The Emergence of Free to Play, and Decline of Pay to Play

By | May 2, 2017

When the first online games emerged, most were based on a pay-to-play model. Some involved an hourly rate that was charged to play; however, the monthly subscription method of monetization became the most common method. As these games grew in popularity and e-commerce websites such as Ebay and Paypal began to grow, players began buying and selling digital items within games for large sums of money. This quickly exploded into a massive industry in which actual companies began to arise around the sale of virtual items in games. This turned ugly quite rapidly, as the pursuit of profit led these sellers to use automated tools, hacked player accounts, and cheats to earn their items, and bots to spam the in game chat for the purpose of advertising their website, thus ruining the player’s experience.

As these gold sellers began to undermine the enjoy-ability of their games, developers began to push back, prohibiting real money trade(RMT) and the advertising of it in game. The massive growth of these “gold-sellers” were a clear indication of demand to publishers. It was proof that players would in fact pay for fake, digital items with no real world value, a concept that would have seemed completely bizarre 20 years ago.

When the first “free-to-play” games emerged, many of them were known to be extremely “pay-to-win”. Quite often, the best items could only be earned by paying, meaning that the only way to be competitive would be to spend a large amount of money. At first, publishers felt that players would only buy digital items if they were significantly useful, as the idea of fake, virtual items being sold was still seen as bizarre. Over time, developers tested the limits of what players will spend money on, with games starting to shift from “pay-to-win” to “Pay-for-convenience”.

Over time, players began to push back against “pay-to-win” games, and new games began to reflect such changes in consumer interests. “Is it Pay to win?” is usually one of the first questions asked by players looking into a free to play game. What counts as pay-to-win is always a controversial topic, with many players holding different standards regarding what’s fair and what isn’t. Games such as Dota 2 have pushed the limit of free-to-play, with items sold having absolutely no impact on gameplay, and being entirely cosmetic.

Another reason subscription-based games are becoming less common is due to the decline in hosting costs per user. Highly scale-able cloud-based hosting such as Amazon AWS, as well as the massive improvement in server hardware and networking technology since the 90’s has reduced the cost per user connected to a game.

Micro-transactions are a large and growing trend in the video-game industry. It is a trend that has been with with intense criticism from hardcore gamers, but continues to persist because it is more profitable than purely subscription-based games. In fact, even subscription-based games such as World of Warcraft and Final Fantasy XIV have adapted micro-transactions on top of their mandatory subscriptions, simply because they’re so profitable.

The subscription-based model has been attempted countless times over the past 5 years, and has seldom been met with success. Almost every recent title launched as a subscription-based game has been converted into a free-to-play or buy-to-play game with micro-transactions. To name a few:

  • Star Wars: The Old Republic(subscription->free-to-play)
  • Elder Scrolls Online(subscription->buy-to-play)
  • Tera(subscription->free-to-play)
  • Wildstar(subscription->free-to-play)
  • Archeage(was initially subscription based in Korea, launched in US/EUas free-to-play)
  • Blade and Soul(started out as subscription based in Korea, launched in US/EU as free-to-play)

Despite nearly every game that launches as a subscription-based title dying within a year, developers are still insistent on launching games as subscription-only titles. This may stem from the fact that the designers/developers are often gamers themselves, and prefer to launch games without micro-transactions out of principle.

With every new game being launched as a pay to play, monthly subscription based title, every company feels as if their game is the exception. They feel as though their game is so revolutionary and exciting that players will continue to pay a subscription and won’t get bored, so they can get away with charging a subscription. The latest of this trend is Ashes of Creation, which recently launched a Kickstarter indicating that the game will require a monthly subscription.

Another theory is that many games launching as subscription-based games are intended to convert to free-to-play at a later date. The idea is that the game will make the majority of it’s revenue early on when there is significant hype, through sales of “Founder’s packs”, copies of the game itself, and the first few months of subscriptions. When the game begins to lose players, temporary sales of the game itself can stimulate further sales. When the game really starts to feel dead and sales aren’t attracting many new players, the game can transition to free-to-play, and the game will experience a new surge of players once again, with revenue from previous sales secured, with older players simply receiving compensation for their purchase of the now-free game in the form of digital items that cost no money to produce.

 

The subscription model fails to compete with free to play and buy to play games, for many reasons:

1. Online games, like social networks, rely on the network effect.

People don’t want to play a game with an inactive community. Online games rely on the existence of many players for the purpose of creating in game experiences.

Players generally want to play a game that they can play with their friends. Convincing your friend to try out a free game is easy, but convincing your friend to spend $60 followed by $15 a month is not. When groups of friends are looking for a game to play, they’re more likely to settle on a free-to-play game, in order to ensure everyone in the group can play it.

If a player doesn’t spend any money, they’re still valuable to the company that publishes the game. That’s because they may attract friends that will pay, or create solid experiences for other players that do pay.

2. Micro-transactions expand expand earnings potential per user.

With a purely subscription-driven model, the most money you can make per user is the cost of the game, plus the cost of a subscription. What you charge for a subscription must be equal for everyone. If you charge too much, you lose subscribers. If you charge too little, you miss out on potential revenue from consumers willing to pay more.

3. Subscriptions deter casual players/busy individuals.

While most hardcore players often prefer purely subscription-based games for the principle of fairness, they are often a minority in terms of players. When Wildstar launched with a subscription-based revenue model and challenging content that was specifically geared towards hardcore players, the game performed poorly in terms of player retention due to the game not appealing to a wide demographic. Shortly after launch, the developers rushed to produce easier content and make endgame content more accessible, but it was too late, players already had bad impressions.

Casual players are less likely to want to pay a subscription for a single game. If they only have time to play a few hours per week, they will feel as though they aren’t getting their money’s worth on their subscription.

4. There’s too much competition from free games.

One of the best thing about free to play or buy to play games is that there’s an abundance of games you can play as little or as much as you like. With a game you’re subscribed to, you likely feel obligated to play it more than other games, thus making it a game you need to stick with rather than having the freedom to play it in short bursts whenever you feel like it.

 

Design Transformation

The massive growth of free to play games has certainly transformed the industry. While it does make online games more accessible and affordable, it also can have negative impact on the ways games are designed. Free-to-play games are often designed around microtransactions rather than what’s fun. For example, in order to create a “pay for convenience” model, designers will implement inconvenient aspects of gameplay that make the game frustrating, such as repetitive gameplay that can be skipped or sped up by paying.

Just as players have demanded that games avoid being pay-to-win, they should also demand that games avoid being designed around micro-transactions rather than what’s fun. The most successful method of achieving a profitable free to play game without impacting gameplay experience has been charging for cosmetic items, and for large expansion packs/”DLC”

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