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Aug 17, 2006

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Comments

1.

As a student with a tight budget, I had the choice of paying $40 for the WoW client and a month of play or $50 for a Guild Wars account to which I would have free access forever. It wasn't much of a choice.

Now that I'm making an actual income, I'm considering playing subscription-based games despite finding it hard to justify the comparative cost.

So my opinion? I think you're right: those that can afford $15 a month will pay it, and those that can't will play the other games.

2.

@Aaron: Although these games sound free to "enter," they can't be both free to play at a level where folks are enjoying them, and "wildly successful" from a business standpoint. Somebody is paying somebody something.

We used to joke in the cellular industry that we should stop chasing 30 million customers at $30/month and go after one really, really rich guy who was willing to pay $900 million a monty for AMAZING phone service. I don't know if there is a curve-of-use for these players, where some number play at a free level for their entire customer life, and others pay-and-play at a minimal (i.e., less than the cost of Ragnarok) level, and others pay a bunch more, such that the economics work well for the publishers. At some point, though, as I said... somebody is paying. It's just a different pricing model.

Same holds true for advertising supported content. It's not free; it's just being paid for by advertisers who then get to influence some portion of the experience. Which is fine. Different, but fine.

I'm not sure I see the major difference between a gamer paying $X/month up front for a standard MMO on a credit card; a pre-teen paying $X/month for a similar game on a prepaid card; and anybody paying $X/month in micropayments for game content. If the customer gets game value, pays money, and the publisher makes some profit... what are we discussing? Business models? OK? I'm missing something here I guess...

But it ain't free.

3.

Andy,

You mean there's no such thing as a "free lunch?" =)

Of course, you're totally correct. It ain't free. Hence the scare quotes.

Many of the participants listed the items that they bought for their own characters, as well as the gifts that they bought in game for their friends' avatars. When you did the math, they were clearly spending more each month on the "free-to-play" games than they would have spent on more traditional titles such as Ragnarok or Lineage II.

You asked what we're discussing here. The conversational field seems to be wide open. To choose just one example, how might this model affect content development and the choices made by game designers? If a game's revenue stream is closely linked to in-game consumption decisions, how would this change the content of the game? Will this model limit or constrain the types of games that are developed in the long run?

As you pointed out, advertising-subsidized entertainment isn't "free." But we also know that advertisers have exercised a huge influence on what we hear on the radio and see on TV. Since we have empirical proof that pricing models influence content, how might this new business model shape the development of virtual worlds in the near-future?

4.

I actually think this is a fascinating area, and in many ways it is an area all games are having to tackle, not just games of the MMO variety. There is a lot of discussion on episodic gaming going on, even in the traditional gaming market (you buy it of the shelf and play it). This is then linked to Xbox Live Marketplace as a potential distribution mechanism for smaller episodes, and so on.

Still, back to the MMO area.

To some extent, it could be said the traditional method of paying £10-£15 a month to play an MMO has to be broken. Not so much because it's a bad idea, but because different options are always good. The reason for this is different options will allow for different types of games to exist.

Take Dungeons and Dragons Online, while it may well have other problems other than its pricing model, one of its major problems was how it priced itself. Dungeons and Dragons Online can't really afford to price itself on a monthly fee model because, right or wrongly, most people don't believe they are getting value, because they don't have a proper persistent world like Azeroth or whatever. In truth, Dungeons and Dragons Online would have been better with a different pricing model somehow based around module releases.

As a result, I think this is a good thing, and different types of games will result, as some games take an approach to content delivery that can't justify the monthly fee, I think Dungeons and Dragons Online was one of them, and went monthly anyway. Other examples are Dungeon Runners, which is a more Diablo-esque game involving dungeon/mission releases over time (in that ways its similar to DDO) - thankfully they've realised a different payment method is needed.

5.

Aaron: Gotcha. The insane overuse of scare-quotes has made me imune to their original, subtle uses ; )

OK. Well, throghout history, the economics of content has always affected the spin, direction, mode, breadth and quality of content. John Donne wrote for himself, and he wrote for patrons; the two types of writing can be easily distinguised, though there are of course similarities. And, sometimes, he wrote ironically for patrons in ways that later scholars would find amusing. So there's always a chance that those providing the economic engine for your work don't quite "get" everything that they're paying for [note the use of scare-quotes to imply punnish, double-meaning, rather than an arbitrary, so-called status ; ) ].

In a game meant to be profitable, I think the use of micro-payments for micro-content is going to drive micro-behaviors. The question then becomes, are those behaviors, in aggregate, more interesting (for lack of a better word) than the things one does in a game where the sweep of your play over weeks and months is more important than attention to various wee details.

That's not to say that details are not important; but if they are the economic driver, then they will, of necessity, take precedence over story. Unless the micropayments are for the story itself -- episodic content was mentioned, but I categorize that differently than the pay-for-bits model. I read somewhere (can't find the link) that... was it "Elder Scrolls: Oblivion"? has added mini-areas that you can buy into for a couple bucks?

What scares me, kinda, about the micro-behavior-model (dibs on new term! I think...) is that it weds gameplay to moneyplay much more closely, while *seemingly* (in the case of "free to join" games) removing money as a barrier.

