Tuesday, July 05, 2011

Is free to play really the best business model? (part 2)

The biggest flaw I can see with current realisations of the free to play model is that a company relies on relatively small set of committed players to generate almost all of their revenue while a much larger number are enjoying some of the benefits of the game while paying little or nothing.

Case in point: Tobold, a committed player,  has spent €250 and has enjoyed 2,500 tank battles (if I am reading him correctly). I, a more casual player, have spent €10 and have enjoyed 400 tank battles. Of course direct comparison of tank battles is not the full story and it is entirely possible that Tobold has gotten great enjoyment out of acquiring and using high level tanks while I have wallowed in the low end. Nevertheless I can say I have enjoyed my time and I am certain that Tobold did not get 25 times more entertainment from the game than I did despite having spent 25 times as much.

So in a free to play game committed players are subsidising the more casual. Cross subsidy is nothing new. In a subscription game the casual player subsidises the hard core and surely that seems less fair. My worry about cross subsidy has nothing to do with fairness however. My worry is that it creates a vulnerability in the business model.  If you are relying on a small group to pay above their share and therefore subsidise everyone else then your entire business is very exposed to a competitor who creates a new product which offers the same benefits but gives a better deal to that hard core of paying customers. That is easy to do because those customers are already paying way more than their cost so there is plenty of room for a competitor to undercut you and still make a profit.

Of course this assumes that online gaming is an efficient market and that players will make rational decisions based on price.This doesn't really happen because players get locked in to the online games they spend so much time in. A player who has spent hundreds of hours getting to the upper tiers of World of Tanks is not going to be tempted to go back and start at tier 1 of a competing game just because it will cost them a few dollars less every month.

The success of free to play however shows that customers will make decisions based on price (free is a very attractive price)  and lock in is not such an unassailable bulwark as might be assumed.  All a competitor has to do is to mirror the benefits you have accrued in the original game. This is already standard practise in other industries. For example I have a healthy no claims discount built up on my car insurance but I can go to a competing company and they will honour that  discount in order to convince me to switch.

So here is my plan to undermine a successful free to play game:

1. Make a copy of the successful free to play game that is as close as you can legally get away with. World of Tanks is particularly vulnerable here because all of the subject matter is in the public domain.

2. Concoct a pricing model that offers substantially better value to hardcore players but still makes you a profit on those players.

3. Create a frictionless transfer mechanism that allows players of old game to carry all of their accrued benefits and experience over into your new game. Allow this at an individual and at a  group level - whole guilds can transfer over at the click of a button and start up exactly where they left off.

4. Advertise heavily and use whatever dirty tricks you need to to convince committed players to try out your new game. They have nothing to lose because they won't lose their old game accounts if they come over and try your game.

5. Cream off a hefty percentage of the committed paying players and enjoy your profits while leaving the original game with an excess of non paying casual players.

Could this happen? Well if you doubt that it is possible to make a high quality copy of a game that stays faithful to the original but doesn't break the law then just browse the catalogue of Game Loft. The only novelty in my plan is the suggestion that players should be allowed transfer their status and achievements from one game to another. For this to work it also means that you need to have your end game sorted on launch day. Many games launch with a polished newbie experience but limited end game in the hope that the end game will sort itself out by the time new players get to it. I am proposing that you ignore the newbie experience and instead polish the end game because you want committed paying players to transfer straight into it.

In part three (tomorrow hopefully) I will ask if another business model would actually prove to be better in the long run than free to play. 


Zoso said...

Interesting idea about the transfer mechanism, though wouldn't it need both parties to co-operate? If I poke around the forums and find the username of a World of Tanks player with a garage packed with Tier X tanks, and pitch up to World Of Not Tanks But As Close As We Can Get To Them Without Being Sued claiming to be "UberTankDood247", only the World of Tanks people could confirm or deny that.

