Why Is (Almost) Every Video Game Suddenly Free?

There are three main gaming platforms. The PC, the mobile or ‘smart' device, and the dedicated games console. Looking worldwide, two out of three are now dominated by free-to-play. On PC we have the world's #2 FPS by revenue. Nope, it's not Battlefield 3 but Crossfire, a low-res free-to-play Counter-Strike clone that's so popular in China that four million people have played the game at the same time.

On Steam, the trusty stats page shows us that the two most popular games on the platform are both free-to-play. Casual PC games now mostly take place in the browser, and the free-to-play model (in which starting the game is free but users may pay for cosmetic and/or gameplay-affecting add-ons) dominates there, with the vast majority of the world now playing casual browser games on Facebook.

If the game is good enough, then consumers will be faced with a choice: pay $US60, or get basically the same thing, for free.

On mobile, there's Apple's top-grossing US list of 2012, where on iPad and iPhone you need to go to 13th place before you find a game that isn't free. On Android, paid games are basically non-existent — with even Angry Birds being free. In Japan in 2011, the two leading free-to-play mobile games companies alone — Gree, and my employer, DeNA — took more net revenue than the entire gross of Japanese games software retail business ....

So, why is free-to-play becoming so dominant?

I wrote last week about the cost to the consumer of downloading data dropping dramatically over recent years. Well, it just so happens that the cost to businesses to send that data has also been dropping dramatically. So much so, that you could argue that the cost is essentially zero. In fact, as a developer, distributing your game on Steam or the iOS App Store or Google Play, costs literally nothing.

Compare this to the price of distributing a game in the traditional console model. You'd need to manufacture an expensive disc (or extremely expensive cartridge), store it in a warehouse, transport it to a distributor's warehouse in planes, boats, trains and trucks and then transport it to and keep it in the retail store.

In economics, there is a concept called "Marginal Cost Pricing" — selling something for exactly how much it cost to make and distribute it. The famous quote on this subject is from a French mathematician Joseph Bertrand in 1883: "In a competitive market, price falls to the marginal cost."

I think we are only a few years away from a free-to-play Skyrim equivalent.

In the old retail model the marginal cost of distributing that game to a user was high: several dollars. The minimum therefore you could charge the users was exactly that: $US5 or so. In the new world of online distribution that marginal cost is the same as the cost of distribution. Precisely zero dollars.

This creates a situation where in any given genre, there is a good chance a risk-taking or desperate developer will start offering their game as free-to-play. If the game is good enough, then consumers will be faced with a choice: pay $US60, or get basically the same thing, for free.

People like free stuff, and generally when making decisions they balance three factors: cost, quality and convenience. When basically the same thing is offered for free, research shows they will generally take that option. This means when one developer offers the same game for free, competitors have no choice but to eventually follow, and soon enough (like we see on mobile), everything is free.

‘Hang on a minute!' You might say. "There's no free to play competitor to Skyrim, Bioshock or a bunch of other genres!"


This hasn't happened yet, but it will. Two things will enable it. First, the talent and the investment needs to exist. I've lost count of the number of amazing AAA devs I know who've moved into free-to-play. Look at a game like Hawken an incredible looking, Unreal-powered free-to-play shooter developed by ex-AAA developers and bankrolled to the tune of 10 million dollars by venture capital. Secondly, free-to-play game design needs to start to work with single-player-games. This is already happening, particularly on mobile, where a single-player focussed game like CSR Racing topped the charts earlier in the year. I think we are only a few years away from a free-to-play Skyrim equivalent.

Remember: consumers are proven to balance cost, convenience and quality. So something radically cheaper and more convenient than the other options doesn't have to match perfectly on quality.

There's one genre where we've already seen this mechanic in full effect: MOBA. An L.A.-based startup with its first game, has been able to push quality so high that its forced the two biggest players in PC gaming to give away their games for free. Riot Games and League of Legends has taken the PC gaming world by storm in recent years, recently it was revealed there are more people playing it than World of Warcraft . But LoL is free-to-play and this has forced the hand of anyone who wants to compete in this space, even companies like Valve and Blizzard who have no previous problems getting people (me included) to spend $US60. In this marginal-cost-pricing environment, where the upstart Riot have taken the risk of dropping to a free price point, both Dota 2 and Blizzard All-Stars have been forced to go free. That is testimony to the power of marginal cost pricing.

If console platform holders continue to be nervous and slow re: free-to-play, they could find that a significant proportion of their loyal fans is unconsciously spending more time on PC and mobile.

Console is the only place where free-to-play hasn't really taken off. There are a few smaller titles like Happy Wars on Xbox 360 and DC Universe Online, Free Realms and the upcoming Dust 514 on PS3. Nothing on Nintendo platforms at the moment. Why is this the case?

