The Catch in the Free-to-Play Model

Proponents of the free-to-play, cash shop, and micropayments financed philosophy of online games like to point out what they see as a key flaw with the subscription model:  Subscriptions set a cap on how much money your customers will give you.

You’re stuck.  You only asked for $15 a month, so that is all you got.

Now the conservative accounting guy in me can see the benefits of a steady revenue stream.

Subscriptions x $15 = monthly gross revenue.

That is nice and predictable.  Your business plan revolves around getting and keeping subscribers, which is at least a concept you can get most people’s heads around.

Still, I see the point of another approach.  In the free-to-play model, not everybody is going to pay but, as the joke goes, you make it up in volume.

So instead of 100,000 subscribers chipping in $15 a month for a top line of $1.5 million you just get a lot more subscribers and have some percentage of them pay $15 or more.

Of course, that is the fuzzy “step 2″ in the process, the details between the idea and profit.

You have to make a game with enough free content to be viable so that you can build that subscriber base from which you will generate your revenue.  Only a certain percentage of your user base will ever give you any money however, so having free content that brings people and keeps them is a plus.

Okay, that sounds a lot like getting and keeping subscribers.  But you have the word “free” to play with, which is a big plus in the getting department.

So if you want to make that same $1.5 million a month and believe that 10% of your user base will spend, on average, $30 a month on your game, then you need a total user base of 500,000.

And I pulled those numbers straight out of my backside just to demonstrate the equation.  I am certainly no expert on the subject of what percentage of players pay how much in any given game.

On the other hand, I would be extremely skeptical of any model that assumed more than, say, 20% of customers buying in unless your game is balanced such that players are at a severe disadvantage if they do not pay.  And if you did that, you’d be killing off a chunk of the subscriber base that is there for the “free” aspect of the game.  So there is something of a tightrope to walk.

Being somebody who has moaned in the past about there being a lack of subscription options, I have been somewhat interested in free-to-play games.  Certainly I was a lot more likely to play Dungeons and Dragons Online or Runes of Magic under that model.  And the fact that neither game has really stuck with me isn’t really an indictment of those games.  I’m just having enough fun elsewhere at the moment that I don’t need a new game regardless of the subscription model.

The whole free-to-play thing came to my mind the other day when I read an article over at Ars Technica about Battlefield Heroes.

Battlefield Heroes is a free-to-play online shooter that I have been poking my nose into off and on for the last few months.  I own most of the Battlefield series of games, but I haven’t really been into shooters since I was playing Desert Combat, a Battlefield 1942 mod, some years back.

While I bought the next couple of installments in the series, I never played any of them as much as I played DC, so I lost the desire to spend any more money on their games.

So along comes Battlefield Heroes, which is free to play.  I like to play a shooter now and again and this looked good, so I signed up.  Customer acquisition win for DICE and their parent EA.

However, since I only play a couple of times a month, I have no real desire to be competitive in the game.  I play, I shoot people, I die, I have fun.  Customer retention win for DICE and EA and fun for me.

What I don’t do is spend any money.  Not so good for DICE and EA.

And according to that article at Ars Technica, I am hardly alone in not spending any money.

So DICE and EA changed up the game.

Previously, or so it was claimed, you couple be a competitive player by earning enough victory points through moderate play to buy the upgrades you needed to keep up with those laying down cash.  Never having aspired to be anything beyond a moving target most evenings, I’ll take their word for it.

Now, however, you must play a lot more to earn enough victory points to keep up with the neighbors who pay, something seen as a bit contrary to the intended spirit of the game, as illustrated by this EA trailer.

And the community is up in arms about it… or at least the part of the community that wasn’t paying any money and that gives a damn about being competitive.  And while I point out my own lack on that front, I will admit that when I move from target to constant lead receptacle I will often call it a night and do something else.

The Ars Technica article comes to a dark conclusion at the end with the line:

…this update has a very real chance of ending the game.

Maybe over statement, maybe not.  I’m not invested enough to have a good feel.  But as I said above, I think if you try to squeeze to hard, you’ll reduce the player base without necessarily increasing revenue overall.

And the fact that this is coming up makes me wonder where that line is when it comes to cash shop financed MMOs.

Sure, the player base is probably a bit different, and there are certainly some cheap shots you can take at the stereotypical FPS player, not all of which are totally inaccurate.

And the play style is different.  A shooter puts you in direct competition at all times with people who maybe be spending more money than you, while in a PvE MMO at least, direct competition is somewhat limited.  The guy with the store bought mount and sword of might can go on his merry way and not wreck your evening unless he really sets his mind to it.

