pair of brothers who clearly care deeply about their game. It is my favourite game on iOS at the moment.

It is not a game about self-expression, though. Its revenue model focuses mainly on people who can’t wait.

Elsewhere, in games from Zynga, for example, this revenue model is taken to a more extreme level. Zynga seems to be using every psychological trick in the book to encourage people to come back, to level up, to spend money and to spam their friends. These are all legitimate game design (and marketing tools).

When they are done cynically, without love, it is to see why the free-to-play detractors attack such games so easily.

The ethics of free-to-play games

I have been struggling with this issue for a long time. On the one hand, I think free-to-play (or freemium) offers content creators an amazing opportunity. For the first time in history, they can share their content, for free, around the world and, using the interactive nature of the Web, use the free content to discover a direct communication channel to their biggest fans. This is an amazing opportunity (and one of the many reasons why established media companies are so scared about the Internet in general and piracy in particular).

On the other hand, it has enabled games to exploit – using techniques honed in cynical marketing companies and the murky world of gambling – those people whose personalities make them easy marks for Skinner boxes and operant conditioning.

This is not a fundamental flaw of freemium. The free-to-play model can be, and often is, an ethical way of sharing high-quality content to the world, and giving your biggest fans something they crave, value and will pay for.

If you are making a game with love and passion (or a book, a single, a TV show) and can find a way to offer high-quality, premium stuff that is really expensive, but valued highly by your audience, you are targeting True Fans. Sleep easy at night.

If your game (or book, single, TV show) is all about psychological tricks, not delighting your fans, you may be very profitable, but you are targeting Whales. Be wary of cynical exploitation: I don’t believe it’s a long term business model.

Are you targeting Whales or True Fans?

  • If your customers suddenly stop, realise how much they have spent, and suffer buyer’s remorse, you’re targeting Whales
  • If they know how much they’ve spent and view it as value for money, you’re targeting True Fans

Freemium business models are not evil. They may prove to be the best thing that ever happened to content creators and True Fans alike (although not to twentieth century media distribution monoliths).

Choosing whether to target whales or true fans is one of the biggest decisions you can make.

Which will you choose?

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