Insider information gives me a simple explanation: Sony, Nintendo and Microsoft are either absolutely terrified of free-to-play, they don't understand it, or they are simply slow to respond. Given every piece of content on console platforms is carefully curated, a policy from a nervous platform holder is all that is needed to constrain any new business model. This is very dangerous behaviour. Consoles don't exist in a vacuum. Players chose console gaming over other competitive platforms. If console platform holders continue to be nervous and slow re: free-to-play, they could find that a significant proportion of their loyal fans is unconsciously spending more time on PC and mobile.

You might not be a fan of free-to-play, but as I've argued, as we move towards 100% digital distribution for all games, free-to-play is an inevitability in most cases, and any platform that doesn't embrace it could find themselves the Encyclopedia Britannica, to free-to-play's Wikipedia.

Ben Cousins (@benjamincousins) is a 13-year veteran of the games industry who's worked at Lionhead, Sony and EA among others. He currently runs Scattered Entertainment (http://www.scatteredentertainment.com/), a studio in Stockholm owned by Japanese mobile gaming giant DeNA. where his team are working on disruptive AAA mobile FPS The Drowning.


    I dissagree, i will always choose a paid model over a ftp model as i get better support ect. i hope that we all dont go down the ftp model.

      It's really one of those things that depends on the developers, rather than the model. Valve, needless to say, are great at it, and there are also others out there, like the guys who do Champions Online. I'm sure there are some others out there, but admittedly I don't have a big experience with free-to-play games.

      Exactly. FTP brings all sorts of problems like equality, pay to win, I don't trust companies with my credit card/ don't want to pay once per week for something I could have bought outright. I always prefer a single outright payment.

      not really, it all depends on the company. Some F2P games have excellent support and some paid games have absolutely horrible, borderline non-existent support.

    Three? Are handhelds lumped in with consoles? I don't think so.

      Umm, yes. They are. They are consoles that incorporate a screen on which they can be played. Hence they are properly referred to as "Handheld Video Game Consoles" rather than just "consoles". And the only reason they still exist is because Nintendo has the exclusive rights to certain games which they keep flogging to death to sell more copies. Hence why the PS Vita died a rather ignoble death, and the 3DS is on life support outside of the Mario-Zelda-Pokemon series'. Mobile Phone gaming has made huge advances which pretty much mirror the Handheld capabilities, and in some cases even exceed them. The previous developers of handheld consoles have lost their competitive advantage almost completely (being the exclusive mobile gaming platforms), forcing them to rely on their copyrights to support the ongoing platform development.

        So then a video game console is just a PC that can only play games. So it should be lumped in with the PCs then. Or mobiles too, they're little computers that can do anything that you install a program for. Maybe that should be a PC too?

        The handhelds are their own platform because they offer something different to the others. That's why you see the three separate consoles all having the same games across them (and often the PC too) while the handhelds have had something completely different that just has the same title sometimes. If anything, the handhelds are to the mobiles what the consoles are to the PCs.

          I'll break it down for you.

          Consoles: Matching hardware and environments.
          PC: Various operating systems and hardware.
          Mobile: Mixed hardware. Same environments.

          Also handhelds have had different games of the same title usually due to constraints placed on their hardware.

          In closing fuck off whiner why are you so butthurt about your handhelds being called a console? Clearly they are.

            Butthurt? I'm perplexed is all. As long as I can remember, it's been handhelds, consoles and PCs. Three branches to gaming. Maybe arcades too if you want to add a fourth. Then mobiles come along and add another branch, then all of a sudden handhelds disappear.

              what DeeDee said is true but your point handhelds disappearance is true as well. I don't know when but apparently mobile has taken over the handheld section because many casual gamers categorize their iPad/iPhone/Android as handheld due to the massive amount of casual games.

              Nintendo handhelds have their own exclusive, PS Vita have their own exclusive, iPad/iPhone/Android have their own. The line is too thin to differentiate now.

              I would like more love to the original handhelds. My handhelds are dying because of the new change!

    I personally dislike free to play games. I would much rather spend $60 at once, instead of paying more over a long period of time. Also, I believe many parents, especially those with limited technological knowledge, would be rather skeptical of FTP, as if they buy a game from a store, that's all they'll be spending, however with FTP, if lets say the iTunes password is entered, a child can repeatedly click buy and spend hundreds.

    Hawken is great from what I've played so far, but they really want you to open your wallet for most things.

    My problem is that I'm an obsessive player in that I'll repeatedly play one game for a long time. Typically I'll start playing through on easy to learn the maps and how the equipment works. Then I'll play through on normal to build up the skills. Then I'll switch to the hardest difficulty settings and keep playing again and again until I develop terrifying skills and unlock all the achievements/secrets. This means that I only play a few games and I play them hard. 50 bucks is a good investment for the hundreds of hours that I put in.

