GDC as a Bellweather: the Gaming Industry is Shifting Towards F2P and Cross-Platform


The Game Developers Conference is the world’s largest and longest-running professionals-only game industry event. As the target audience is not the gaming public, the focus and feel of GDC is very different from other recent conferences that we attended, such as New York Comic Con back in October 2011. We didn’t see a single cosplayer. Most of the sessions are hosted by developers sharing their insights and experience with various properties or companies hawking their upcoming games, platforms, and tools.

When I attended GDC back in 2010, “Social” was the big buzzword as there was a lot of attention paid to the burgeoning Social Gaming market. Skimming this year’s schedule, “F2P” (Free-to-Play) and “Cross-Platform” are the hot keywords.

Why the shift in focus?

Let’s talk about F2P first. In a nutshell, the business model is to entice players to download and try your game and convert some of them to paying customers. The concept has been around for years and as the Internet’s infrastructure has matured, it has become an increasingly cost-efficient and viable distribution platform.

Most Social Games have been F2P from inception, as the games are very lightweight to download, require no separate (e.g. Facebook Apps / Games) or minimal (e.g. App Store) installation, and have viral incentives to encourage players to rope in their friends.

However, the traditional gaming markets, PC Gaming and Console Gaming, have their roots in physically-shipped boxed products and the games were – prior to a few years ago – impractical to distribute en masse online as the game downloads were huge relative to the average customer’s bandwidth. The costs of real-world distribution are significant.

The synergistic rise of high-speed Internet access by ISPs and the maturation of CDNs (Content Delivery Networks) has made it feasible and viable to distribute even large games over the Internet. E.g. everyone I know playing SWTOR, which launched 3 months ago, downloaded the 20GB game instead of waiting for installation discs. Contrast this to Blizzard’s The Burning Crusade expansion for World of Warcraft just 5 years ago, where I dragged my wife with me to Target in the East Bay to stand in line with hundreds of other diehard WoW gamers at midnight to buy the game. (The game sold out about a dozen people after us, and there was a near nerd-riot LOL).

So the distribution side of making heavyweight MMORPGs F2P is there. But what about the monetization side? This in my opinion is the bigger challenge. How do you create a game that is sufficiently enjoyable without paying that it attracts and retains players, while still providing virtual goods and other perks that a fraction of the playerbase will gladly pay for? And how do you do this for massively-multiplayer games without creating a game that is essentially “Pay-to-Win”?

F2P is a bad word to the majority of MMORPG players, but that is mainly due to poor design and implementation rather than the concept being flawed itself. I’ve had both positive (Knight Online back in 2005-2006) and negative (Allods Online in 2010) experiences with F2P properties. Back in KO, one of my guildees, a pizza shop owner down in Brazil, was forking out hundreds of USD a month to maximize his enjoyment of the game, and I became a monthly sub ($15 USD) because it was worth it to me as a full-time working stiff who valued his free time.

The PC and Console Gaming industries have the benefit of watching what has worked with Social Games, which have proven that players will pay for convenience and for virtual goods, e.g. cosmetics / customization / in-game items, etc. Microtransactions FTW.

It’s only in recent years that some of the larger mainstream MMORPGs have transitioned to F2P, e.g. Turbine’s LOTRO and NCSoft’s Aion. Industry analysts and bloggers have been predicting the end of P2P (Pay-to-Play) games for a few years now, and while the industry is moving in that direction, P2P games are not dead yet – see EA/BioWare’s SWTOR and ArenaNet’s upoming Guild Wars 2 launch.

One huge reason why games are still P2P is that game developers need to recoup their sunk costs to reach product launch. E.g. the estimates for SWTOR have ranged anywhere from $100-200+MM USD. (The ironic thing: the most common complaint I’ve heard about SWTOR is the lack of endgame content or issue-free content. But hey we’re gamers and we’re never satisfied, amirite?).

And here’s the basic problem: how to make a P2P game scale its customer base over time. Having a hefty (e.g. $50 USD) price tag is a significant deterrent to acquiring new customers. Arguably no developer has figured it out aside from Blizzard with WoW, and even Blizzard started offering WoW to level 20 for free last summer.

