Evolving MMOs: Changing Business Models

Among everything else going on at the Austin GDC, an interesting panel took place on the issue of changing business models in MMOs — Free To Play has an easy to read, to the point summation of the panel, which included Robert Ferrari of Turbine (LOTRO), Hilmar Veigar Petursson of CCP (EVE Online), Nicolay Nickelsen of Funcom (Age of Conan), and Min Kim of Nexon (MapleStory). Unsurprisingly, it included discussion of the revenue models — subscription versus free to play — as well as potential audiences:

Robert: F2P has a huge influence. But we have been based on subscriptions for years, with some games being around for 10+ years. Subscripitions hit a hardcore audience that is really embedded in those games. But as you expand your audience, they aren't as hardcore anymore and F2P becomes more enticing as subs only wouldn't appeal.

Nicolay: Both models work. Hardcore gamers are comfortable with sub model and most of the games with microtransactions have been casual games. But it is possible to have more than one biz model in a game.

Min: There is room in the market for both biz models. F2P in North America will make a large push as teenagers can't commit to $15/month, so F2P will work well with them. Nexon saw lots of success when the market went beyond core to mass market.

Hilmar: Consumers are changing the business model of games - consumers making decisions. You can play Eve online through our trial program as a F2P program - users are able to "game" our trial system to play it as a F2P game. It's a challenge for companies to adopt the needs of the market rather than keeping their head in sand. People will play the game how they want.

Min: We're seeing in S Korea a lot of players have a subscription-based game that is their favourite, but have a secondary game that they play f2p with microtransactions.

I can't imagine the FTP model will ever overtake subscription models in the West, but there's no doubt that there are a lot of people playing FTPs — and spending way, way more than they would on a subscription — with an ever-increasing audience. I'm curious to see if we'll get any of the crazier FTP MMOs coming out of Asia in the coming years.

Evolving Business Models in MMOs - Panel [Free To Play]


    IMO the business model needs to fit the quality of the game. I've tried a few FTP games, but they all suck, badly. I still pay $30 a month for WoW (I have 2 accts), and although I'm on a small break until the new expansion comes out, I've been pretty satisfied to date. $30 month is very, very cheap entertainment compared to movies, alcohol, eating out, etc.

    Back on topic, compare these two business models (intentionally left off the current de-facto);
    Game purchase: $10 and free expansions each year
    Subscription: $20/55/200 per month/quarter/year.
    Game purchase: $180 and $90 per expansion thereafter that DOESN'T require the original game every six to twelve months
    Subscription, nil.

    Which works best? Both cost the ~same... Which would the industry prefer? Which would consumers prefer? Well unfortunately we don't get a choice, that is up to the 'marketing' department.

    The problem comes down to the economics of money, and the fact that everyone needs to get paid. Consumers don't think twice about the initial cost of sale when it is a very low figure (say the cost of a couple of beers), and you see a lot more potential buyers for those games, however the stores don't make any money on sales as it all goes to the developer through subs. When the game costs a bomb, the margins on sales are much higher, but there is the initial shock of a huge up-front cost. Add to that, the cost of upkeep is potentially unstable for a developer, cash flow is poor, and you must keep releasing fresh content and charging for it to make it work. It does eliminate the need for subs/game card payments, but $180 off the bat is a big investment for some people.

    Personally, I'd prefer either as the current system is flawed by having to pay for the store delivered game, plus expansions, as well as a subs thereafter, when all the advertising and promotion is on-line anyway.

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