    But FTP? Often they have mechanisms that slowly drain your bucks. I used to play World Of Tanks. To play high tier tanks you needed credits and to afford running tier 10 tanks I needed to pay for a Premium account. Typically on tier 10 I broke even, but I still ran some gold tanks to make sure that I had credits to spare for those occasional bad days. Also I needed to spend money on buying garage slots (because I hated selling tanks). I found that I needed to infuse about 100 bucks per 2000 battles. I played WoT as about as much as I would any other game so I played over 8000 battles. That's 8 times what I'd normally pay on a game.

    I had fun with my experiences with FTP but I've learnt the hard lesson for myself. For the hours that I'm willing to put into a game, a one off payment at the start is the most affordable one. But that's due to how I play. Other people who quickly sample a game then move on might adore the FTP model. But for me one off payment is the way to go - heck even paying for DLC annoys me these days.

    Dota 2 isn't free anymore, it's $30 on steam

      Well actually that's only for early access.

    Free to play, pay to win.

    This is literally a game-changer that lowers the bar for the free player vs the paying one... its an aggressive marketing movement towards micro-transactions, and it creates a tiered system of players, the spenders and the leaches. The spenders are pandered too... if your rich in real life your character will look nicer or have ingame advantages. Most games now have no spending cap and you will be competing in the same exact game with people who have no spending limit. And the Big spending will have access to nicer or newer stuff bottom line...

    Competing on an equal field is why i play video games in the 1st place! When the spenders get the newest and best ingame 1st, or without actually delving into the game content, it cheapens the experience and make the game less about providing content and more about trying to get you to open you wallet for a micro-transaction. I wanna pay and support the developers, not decide if my budget will let me kickass or be stuck farming in purposefully lame looking gear (check the only free mech in Hawken, it looks like a walking television set from 1990s and the ones you farm/buy look like starships).

    Yes you can work hard ingame to compete with the paying players, and yes not "working hard" is e x a c t l y why i want to play videogames, to avoid real life issues. Your pixel avatar has no ingame inequalities due to their race, creed, gender, or finance that ties you down, unlike real life. Racisim, sexism, most any -ism is not coded into a game's mechanics... until capitalism sinks its teeth in. Bottom line, what if you're poor? or what if u have money in real life but you're cheap haha,.. should you be having less fun than the spenders?

    I don't wanna be considering my monthly/daily budget every time some newb in fancy gear kills me or whether he is a millionaire in real life or just a gamer with too much credit card dept.

    Free to play is a great business model.

    But it doesn't need to be either/or. You should have a choice with nearly every game - to either purchase an entire title up-front, for the full-price, say $60 for a AAA title. Or, you can start playing for free, and pay incrementally as you go to get the entire game, which works out to about $60. Then Dev's can add in DLC and bonus/extra features to both for additional cost. If the balance of quality, convenience, and price is proven for human-beings, - it will work out to generate the same if not more revenue.

    I'm very worried about Nintendo, Sony, and Microsoft long-term. They are set in their ways, huge, slow moving organizations. In their arrogance, they are all susceptible to being dealt fatal blows.

      Sadly i think they count like every 4th or more customer as a paying customer... so the ftp model will try to squeeze 4-10+ times a normal game fee from the paying customers per year so the rest can play for free x_x

    The stat about Crossfire in China, I think indicates the demand for Gaming in China more than the Free-to-play business model.

    If consoles weren't banned in China it would be a different story.

    So you write an article about free to play games, saying that people will choose them over $60 games because they're free, and that we'll end up getting a free Skyrim equivalent game, failing to mention that with every single one of these games, there are ridiculous amounts of microtransactions usually pushing the price well over $60!

    Free to play works well with multiplayer games. I'm going to take a bet that it will never take off with single player games.

    You want my take on why consoles haven't adopted free to play? Because players want a full experience. They don't want screens coming up on them prompting them to spent $1 here, $5 there. And what else? Microsoft, Sony, and Nintendo know their place. They're not terrified, they're not slow, they're not stupid. They know that people want full experiences that you won't get anywhere else. Could you imagine a free Mario? Are you honestly stupid enough to think that would be a good idea? Sure, you get the game for "free" to start with, but you get one world, or maybe a couple of levels. If you go by the trends seen in F2P games, you'll end up paying more for the entire game than you would've if they just sold it fully.

    Let's take Theatrhythm Final Fantasy, a game I'm quite familiar with that just made the jump from paid 3DS game to free iOS game. I paid $30 or so for it, and got a full game with the full experience and all the characters and all the base songs. I can't be bothered trawling 100 pages through GoNintendo to find it, but there's a good breakdown of the different costs between them, and also what the iOS one is missing. Basically, you end up paying about $70 for the same thing, and you still miss out on one of the game modes, and you get static backgrounds instead of clips from the games.

    All F2P is doing is lowering consumers expectations. If you want a barebones experience, then fine, stick to F2P and take satisfaction in your $5 outfits or whatever. Believe it or not, there are people like me who would prefer to get a full game, with a rich story and fulfilling experience, without getting nagged or pushed into paying small amounts every step of the way.

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