So far, in the free-to-play MMOs I have visited, I have not seen a huge push to make people feel they need to buy.  Usually what I see are incentives, special deals, and other come-ons to make item shop purchases look more attractive.  But who knows how long that will be the case?  What happens when a game don’t make goals for a couple of months and the CFO is calling to tighten up the business model?

What happens when it becomes imperative for the company to make the players buy more stuff?

Can you push the cash shop free-to-play formula too far in the direction of “must pay to realistically play?”  Or does the MMO model… or at least the PvE fantasy MMORPG model… protect us from that to a certain extent as long as you have a tank, a healer, some DPS, and a monster against which to throw them?

17 thoughts on “The Catch in the Free-to-Play Model

  1. Andrew

    I don’t like paying for convenience/frill items in F2P games, however I do love paying for content. I happily buy new zones and quests in both Wizard101 and DDO.

    That’s where the sweet spot is, IMO – guarantee a revenue stream by gating much of the content with microtransactions, and have the other traditional cash shop items on the side.

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  2. SynCaine

    One of my issues is dev motivation.

    In a sub plan, dev motivation is to keep you playing for as long as possible, and assuming I’m playing for fun, the sounds rather win/win to me.

    In the F2P model, dev motivation is not to keep you playing, but to keep you paying. Releasing more free content is a good deal for the player, but does nothing for the immediate finance of the dev. Selling an uber sword does little for me if I’m already happy with my gear, but it helps the company stay in business. The problem sets in when I can opt not to buy the sword because realistic free options exist, and so the devs change the game to make it more ‘worthwhile’ to buy said sword. Now it’s pay up or bang your head against content tuned for uber-sword users.

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  3. Wilhelm2451 Post author

    @Andrew: At a gut level, I am totally in agreement with you. Content seems like something for which I would be totally willing to shell out real money.

    The problem is that is only theory at this point, since I have not actually purchased either content or cash shop items from a free to play game. I find that I can be self-deluded on things that are only theory. If and when I actually spend some money, then I’ll be more sure.

    I would like to know how well DDO is doing in content vs. goodies in their cash shop.

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  4. zentr

    Regarding your question, I think we are seeing that squeeze going on in Free Realms right now, and I would be curious to know how their change (in a nutshell: only being able to go to level 5 without paying) works out. You are right; it is a tightrope walk.

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  5. Wilhelm2451 Post author

    @Zentr – I had thought about referencing that change to Free Realms, but I am not familiar enough with the game (it has zero appeal to me for whatever reason) so I was not sure exactly how big of a hit that was to the game. Battlefield Heroes though was closer to home and seemed to cause a lot of screaming from the user base.

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  6. Brian 'Psychochild' Green

    If you want some actual numbers from a free to play game done right, see Daniel James’ metrics he posted up a while ago. Pretty convincing argument.

    Basically, the reason why free to play works is because it’s easier to get those 500k people trying out your game if there’s no subscription to hassle them with. When we did free trials of Meridian 59 we got a fair amount of interest, not quite 5x our existing playerbase, but a good number that might have started playing the game. We might have gotten more with better marketing.

    So DICE and EA changed up the game.

    Make no mistake, DICE is completely owned by EA. I doubt the developers had much say in this, other than a nod of assent when EA told them they were either going to have to increase revenue or be kicked to the curb in this economy. Even though EA might be letting DICE remain separate for now, one only has to look at the fates of Origin, Westwood, Maxis, Kesmai, Mythic, etc. to see that this autonomy won’t last forever. As I’ve said before, this is my main concern for the upcoming Star Wars MMO by Bioware.

    But, consider what would happen if Battlefield Heroes were a subscription-based game. Even if Ars Technica is worried about “ending the game”, if it were a subscription game the notice that they were changing the prices would instead be a “Letter from the Producer” going something like, “It’s been an honor to be involved with this innovative game. But as of (date) the game will no longer be offered to subscibers.” For reference, see all the MMOs EA has shut down in the past, including darling The Sims Online which was hyped to be the first million-subscriber game and fell far short.

    You might lament the fact that prices are being jacked up, but the alternative is that you’d be paying a subscription and the game would then be closing. Something to think about.

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  7. Wilhelm2451 Post author

    @Brian – Ooh, thanks for that link. That is quite interesting. I don’t know if one case gives me all the answers, but it is one more case than I had before. I’ll spend some time with that.

    I know, if it is EA, it is EA and the other name matters not a whit. I mentioned DICE more out of nostalgia than a desire to implicate them in any high level decisions.

    And speaking of nostalgia, funny you should mention Kesmai, since I was big on their games a couple of decades back. I had the honor to meet a bunch of the Kesmai team (and Bill Louden) at the Air Warrior convention they had in Dayton, Ohio. That they, their work, and their legacy was subsumed into EA, never to be heard from again is a crying shame. At least the others you mentioned still have some measure of their work available. I’m always happy when I get a comment on one of my Kesmai related posts from somebody who was there in the day.