To be clearer (hopefully). You tell the players that money doesn't matter; you don't need to pay anything to sign up. From a "rules and understanding" standpoint, this means that success should be determined by behavior, ability, luck, time-in-game, etc. Game-based attributes. But when you get in game, there are all kinds of economic-based activities that actually accrue directly to your success, and accrue unevenly depending on how much dough you're willing to throw at the game. As opposed to a game that requires a monthly toll, that is more "money focused," but that has a level bar once you get past the subscription fee.

In short, the larger role that economics plays is hidden in micro-behavior models. Which is, I think, bad from a pure gameplay standpoint. Imagine, if you will, the gameguide for such a game/world. It would read partly like a standard game-gameguide, and partly like a "Consumer Reports" or other shoppers' guide:

"For the money, a BlueGem Helmet of Protection is probably the best Level 3 defensive armor you can buy, with its warding of both ice and fire spells and ability to detect poison in all but dwarven environments. If you can afford a few hundred guilders more (US $3), though, you may want to have a Gamillring Stone enhancement added at your nearest spell shop, as it will keep either one bladed weapon sharp at all times, or provide premanent un-break status on one mace."

Now, I'd rather have that than a game that's not supposed to have RMT but does it on the side, against the EULA. And a world that allowed for a totally transparent set of tools for players to develop and sell content at all levels (the mythical "SL meets WoW meets D&D")... that would be pretty cool.

But charging kids 20-cents for different facial expressions and 10-cents for signature animations and 30-cents for armor-bling... and hoping it all adds up to more than $15/month because you just don't notice loose change dripping out of your pocket as much as you do a wad of foldin' money...

I don't know. Feels kinda scummy to me. And, again, feels like a focus on the micro instead of the macro. Mechanics not game, costume not story.

6.

I have the feeling that you are seeing two factors:

- a largely teenage playerbase, with shorter attention spans and a quickly varying lifestyle.

- a game whose content eventually becomes stagnant and uninteresting, causing the players to leave.

I certainly can't provide hard data for any of this, but that's the way it feels to me. The fact that large numbers moved from subscription to micropayment games would in that sense be as irrelevant as the fact that large numbers of players moved from a game whose name contains "quest" to a game whose name includes "craft".

7.

Oh, where to begin? First, yeah, as you say, this is incredibly obvious. One only need look at the text MUD/MMO market (which the graphical MUD/MMO market tends to mirror, only years later) to have realized, before the year 2000, that the subscription model is going to be supplanted as the primary model. It isn't going to die, but it's not going to be the primary model. Happened in text years ago after we pioneered this model in '97, and it is happening again in the graphical realm.

Aaron wrote:

As Richard Bartle, Jessica Mulligan, and Raph Koster (among others) have documented, MMO growth and attrition patterns are relatively easy to predict.

No, no it's not. If it were, SW:G would have had over a million players, as Raph predicted. If it were, Runescape wouldn't still be growing.

Andy Havens wrote:

I'm not sure I see the major difference between a gamer paying $X/month up front for a standard MMO on a credit card; a pre-teen paying $X/month for a similar game on a prepaid card; and anybody paying $X/month in micropayments for game content. If the customer gets game value, pays money, and the publisher makes some profit... what are we discussing? Business models? OK? I'm missing something here I guess...

But it ain't free.

Really? So a trip to the park isn't free because there is a vendor there that lets me purchase a Coke? What if I don't purchase any Coke and still enjoy myself? In what way was my trip to the park not monetarily free of cost (which is what people mean when they use the word free)?

I agree that it's not a free trip to the park if I purchase a Coke, but what you seem to be missing is that one doesn't have to purchase the Coke. Further, what about the guy who goes to the park, spends his day lazily wandering about looking for soda cans, redeems them for 5 cents/can, and then buys a Coke with that. Was his trip to the park free? I'd certainly say so.


I don't know. Feels kinda scummy to me. And, again, feels like a focus on the micro instead of the macro. Mechanics not game, costume not story.

With all due respect, that's simply false. Our games have used this model successfully for almost a decade now, and the level of story in them absolutely dwarfs anything going on anywhere in World of Warcraft, Everquest, SW:G.

I understand why you might come to the conclusion you did, but I suspect it's based on very limited exposure to the model. I'm not going to argue that business model has no impact on game design. Clearly, every decision surrounding an MMO interrelates and can affect game design. However, the idea that the virtual asset sales business model is somehow incompatible with story, or less compatible than any other model, seems unsupported by the evidence around us: Of the companies running subscriptions, few of them have any serious story and nearly all place their emphasis on game mechanics. Of the companies running virtual world asset sales, few of them have any serious story and nearly all place their emphasis on game mechanics.

--matt

8.

We actually do have a relatively large scale model for the "free to play" game here in the States, though I'm pretty sure it's more popular off-line than online to date: the collectable card game. With a small initial investment ($10-15 for most games), you can play, for free, as many games as you want. The catch is simple - your ability to win depends not only on your skill (which does matter a great deal) but also on the cards you've included in your deck, and cards cost money. I'm not sure if it's still fair to call it a "micro"payment when a top end deck includes 30+ so-called rare cards, where industry standard practice allows you to get a single rare card (1/60 chance of being the one you want) per $3 pack, but the general concept is there.

