Subscription-based multiplayers are becoming a thing of the past. A few holdouts still linger, but nearly every major MMO has gone free to play (F2P), marking a huge shift in the gaming market from premium play to freemium.
Last month, one of the most venerable games in the MMO role playing game (RPG) genre went F2P – it was a last major holdout to this new paradigm and it finally gave in. Sony Online Enertainment, which owns the Everquest franchise, converted the game to F2P after 13 successful years as a premium-model game.
A few months before, Everquest 2 had already made the change, as had SOE’s rival Turbine’s Dungeon & Dragons Online (DDO) and Lord of the Rings Online (LOTRO). The game uniquely synonymous with MMO, World of Warcraft (WOW) had also made the change, as did Rift. Most of the new games entering the market are doing so as freemium offerings as well.
“Freemium” is an online business term that describes a specific model for the website or application’s income stream(s). The idea is simple: give away access or software for free and then charge for upfitting, better access, or useful add-on features.
In gaming, “freemium” is replaced with “free to play” instead. The idea is the same: you can download the game client and play for free and only have to pay for more “premium” content, access, or game goodies.
Some games use a micro-transaction model in which small transactions add up to big player payments into the game, usually to purchase premium upgrades like cosmetic gear, exclusive races or classes, and so forth.
Others use one-time or monthly payment plans to sell players better access (usually to pay-only servers), the ability to advance beyond F2P level caps, or access to premium map areas – or any combination of these.
Most games seem to be going for a mixture of both freemium types. Lord of the Rings Online (LOTRO), for instance, uses a combination micro-transaction/premium model for players. Non-paying (F2P) members can advance until they reach premium map areas requiring module purchases. In addition, anyone (F2P or premium) can purchase “Turbine Points” to get added extras in micro-transactions within the game.
The game market has been undergoing deep changes for some time. Most of the focus on MMO and RPG news sites and blogs is on the games themselves – changes in them, upgrades coming, new releases, etc. This overlooks the overall market as a whole, which has been seeing some serious shifts.
Video game sales from the store – meaning game sold off the shelf at game stores, department stores, and online as downloads – have been dropping steadily for some time. February 2012 marked yet another month in which year-on-year game sales fell. This time, the slump was larger than usual, dropping a huge 20% from an already-dismal February 2011, with total game sales being only $1.06 billion. It should be noted that January and February are traditionally slow months, so much of this decline over last year’s and the year before’s is likely because of the slow nature of Jan/Feb – months in which few game houses release new titles.
Still, the drop is significant and important to note. By contrast, subscription-based gaming (MMOs, for the most part) had good months at $550+ million on average for Jan and Feb. Those numbers are for subscriptions only, meaning premium content, not for micro-transactions, which are now making up a huge chunk of online gaming’s income stream. These numbers are all reported by Zacks.com.
Both of these trends are part of a larger change in the market. It’s mostly moving away from one-off game purchases and subscriptions and moving into a different income model.
Further market analysis has shown that under a freemium model of micro-transactions, game developers can expect to get an average of $21 per month per paying player in micro-transactions or a combination of premium and micro-purchased content. That’s very close to the $20-$30 monthly subscription payment paying players were shelling out under a premium model.
This shows that the move to freemium is not killing the gaming industry and is, in fact, adding more paying players, says a study from Parks Associates.
While some titles have been more successful at this market change than others, nearly all have seen two things come once their Free to Play swap is made: more players.
Sometimes the players added are short-lived, which is often the case if the change to F2P wasn’t accompanied by a large content update. Games that were troubled before going freemium usually remained troubled after it – at least once the hype of going Free wore off.
Once-dwindling MMO titles like Everquest 2, however, saw huge leaps in players and income. EQ2 saw a 300% increase in players after going F2P and then saw item sales and subscriptions increase by significant amounts as well.
Other games like DDO and LOTRO did the same, though perhaps not as dramatically. Both of these games enjoyed strong bases of players before the change, and that base remained largely intact after going freemium.
Some in the industry, such as Adam Mersky of Warner Brothers, say that this shift will not kill off the premium, subscription-based game entirely, nor will we see one-off games purchased off the shelf going away either. Instead, F2P has added another choice for players.
His comments are backed by the industry’s many ways of changing to the new times. Many former premium games are now a freemium-premium hybrid, going Free to Play for players to “test” the game, but holding them at certain level caps or other restrictions that make the game less fun than paying a few dollars a month might make it. This is a popular choice for games that were formerly subscription-based.
Although it’s largely disappearing, when premium games began going free to play, many players saw this as “giving in” and as a form of failure on the game’s part. They saw their favorite games, titles which they’d spent countless hours and paid every month to access, suddenly open themselves up to the masses by going free.
This was seen as a “failure” as a once premium experience became filled with “noobs” who hadn’t played the game before and were only playing it now because it didn’t cost anything.
Today, that stigma had largely been lifted, but there are many hard-core players of some games that still feel that their game of choice was “ruined” when it went F2P. This was seen in games like WOW, EVE Online and others when they made the freemium switch.
This change, however, marks a new dawn of choice in game play for players and gives a lot of the power of making or breaking a game title back to the players themselves.
Up to this point, with only premium games on the MMO market, players had to pay into a game before playing it, thus rewarding the game’s makers whether the game was good or not. A game with enough marketing behind it could live for quite a while on just single month subscriptions in this way.
Under our new model, paying doesn’t have to happen until you’ve already played the game long enough to decide that it’s something you really like – like enough to put money into it. This means that if the game’s content and play aren’t that good, it will have a lot of client downloads and players, but will not do well in income as very few of those players will becoming payers. This directly rewards the good games and quickly tells the bad ones that they aren’t wanted.
Dave Georgeson of SOE said it well when he said “If we’re not entertaining you, then it’s our fault that we’re not making any money. This is the new way of gaming.”
He’s right. Ultimately, the Rise of Freemium as a game model has put a lot more power into the hands of gamers, allowing us to choose which games live or die simply by voting with our feet (so to speak). If we don’t like a game, we won’t pay for it.