I could be wrong, but I think there are industry regulations for things like confirming length of no claims bonuses; another precedent could be keeping your telephone number when moving to different services, but again I think there's some regulation there. It would be a positive move for the customer, emphasising competition on price as you say, but I'm not sure the companies would go for it.

Would also be fun on the forums to see debates about whether a Tiger tank is represented properly in Game 1 or Game 2!

mbp said...

Well the way I see it is that every game has some mechanism for reporting a players stats. Some games even make it publicly available such as WoW armory. The competitor needs to come up with an automated script that allows a player using their own log in details to to read these stats and report them back.

I can see this being a bone of contention - the recent example of Facebook blocking Google+ from looking up friends lists is an example of the sort of cat and mouse game that could result.

Some technical ingenuity is definitely going to be required.

Anonymous said...

From what you've written I suspect World Of Tanks is micro-transaction based not free-to-play. Free-to-play is advertising based, ie: there is never any user charges.

Micro-transactions is a form of pay-to-win. Once the novelty of blowing everything up wears off, pay-to-win collapses, ie: when the paying users stop paying. It's too limited in it's progression and diversity.

MT's have another problem, the environment has to artificially partition based on amounts paid. This limits the multiplayer aspect. But then I guess many games are not really a multiplayer design anyway. It would be fair to say I've been assuming multiplayer as a basic premise of online games.

On your topic - Subs seem perfectly fair to me and I'm only very casual. Maybe reduce the granularity down to days instead of months is about all I'd see a benefit in. Btw: Hourly charges is no different from monthly charges in that they are both paying for time.


mbp said...

While you are absolutely correct about WoT not being "free" to play the term Free to play has become absolutely confused with microtransaction games in common parlance. Even the game companies themselves use it to describe their microtransaction games.

You make a very good point about the only difference between pay by the month or pay by the hour being a question of granularity. I guess my feeling is that pay by the month is too inflexible nowadays for many many people. There are too many games out there and too many people who want to play multiple games in any one month.

Anonymous said...

Heh, that probably makes every subscription game free-to-play also. They'll all have free trial periods, right? I know I've started maybe 70 trial accounts for just Eve alone.


Anonymous said...

I suspect if the granularity became very small for a large player base then the credit card system would fail under the load.

For example, every Visa Debit transaction being a double transaction with the first transaction being on the credit card which in turn triggers a second one of Direct Debit with your bank.

If hourly subs started becoming truly a massive activity Visa/MC would effectively be DDOS'd by their customers. Or, at the very least, they would have to start charging for the extra burden to fund the huge increase in computing and network capacities required.

Even daily subs is a lot. Not to mention the bill will need to be reformated to make it readable.

I'm sure it's doable but probably not at the moment.


Anonymous said...

The multiplayer aspect is prolly the most significant part of the equation of subs vs MTs.

In multiplayer, balance between characters is important. Having any advantage that was purchased with RL money is unfair. Just like the average single player skill-by-missions is hugely unfair to newbies.

So, when such systems are part of the game engine then there has to be the dreaded artificially partitions to help keep the balance.

This is rather anti-multiplayer, which in turn makes the game more of a single-player game with added chat rooms and arenas.

For true multiplayer games, imho, subs are the only reasonable answer. Albeit with finer granularity in the future.


Anonymous said...

According to Wikipedia, Gobliiins predates The Lost Vikings.


mbp said...

I haven't played any of the Gobliins games but you are correct - they do predate Vikings and it looks like Blizzard copied the idea from them.

Anonymous said...

Thank you, I was starting to forget what I had written. :)

Did you have any choice in which comments you could validate in this thread?


mbp said...

Unfortunately I have no control over the comments that get flagged as spam. Those comments Blogger thinks are spam get shunted off to a hard to find folder. I check it every once in a while and rescue the non spam ones. I had hoped that the filter was adaptive and would learn for example that comments signed by yourself were not spam but it hasn't learned yet.

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