The problem you're going to run into trying to make one of these things into a 50K+ player game is how to handle your non-payer ratio. If you want to be averaging $15 per player in monthly revenue, your more enthusiastic customers need to be spending significantly more than that. This means you need to provide content that's worth $50+/month to the high end user. How do you accomplish that without creating a staggering entry barrier to the low end player (countering the main advantage of the "free to play" genre, namely accessibility)? How do you retain your mid-range ($15/month) player while simultaneously letting his opponents buy their way past him in the standings (the very reason why many current MMORPG players dislike RMT) when that same player could jump to a monthly-fee game and experience a much more level playing field?

9.

It's more then the youths though, I think.

Living in Asia myself, I note that many adults (And I'm talking of the post 30/40 generation) are actually playing several of these free-to-play games over their regular solitaires.

I could be wrong, but watching as my own father subtly influenced his entire office to play Gunbound (A free-to-play game with two currencies as well) was a pretty interesting thing to go by, and I've seen smaller effects elsewhere.

Could free-to-play be the way to influence older people to play as well, considering their oft-cutesy graphics?

10.

I think the test I'd like to see of whether free-to-play is going to Rule The World would be for NCSoft to make Auto Assault free-to-play.

If free is all that matters -- if it trumps gameplay -- then merely changing the fee model would reverse the losses that NCSoft is said to be taking on AA.

Otherwise, the situation is more complex; American gamers won't necessarily leap like a largemouth bass for a worm on a hook at anything that happens to be free-to-play. Free might be necessary for new games, perhaps, but it's probably not sufficient.

Probably.

--Bart

11.

Eugene N wrote:

Could free-to-play be the way to influence older people to play as well, considering their oft-cutesy graphics?

Just keep in mind that the two have no inherent relationship. Try playing Runescape for instance (free to play, optional subscription that unlocks more of the world). I'm not sure what one describes those graphics as, but cutesy they are not!

--matt

12.

What distinguishes this model of Thai gaming from MindArk's Entropia, other than the opprobrium of the founder of MA? Same game model, same business plan, same methodology. Hate to say it, knowing the rep they have here, but the Swedes did it first :)

13.

@Allen & Matt

So it looks like micro-payment for addional episodes, pieces of different story line, territory will work, but micro-payment for gear or skills on the same playing field won't?

what about micro-payment that offers the likelihood of heroism to occur in your gane play - for example by adding random generated content, or some form of personal service like a personal karate coach that is able to provide you with lessons" that go beyong the confines of the in-world gameplay, what about secret, off-limits stuff ... what if there were rumours about the "dark side" inside the "premium area"?

14.

@Matt: Couple things...

A trip to the park ain't free. It's paid for by taxes. And parks aren't built with the primary intention, from the ground up, to support soda vendors; they're built to support the free activities -- the walks, the frisbee, the dogs, the kids, the lovers strolls, free concerts, etc. The fact that some parks (not all... depends on zoning) allow vendors is ancillary to the purpose of the park.

I do not doubt that there are games with paid micro-content that are fantastic. In fact, as I said, I'd rather have something where that is explicit than on-the-side. And if the system was set up to provide player-to-player transactions... that's super. And "economic play" is also a very, very valid type of play in-and-of itself. So I didn't mean to pooh-pooh the entire concept out-of-hand.

What seems "smarmy" to me (and I should have been more clear; my appologies) is to promote a game as free, if it really takes a fairly significant amount of payment in order to enjoy the experience at an "average" level.

So... to use your analogy... suppose the park were free to enter, but there was a concert hall from which music seeped out -- obnoxiously audible, but not clearly so -- but which you had to pay to get into. And suppose the dirt track was free to walk on, but the nice grassy areas and paved riding tracks were fee-based. And there's a nice lake, with a gorgeous sunset view... that you can't see, except from a pavillion that charges for entrance. You get it. At some point, the "free" nature of the park has been subsumed by the paid attractions. The soda becomes the driver, not a nice add-on. The purpose, not a feature.

If you design a great game, and have a cool way to incorporate paid content into it... have at it. But we have seen "filthy lucre" corrupt just about every other art on the planet. If your desire to milk micro payments out of teens is at the heart of your game design, you won't, I think, develop a great game. At best you'll develop a great addiction. Now some might argue that the mark of a great game is solely its ability to generate revenue. Not I.

15.

@Arno: These games are extremely popular in Thailand (and throughout Asia), but they are all developed by Korean companies. In the East, Korea is widely recognized as the epicenter of innovative game design. Some would argue that this is true at a global level as well.

Project Entropia started in 2003, while Maple Story was first released in 2002. During this wave at least, the Swedes were not the first to pioneer the model.

(Note: I'm just waiting for Jessica, Richard or Matt to jump in with a list of thirty-seven other titles that incorporated various permutations of the "free-to-play" model during the last two decades, and am wary of making any unsupportable claims about who was first.)

There are other significant differentiators between Maple Story and Project Entropia, but I'll need to review Entropia's game mechanics before saying much more about those differences.

16.