    Finally, as for lamenting the price change, I thought I was clear that I really had no skin in the game on that, being one of those casual cheapskates that is causing EA to react. In fact, thinking about it, the change will likely mean more people playing at my level of equipment. Maybe I’ll spend slightly less time as a target.

    But you are right on the alternatives. EA’s history speaks for itself.

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  8. Brian 'Psychochild' Green

    I spent the first few years of my career developing online games learning history. I’ve been fortunate enough to have chatted with Kelton Flinn myself. I didn’t get to play any of Kesmai’s games, unfortunately; I think this is one of my motivations for trying to keep Meridian 59 running.

    And, sorry if I was a bit too free with “you”. The title says there’s a “catch” in the free-to-play model. I’m pointing out that there’s always a catch, it’s just a question of where it is for the consumer. :)

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  9. Toldain

    In order for an FTP model to be successful, you need to make and sell things that the players want. Exactly what that is will depend on what your game is. I have it from a reliable source that D&D Online is making more money under F2P than it did under subscription. And a lot of that is from appearance gear.

    I’d hesitate to generalize from that, lots of posters here wouldn’t spend money on appearance gear. Except they maybe would if it were a game they had a long history in with one character, don’t you think?

    Like any other business, you have to be able to answer the question “what is the value proposition?”

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  10. Wilhelm2451 Post author

    As usual, I have let simplification obscure my point. Getting a headline to express exactly what you mean is always a challenge.

    I wasn’t claiming a moment of “Eureka! I have found the problem!” I just found it interesting that EA’s actions so clearly illustrated a problem with the FTP model (and I wish the acronym wasn’t “FTP” since that means something else in my mind… but being an engineer, I must turn everything possible into an acronym) which is how hard to push the items in the cash shop and how necessary they should be to being “successful” (however you want to define that) in a given game.

    I also was wondering how much more fuzzy that line between “just enough” and “too much” was for MMORPGs when compared to a game like Battlefield Heroes. How transferable is the lesson (if there is a lesson, it is still early yet) from EA’s changes to the game.

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  11. Stabs

    If there’s a lesson to be learned by developers it’s not to start your pricing model too generous.

    Battlefield Heroes are being seen as taking something away from players.

    Yet I’ve been playing a similar F2P game on and off for years, quite happy to play for free as cannon fodder for the people paying. (Shattered Galaxies).

    Very similar business model, very contented community, game is still going after eight and a half years.

    The big difference is they didn’t start out too cheap then have to wallop people with a hefty price raise.

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  12. heartlessgamer

    As a long time BF:H player, I want to point out that the Ars Technica story is full of crap. I don’t have the full time to explain now, but I have no problem with the changes. VP (in-game points) items were too cheap and BF (real money) items were too expensive.

    The point of the change is that players that wanted to spend money were getting nothing for the money spent and had to use the free in-game Valor Points to get everything they wanted. I called this out in beta, because it didn’t make sense.

    Outside of one weapon, the rocket launcher, the items you buy with VP are not in any shape or form required to be competitive. I play with the default weapons and without bandages all of the time and routinely place #1 in matches.

    The backlash is because people hate having something taken away. No different than players saying they are unsubscribing from a monthly fee after a patch nerfs their class.

    I’m sick of people losing the perspective anytime the dreaded word “micro-transactions” gets involved. Blog post inc later today if I have time.

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  13. Wilhelm2451 Post author

    @Heartless_: Thanks for your comment. I went back this weekend after writing this and played for a few hours. I favor the defaults as well just because I’m usually on to play, not to shop. I did well enough and never felt like I was totally outclassed by the guy wearing all the custom gear. So I would have to agree that, for me, the change does not appear to mean much at all.

    But people screaming bloody murder about it made me think about the potential for screwing things up and how that might manifest itself in a F2P MMORPG.

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  14. heartlessgamer

    Well, people screaming bloody murder about it made me think about the potential for screwing things up and how that might manifest itself in a subscription MMORPG just as easily.

    Blog post will wait another day. MNF took a bit outta me when the Packers almost lost it :P

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  15. Loredena

    I find that I will pay a microtransaction for appearance gear in EQ2, where I am invested in my characters. I have also bought LDoN cards in the hopes of certain loot items that are useful, and I frankly would have preferred the option to outright buy them.

    In DDO, I have paid for bags, and starter gear, and of course access to adventuring areas. I’m only playing once a week, with friends, so anything that helped get me going was good and I figured if I spent the equivalent of a couple of months subs up front and then never again, it’s a good deal all the way around. I’m not going to pay for appearance items in DDO though, as I’m not invested in my character’s look.

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