As MMORPG developers sort out F2P, what I expect to happen is for the large-scale AAA-quality launches, e.g. the RIFTs’, SWTOR’s, and GW2’s, to be continue to be P2P at launch to recoup the sunk costs, and for those games to eventually transition to F2P but with mechanics that entice players to pay on a recurring (subscription) basis, expansion basis (GW / GW2), or microtransaction basis. We’ve already seen Trion Worlds offer new mounts (spider!) for a microtransaction even though the game is P2P and requires a monthly sub. This shift from P2P to F2P for a given game may be necessary to achieve a sustained net-gain of customers over time after the initial “burst” of customers at launch. And to do it right means that the developer would need to consider F2P mechanics before the game transitions from F2P to P2P.

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Posted in Aion, Allods Online, Business Analysis, Guild Wars 2, LOTRO, RIFT, SWTOR, World of Warcraft
19 comments on “GDC as a Bellweather: the Gaming Industry is Shifting Towards F2P and Cross-Platform
  1. ROOT/. says:

    My personal favorite method of paying for MMO type games has to be the Guild Wars model.

    You buy the box (or the download) you get it all. Then the next big expansion comes down the line later and you buy the box.

    To me, it makes more sense. I know exactly (to a point) what i am going to get for x amount of money spent. From there I can decide if it is worth the cost of admission.

    Also, cosmetic (pets, mounts, and the like) micro transactions are just fine in my eyes (for this model) provided:

    1. The content was made/developed AFTER initial release.

    2. it in no way effects game balance (player power and/or in game economics)

    3. the purchase price of these items is not obfuscated by some sort of false currency (IE spend cash to buy “gold coins” that you use to buy the item. I do not like the idea of companies using this to encourage you to buy something because it is only 500 gold coins, instead of saying its is 5 dollars, or 50 dollars, or whatever the real would amount is.

    In my eyes this model seems the most straight forward, transparent, and honest way to do it.

    P.S. well written article Ed. Keep up the good work.

    • taugrim says:

      ROOT/. :

      Also, cosmetic (pets, mounts, and the like) micro transactions are just fine in my eyes (for this model) provided:

      1. The content was made/developed AFTER initial release.

      2. it in no way effects game balance (player power and/or in game economics)

      3. the purchase price of these items is not obfuscated by some sort of false currency (IE spend cash to buy “gold coins” that you use to buy the item. I do not like the idea of companies using this to encourage you to buy something because it is only 500 gold coins, instead of saying its is 5 dollars, or 50 dollars, or whatever the real would amount is.

      In my eyes this model seems the most straight forward, transparent, and honest way to do it.

      I agree with your points above. The key is providing fun / convenience with microtransactions and not disrupting game balance.

      The issue is that some F2P games have grind that is so tedious that to play without microtransactions is a huge waste of time.

      Developers are starting to get it though. E.g. at NY Comic Con, Trion announced that their MOBA offering End of Nations will be F2P and that the microtransactions will be cosmetic customizations of your unit models.

      That’s the way to go IMO. Things that add flavor to the game without adding game-altering advantages.

  2. Paravian says:

    I would slightly edit the part about GW2 being a pay to play game. It is and it isn’t. It is purchasable but with no sub fee, so not in the traditional P2P system like WoW and SWTOR.

    • taugrim says:

      Paravian :

      I would slightly edit the part about GW2 being a pay to play game. It is and it isn’t. It is purchasable but with no sub fee, so not in the traditional P2P system like WoW and SWTOR.

      Fair enough.

      You do have to buy the game, and you purchase expansions. I didn’t play GW, but from talking to Ryndar, the pace of the expansions more or less made it feel like it’s own subscription system.

      • Baromega says:

        I think the main difference is that you can keep playing whether you choose to buy their new expansion or not. In WoW and SWTOR, they’ll charge you that $15 regardless if you actually play during that month.

      • Icalis says:

        Guild Wars 2 will have no subscription fee, although you will have to buy the expansions when it comes out, I don’t see that as being any different than how expansions are currently with other MMOs.

      • cronagol says:

        taugrim :

        Paravian :
        I would slightly edit the part about GW2 being a pay to play game. It is and it isn’t. It is purchasable but with no sub fee, so not in the traditional P2P system like WoW and SWTOR.