Andy wrote:

A trip to the park ain't free. It's paid for by taxes. And parks aren't built with the primary intention, from the ground up, to support soda vendors; they're built to support the free activities -- the walks, the frisbee, the dogs, the kids, the lovers strolls, free concerts, etc. The fact that some parks (not all... depends on zoning) allow vendors is ancillary to the purpose of the park.

It's free to the end user, which is the point. It's the same way that broadcast is free from the end user's point of view. I think you're taking the analogy a little too literally when you start bringing up zoning...


What seems "smarmy" to me (and I should have been more clear; my appologies) is to promote a game as free, if it really takes a fairly significant amount of payment in order to enjoy the experience at an "average" level.

Except that most of these games have adopted the model of having dual currencies that are interchangeable, so it doesn't actually take any money payment to enjoy the experience at any level. You could make the argument that that is still not free because you have to invest time, but at that point I would say, "I do not think that word [free] means what you think it does" and point out that it is then, by that logic, misleading to label the box + $15/month cost of WoW as the cost of WoW, yet I am fairly sure that most people, when asked how much WoW costs, will trot out those figures and only those figures.


If you design a great game, and have a cool way to incorporate paid content into it... have at it. But we have seen "filthy lucre" corrupt just about every other art on the planet. If your desire to milk micro payments out of teens is at the heart of your game design, you won't, I think, develop a great game. At best you'll develop a great addiction.

A couple things:
1. I realize the article focused on teens in Thailand, but I don't like the assumption that it's just teens playing free to play games. They are quite popular with adults as well as far as I can tell.

2. I don't want to get into an argument about art, but let's just say that I fell onto Roger Ebert's side of the argument, with the caveat that I'm not entirely sure when it comes to virtual worlds.

And I'll tell you what: YOu know what motivated Blizzard to make WoW? That "filthy lucre". They are part of a massive entertainment corporation. If you honestly believe the organizational motivation to make WoW was not money, I'm not sure what would convince you. On the other hand, we, a company that employs the model you're using, are free to create whatever we want, and frankly, given that a lot of our content is created by volunteers, the creators of a lot of our content are motivated by nothing more than pure love of the world.

The differentiator has nothing to do with the business model, and everything to do with scale.

I'll also add that it's not just micropayments. We don't even do "micropayments." The smallest amount you can spend with us is $10. The largest is unlimited, but we have had a single transaction as large as $10,000.

--matt

17.

Aaron wrote:

(Note: I'm just waiting for Jessica, Richard or Matt to jump in with a list of thirty-seven other titles that incorporated various permutations of the "free-to-play" model during the last two decades, and am wary of making any unsupportable claims about who was first.

Happy to! ;)

I'm willing to claim that my company pioneered the model in 1997 in the sense that I believe we were the first commercial enterprise to use this model to build a business. That said, I use the word pioneered rather than invented, because I am virtually positive that other people ran free-to-play w/ virtual asset sales previously, even if it was a hobbyist game admin selling something on the sly to players to make a few bucks. I don't have any examples, but I would be really surprised to find out there were none.

I can't really speak to the East, as I had no idea what was going on in online gaming in the East before about 1998.

--matt

18.

Btw, I meant to bring this up in a different post. It's not really related to virtual worlds, but interesting none-the-less. The Flash-based single-player "RPG" AdventureQuest (battleon.com) recently began selling (for $$) what they call Z-tokens. They are credits, essentially, used to purchase various things for your character. It's sort of like Oblivion's downloadable mods, but taken further in terms of coded game functionality of what you can purchase.

--matt

19.

Hmm. Great food for thought. Terrific arguments. Let me add to the mix with a mention of something I first thought of when I read the original posting, but which I haven't seen referenced yet. Cultural-economic difference. Are the purchasing habits and economies of Thailand, or China, or even Sweden, comparable to those in the United States? So much in the U.S. is subscription based, historically: newspapers, magazines, cable tv, cell phones. So are pay-as-you-go phone cards and pay-per-view shows edging out their traditional subscription counterparts? Does someone have data? I just wonder to what extent U.S. consumer behavior is comparable to that in other nations. Anyone?

On another note, I too am struck by a kind of bait 'n switch in free-to-play. Maybe free-to-stand-around is more like it. You want pants? You want gestures? You want crusader enchants (lol)? Can't afford 'em? Well you can come over here and kill rabbits with your bare hands for a few hours.

Now what would be cool is if free-to-play let you get enough of an ingame income going through some side activity (e.g,. professions) to earn pay for your own play. OMG a microeconomy. How novel.

20.

While cost model will have major impacts on a MMO’s design and success, I’d like to return to Aaron’s original question. In my experience, the decision to play a given game is dictated by cost, but also by connections and content. There are many, many factors that initially draw, and then sustain play, yet connections and content seem most pertinent to a discussion on cost. The words cost, content and connections also use alliteration, a key component to any real theoretical discussion.

Since seeing the almost nomadic migration of MMO communities, from Norrath, Paragon City, perhaps Talus, to the respectively fertile valleys of Azeroth, I am convinced that players move with their guilds. If you have ever been in a high-end guild, then you will probably agree that many of the guild’s players are extremely committed to one another. For those of you without 40-100 extra hours per week, check out Jakobsson and Taylor’s Sopranos Meets Everquest article. If you don’t have time for either, that’s ok. What you need to know is that Jakobsson and Taylor discuss different factors that bind players to one another. Three major factors in guilds are reputation, trust and responsibility; they also compare real life friends to mafia connections. While these timeworn connections can’t be replaced, there’s a lot of interplay with cost. How cost is built into the game will influence whether a guild decides to move, and whether they decide to stay.

Content I might best illustrate with a small story. About 8 months ago, my roommate and I were surrounded by friends who had just quit playing Warcraft. Also feeling a little burned out, my roommate decided to download and begin playing a 14-day free trial of Eve Online. I started playing a few days afterward. While the following may be subjective, I feel that we had both exhausted Warcraft’s game content. We had our fill of that gameplay, and had thoroughly experienced everything that we knew how to experience. Note that I’m not just talking about how many quests or monsters or grinds a game has – I’m talking about the gameplay engine itself. At a certain point you might simply become tired with a game. And while content may have prompted this move, cost was a factor in starting our play. It was free to try. Cost was also one factor that drove us away. After the 14 day trial expired, neither of us decided to start paying for Eve.

The main challenge free-to-play faces in the West is not whether it will attract people. If a game is both cutting edge and free, gamers will flock to it. The trick will be maintaining accounts from the core demographic. Hardcore players are used to getting all of the goodies for 15/month. The developer that negotiates this, and other factors for a Western free-to-play MMO might not just attract a substantial number of gamers; they might get to keep them.

Real world money is a critical aspect of any designed game system, but it is one of many. Each unique person will have unique reasons for choosing to quit, start, and/or maintain a game account.

21.

I think that the Item Model is a very disruptive idea, which is why people like it. If you look at the music industry, the iTunes Music Store has made great strides by being a disruptive technology and offering a la carte, pay for what you want style purchases possible.

I think that, with an explosion in the number of MMOs in development, the Item Model is great news for gamers as it gives them a chance to pay in accordance with their gaming habits (something that is important given the varied habits of people who do play MMOs) whilst also forcing the companies who want to continue to charge a subscription fee the incentive to create better content that is worth paying a flat fee for.

I've written a bit more about the Item Model here:

http://suttree.com/2006/06/29/the-item-model/

22.

Gamers can choose to “free”-play a subscription-based game.

In my country, China, the most popular online game is WOW now. But almost all Chinese experienced players will say, “Fantasy Westward Journey” is the most successful game in China.

This game and WOW both use “prepaid card” as their pricing system, not paid-monthly one. WOW is 0.45RMB/hour, and Fantasy Westward Journey is 0.4RMB/hour, maybe the two most expensive games in China. But, the followers of WOW are mainly “rich” players, most of them are adults with stable income living in big developed cities. And how about Fantasy Westward Journey? It’s a 2D game, expensive, but popular in China, especially in the developing provinces in China, about 180,000 players are present there at any given hour.

If you played Fantasy Westward Journey, you can easily find the key point of its success: players can auction their prepaid cards in the game, and other one can buy them with their in-game currency. So, the success of this game is not only it’s a Made-in-China game, but also you can play it monetarily“free”.

Just provide some related facts to you all, hope it is matched for your discussion.

23.

@Matt: I never suggested that making great big monster bags of money wasn't at the heart of every decision made about how to create, promote and maintain World of Warcraft. I also have never suggested, here or on any other forum, that it is a particularly "great" game by my particular standards of gaming. It is clearly successful, which is one quantitative measure of greatness; economic. We can come up with a list of other measures of worthiness besides economic, and that is the point, I think, of arguing all up and down on this forum (and others) about what makes games better, worse, helps them progress, etc.

An illustration: I remember when "Magic the Gathering" first came out. As a gamer, I tried it and found it to be a pretty fun game. Decent play mechanics, easy to pick up. Fun. As a marketer? Holy crap. I was blown away. Brilliant, brilliant marketing, I remember thinking. These guys have come up with a way to tap into the competitive/obsessive nature of collecting (which, in my youth, was limited, in cards, to sports cards) and and graft it onto a kinda RPG/strategy game. It turned out to be huge. Then it was copied badly both by its own publisher and others, it wore out its welcome, and the economic drivers of the game -- the need to pump new cards into the system -- eventually ruined the game. You now have old cards that have been "retired" and can't be used in play, and new ones that do (in game terms) essentially the same damned things as the original cards. The economics have overshadowed the game. Can you still play, for fun, using original decks purchased on eBay, or the ones your older brother picked up 5 years ago at a comics convention? Sure. And it's still a fun game. But as a vector... it's dead.

My point is simply this -- If the real-world economic portion of your game is inherent to the game's flavor and fun and subservient to gameplay... fine. It's a feature of the game, and knock yourself out. I don't know enough about your games to comment on whether or not that's the case, but I'll take it as a given that it is. I got no beef with that.

But there is a difference between a game (or any content) that makes money because it is fun and people will always pay money to do something that's fun, and a game that is fun, partly because there is money involved somehow. Capiche? Consider:

A) A game where, as part of the scene, I can create any kind of clothing for my avatar based on the game mechanics. I win fabulous textures in simple Tetris-like games. I get new patterns in competitive sports-game tournaments. I can earn entirely new types of clothing (hats, canes, boots, bling) by conquering massive, Myst-like puzzle areas. Super-items are only available to guilds who work together to achieve massive public works that can then create specialized jewelry or pets for their members. When you look at an avatar, you can instantly tell, "Wow... he/she's got it going on." You wanna know my high-score? I wear my mutha-humpin' high score, brohim.

B) I can only purchase stuff for my avatar. Same effects as above, same final look, but paid for in real world money.

C) Both at the same time.

Now, if you've got a game that's all about combat, fishing, flying, humping, music, chat... whatever... grafting "B" onto it isn't going go be a big deal. I agree. Could be fun. Trick out your dude and be done with it. However... if some part of the mechanics of what you are buying begins to slip into the mechanics of the game... "A" is by far a "game-i-er" game. "B" is a more economic situation. And "C?" I find it simply confusing.

24.

I think there are two types of "free-to-play" games and the difference is very big.

One type is the ones with the 2 type of in game currency and where obviously there is a trade off between the two. In this case, you can play every aspect of the game without RL cash because all the content available to everybody, and the RL cash only makes the progresson faster. If you want some item which can be bought with RL cash, but you dont want to put money into the game, then you simply swap your one type of currency to the other one and buy whatever you need. Practically you convert your time into cash.

The other type of games are those where you can purchase content with your RL money, and you cant purchase that content with in-game money. So in theory its free to play the game to a limited extent, but if you want to fully enjoy every aspect of the game, then you HAVE TO pay for it with RL cash.

Imo its pretty annoying when the latter one is advertised as free, because its not free to play, but rather free to trial.

The first model is very good one, because it lets people decide individually whether their time or their money worth more for them.

btw EVE online use the same method as mentioned in Fantasy Westward Journey. You can trade Game Time Code - prepaid time 30,60,90 days - in game for in game cash. It is a promising method, because this way the game can have a bigger income than with only the flat monthly fee and no conversion of in-game and RL cash.

25.

I think most of this conversation misses the point. Two quotes from the article:

- "When I reached the highest level there was nothing much to do except wandering about and maybe fighting with other players." Another gamer described the game as "a dead end."

- "they could no longer justify spending money on a game that was no longer fun"

They didn't leave the game because they were breaking bank paying for it. They left the game because they weren't having fun. I think the main point of discovery here is that there is probably some ratio of cost to fun people are willing to pay. The less fun a game is, the less people will pay for it. Conversely, people have a higher threshold for tolerating crappy games when they are cheap or free.

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29.

I have greatly enjoyed reading all the points raised above, and I feel everyone has contributed their own worthwhile angle to the discussion.

The thrust of my argument and contribution is as follows: I think that the subscription games will have a limited shelf life, increasingly free to play games will take the market lead, corporations will increasingly make their money in building up large databases of information on people, selling in game items, and having ingame advertising.

The reasons for my views are as follows-

Its difficult to knowingly predict with great accuracy which way the online gaming format will run, subscription or free to play. I think the first thing to consider is that the internet in one respect reflects a perfect economy with perfect information. If there is a good game out there, people know about it, if there is a good cheap game out there, people will eventually find out. Bar countries like China, there is a mass freedom of information on the net that is incredibly easy to access. Hence, my first point is that the internet provides and enforces a platform for any industry (in this case online gaming) that can be nothing other than phenomenally competitive.
In order for subscription games to maintain their high profit margins, all the game operators need to coordinate with each other in their price setting. It is obvious economic theory to postulate that if WoW reduces its hourly rates by say .10 RmB in China for example, they could expect to increase their customer base. What would happen if a game of the caliber WoW had no hourly rate and were free to play. I surmise it would sweep up the market if it were better than its competitors, and take an awesome market share. But how would it make its money? Advertising, with a large market base, comes the ability to command large fees (coca cola recently did a campaign with one of online games (not sure which one) with a character from it on the front of the can). Selling in games items as everyone has discussed, and building up databases of consumer knowledge on people. Whether the profits would be so significantly reduced that there would be no interest in producing games of the standard of WoW is another question, which I cannot answer here.
Over time I would suggest that popular fascination with high end graphic games that you have to pay subscriptions for will dwindle for the majority, but peoples desire to make and communicate with friends will always remain.

This is a quote from Business Week online last month:

'The business model for online gaming is changing, notes Jun-Fwu Chin, a senior analyst and online gaming specialist with IDC Malaysia. The current trend among online game purveyors is to reduce or entirely eliminate fees to play games to build up a bigger stable of users. Instead companies are switching to a model with revenues generated by the sale of virtual items'

Another quote from Pacific Epoch from this month:

'Online games are a social platform. Designers and developers don't like to hear this, but eventually your game becomes mainly irrelevant to the players who stick with it. What is important is the social group; the game draws them in, but they stay, if they stay, for the socializing. The MMO becomes mainly a platform for group chat and group/individual strut, with a game attached to it to give it context'

The game theory concept the 'prisoner’s dilemma' tells us that you cannot trust people in a situation that allows one party to potentially gain over another. In a such a position both parties always cheat, and try and better themselves, however, as both have cheated, both are now worse off. Hence, in this scenario companies cannot be trusted to maintain the same prices for their online games (as some will try to reduce fees to increase their gamer audience), thus profit margins will always be pressurized downwards by competition. Consequently, I don’t see Subscription games being the way of the future. If you look at Korea and Thailand 'free to play' is becoming increasing more popular.

What do you all think of this view?

30.

Olly Jeffery wrote:

"This is a quote from Business Week online last month:

"'The business model for online gaming is changing, notes Jun-Fwu Chin, a senior analyst and online gaming specialist with IDC Malaysia. The current trend among online game purveyors is to reduce or entirely eliminate fees to play games to build up a bigger stable of users. Instead companies are switching to a model with revenues generated by the sale of virtual items'"

Yes indeedy. My (completely unsubstantiated) guess is that the value of items and avatars in MMOG's is based on the popularity of said MMOG. It's a positive feedback loop--players want to play an MMOG because it is the hot thing and everyone else is doing it. If that's the case then doesn't it make sense to reduce the barrier to entry to as low as possible in order to grow the user base to as large as possible?

One final thought--how about a parallel track for advancement in this hypothetical MMOG? If you're broke you can grind away and pray that you get lucky in order to get the Sword of Uberness. Or if you have plenty of cash you can spend $1000 to purchase it directly from the game publisher. That naturally leads to the kind of ooh'ing and aah'ing which seems to be the goal of a lot of MMOG's: "Wow, he's wearing $5000 worth of equipment!"

31.

And of course the fact that players can get high priced equipment for "free" is another strong motivator.

32.

Lewy wrote:

Yes indeedy. My (completely unsubstantiated) guess is that the value of items and avatars in MMOG's is based on the popularity of said MMOG.

I suspect your guess is incorrect. Popularity may be one factor, but it's not the major one. Our text MMOGs, for instance, have some individual players spending thousands of dollars a year on virtual items and we have less than 10,000 active users, spread across four MMOGs.

--matt

33.

Matt Mihaly wrote:

"I suspect your guess is incorrect. Popularity may be one factor, but it's not the major one. Our text MMOGs, for instance, have some individual players spending thousands of dollars a year on virtual items and we have less than 10,000 active users, spread across four MMOGs."

While there will always be outliers in the sense of individuals who deviate substantially from the mean I have to wonder if the total percentage of a game's subscription base that's willing to spend large amounts of money isn't affected positively by the general popularity of a game. To take an absurd case, what's the cap on what someone would be willing to spend for a game with only a few dozen or a few hundred players? There's always the chance that you will get an outlier who is willing to spend thousands upon thousands of dollars to monopolize a game even if the user base is tiny, but my guess is that more generally the perceived value of goods and items for such a small game will be pretty low. Someone with a background in economics may be able to provide a better answer. I am curious though about how the cost of gold in a game like WoW compares to the basic currency for a game like Auto Assault.

34.


@Matt: I agree with Lewy on this one. It is inherent sense that if something is in more popular demand, the price for that commodity that is highly sought after will rise in price. Now, you may correctly raise the point that a game may be popular, yet the supply of ingame virtual assets are infinite (guess here), hence demand for the games should have no affect on the price of goods paid for.
I would suggest that in your case Matt these examples you give are probably outliers. What is the mean amount spent per person, per item I wonder in your game? Thousands, I doubt it?
The interesting question is whether demand for a game is reflected in increased in game virtual price. Maybe having a large body of players leads to an increased virtual currency (people making money on tasks, and converting RL money into game money leads to ingame inflation) which reduces the value of many items and hence leads to increased prices. This could be why prices in popular games are more expensive.

side note - Matt if a good is in high demand in your game does the price of that item go up i.e. does your ingame economy work like a market economy?

35.

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36.

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37.

lewy wrote:

To take an absurd case, what's the cap on what someone would be willing to spend for a game with only a few dozen or a few hundred players? There's always the chance that you will get an outlier who is willing to spend thousands upon thousands of dollars to monopolize a game even if the user base is tiny, but my guess is that more generally the perceived value of goods and items for such a small game will be pretty low. Someone with a background in economics may be able to provide a better answer. I am curious though about how the cost of gold in a game like WoW compares to the basic currency for a game like Auto Assault.

Sure, no question that it is A factor, but I don't believe it's the dominant one. As always, the prices of items are determined by the strength of the context. A very popular game that nobody is particularly invested in may have a context so weak that everything will be fairly cheap. A small game that people are heavily invested in can have a context so strong that people are willing to pay more for it than a much larger game. Size is just part of the context, but size itself isn't terribly relevant. (Though perhaps as you decrease in size, size becomes more relevant to the value of the context?)

Olly Jeffery wrote:

Now, you may correctly raise the point that a game may be popular, yet the supply of ingame virtual assets are infinite (guess here), hence demand for the games should have no affect on the price of goods paid for.
I would suggest that in your case Matt these examples you give are probably outliers. What is the mean amount spent per person, per item I wonder in your game? Thousands, I doubt it?

Measuring per item isn't too useful unless you somehow compare apples to apples across games, which doesn't seem possible. In any case, our ARPU (Average Revenue Per User) is significantly higher than the $14.99 subscription fee, though I'm unsure if that contributes to this discussion or not. Someone spending $10 grand at once is an outlier, for sure, but if you look at our paying customer base (~half of our total user base), spending $100+ on items is common and not at all an outlying behavior.

The thing is, looking at these as "virtual items" kind of misses the point in my opinion. Particularly in our games, where the items you purchase from us are completely non-transferable to another character (you'd have to transfer the entire character to someone else to move the items to someone else, and that's against our rules), what you're buying is a service, not an item in any sense but the fictional sense. From that perspective, it makes total sense that a smaller game might be able to command higher prices for its services/items in the same way that a boutique hotel can charge more than Best Western (I'm not making an underhanded quality comparison there).


The interesting question is whether demand for a game is reflected in increased in game virtual price. Maybe having a large body of players leads to an increased virtual currency (people making money on tasks, and converting RL money into game money leads to ingame inflation) which reduces the value of many items and hence leads to increased prices. This could be why prices in popular games are more expensive.

Are they more expensive in popular games? By what measurement?


side note - Matt if a good is in high demand in your game does the price of that item go up i.e. does your ingame economy work like a market economy?

Depends on what part of the economy you're talking about. The exchange rate between gold (gotten via in-game actions generally) and credits (all of which were either purchased from us or given out by us) fluctuates according to market forces, so in the sense that our most valuable items are priced in credits, I'm unsure whether that makes it a market economy or not, given that our prices for credits purchased with physical world currency haven't been changed in about 7 years and are set unilaterally by us. So in one sense it's a market economy (you can always buy credits for gold or US dollars. The former rate fluctuates according to market forces. The latter does not.)

38.

I'm wondering what would happen if/when more tools for "meta gaming" are made widely available; i.e., when a company puts out a product that more easily allows high-level end users to create and publish niche and micro-niche games. At the point where 1-5 artists, writers and programmers can leverage a platform supplied by another "uber-publisher" to provide a really specific game experience, we may see economics that are very different than what's going on now.

Take the economics of sports and how they scale, for example. There is no way to compare the monies involved in major league basketball to those involved in amateur bowling to those involved in local sports at pubs and clubs. Yes, they are all "sports," in terms of the activities being played, but the economics are wildly divergent. The salaries and profits being made may even be similar for some of the players or employees at some points in the system... but the ways in which money comes in and goes out? Very different.

If you can get 2,000 people on average to pay $20/month for a game, that's $480,000/year. And while that's not crazy cash, that's a decent salary and op coverage for 4-6 young dudes fresh out of school... especially of a couple of them are coding from Bangalore. If the game is highly specific to those 2,000 people and provides a very clear value proposition that they aren't getting from the wide-cast stuff... Bingo. Those 5 guys don't need to be Blizzard. They just need a company that will help them do the Blizzard-like stuff.

Will this happen? Of course it will. All the tech tools move down the chain. Even 12 years ago, building a web site was considered a pretty "techie" thing to be able to do. Now? You can get a free blog up and running in 5 seconds on Blogger. Price of entry to create and manage a decent MMO will come down and down and down. Maybe I'll be able to do in in SL. Who knows. But the ideas and content will be more important than the tech.

And then there will be all kinds of weird, neat ways to part folks from their money. Ways that they'll love. : )

39.

Free to play, particularly web-based free to play, offers a lower barrier to entry for independent game developers. For me it was simply, "How can I make a living doing what I love without working for one of the big publishers?" Sherwood Dungeon is purely ad driven (no micro-payments, no subscriptions, no delusions of grandeur, just plain free.) With 2500 simultaneous players during peak times and 80,000 daily visitors, it's not setting any records. But it is paying the mortgage, putting the kids through college and then some.

"Same holds true for advertising supported content. It's not free; it's just being paid for by advertisers who then get to influence some portion of the experience." I don't agree. Yes the advertisers get their banner sized piece of screen real-estate, however no advertiser has ever asked me to modify my games for them.

There are some developers like Jagex, Iron Realms, Three Rings and myself (I hope) that are more "grass roots" about their approach to the games and their player communities. Alternate revenue and distribution models are just a fact of life for independent developers.

www.maidmarian.com

Gene

40.

Hi Gene!

Great to hear from you on here. I have long noticed that Sherwood is ranked highly on Google for "free MMORPG" but wasn't sure whether you made your money purely from ads or not. Could you shoot me an email at matt -at- ironrealms -dot- com? Thanks!

--matt

41.

In the non-virtual world, people habitually pay annual membership fees to belong to clubs whose facilities they rarely, if ever use. The important part of the transaction is the membership itself, not the services to which membership provides access.

Personally, the only reason I can imagine terminating my SoE Station Access membership would be if I literally could no longer afford to pay for it. I have been through periods of many months over the last few years when I didn't log into any SoE games at all, but I have never let my subscription lapse.

I have downloaded and played maybe a dozen or more free MMOs over the last couple of years, some of which I still play on occasion (Ferentus, for example), but I feel no commitment or attachment to them. The SoE games do feel much more "mine". I pay primarily for that attachment, not for the gameplay, although it is also true that I have not yet played a free game with comparable gameplay to any of subscription based games, SOE or otherwise.

42.

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