        Fair enough.
        You do have to buy the game, and you purchase expansions. I didn’t play GW, but from talking to Ryndar, the pace of the expansions more or less made it feel like it’s own subscription system.

        I actually think that the subscription system of Guild Wars / Guild Wars 2 is called B2P (Buy to Play) °°

  3. Very much agree. I think a lot of gamers get a sick taste in their mouth when they hear about F2P games because it brings up the image of Facebook/Zynga games and paying to actually progress in the game, instead of paying for non-game changing pieces to the game (like LoL)

    • taugrim says:

      Jacob A. Ratliff :

      Very much agree. I think a lot of gamers get a sick taste in their mouth when they hear about F2P games because it brings up the image of Facebook/Zynga games and paying to actually progress in the game, instead of paying for non-game changing pieces to the game (like LoL)

      Yea the “non-game changing pieces” is critical. E.g. Trion Worlds for their upcoming F2P MOBA End of Nations that they are focusing the monetization a lot around cosmetic customization of units and such, which makes sense to me.

      I want to be a unique snowflake, but my gun’s no bigger than yours. That’s fair.

  4. chapliin says:

    ROOT/. :

    My personal favorite method of paying for MMO type games has to be the Guild Wars model.
    You buy the box (or the download) you get it all. Then the next big expansion comes down the line later and you buy the box.
    To me, it makes more sense. I know exactly (to a point) what i am going to get for x amount of money spent. From there I can decide if it is worth the cost of admission.
    Also, cosmetic (pets, mounts, and the like) micro transactions are just fine in my eyes (for this model) provided:
    1. The content was made/developed AFTER initial release.
    2. it in no way effects game balance (player power and/or in game economics)
    3. the purchase price of these items is not obfuscated by some sort of false currency (IE spend cash to buy “gold coins” that you use to buy the item. I do not like the idea of companies using this to encourage you to buy something because it is only 500 gold coins, instead of saying its is 5 dollars, or 50 dollars, or whatever the real would amount is.
    In my eyes this model seems the most straight forward, transparent, and honest way to do it.
    P.S. well written article Ed. Keep up the good work.

    I agree.

    Having started back with MUDs in the 90’s, when internet services charged a ‘per hour’ fee, through the P2P models, I find the F2P model like GW2 to be more appealing now.

    I certainly have grown tired of buying a box, for an incomplete game, and then be charge $15/mo while they ‘fix’ it. I have found myself more and more just immediately cancelling, rather than paying month after month.

    TOR is a good example. While the game has some enjoyable qualities, it just doesn’t feel worth the P2P fee, in addition to the Box price. Had it been F2P, I would likely still be playing it on the side, but do not simply because of the monthly fee.

    • taugrim says:

      chapliin :

      I agree.

      Having started back with MUDs in the 90′s, when internet services charged a ‘per hour’ fee, through the P2P models, I find the F2P model like GW2 to be more appealing now.

      I certainly have grown tired of buying a box, for an incomplete game, and then be charge $15/mo while they ‘fix’ it. I have found myself more and more just immediately cancelling, rather than paying month after month.

      TOR is a good example. While the game has some enjoyable qualities, it just doesn’t feel worth the P2P fee, in addition to the Box price. Had it been F2P, I would likely still be playing it on the side, but do not simply because of the monthly fee.

      You hit on a key issue for P2P games: the early adopters / die-hard IP fans are the ones who pay for the product when it launches and is still rough around edges.

      There are multiple issues with launching P2P games earlier than the studio would have liked (i.e. games often launch early due to financial concerns from a parent company or publisher):
      1. first impressions count. Games launched early not only hurt the game’s reputation but the game developer’s as well. Players who feel that the game is lacking x, y, z functionality or polish at launch may de-sub and never come back, and they will tell their friends about their experience. It’s reverse-viral to launch a game prematurely
      2. it creates a very painful experience for the developer, since the “finish line” is not really launch and the staff has to scramble for months until the game reaches a more stable state

      SWTOR Patch 1.2, for example, looks to be the game that it should have been at launch. Did you hear the amount of applause at the Guild Summit? That’s validation that the developer is getting the game to the state people believe it should be in.

      So here’s the question: what are the “exit criteria” that a developer uses to say that Beta is finished and the game is ready to ship?

      Scott Hartsman, the Exec Producer from Trion Worlds for RIFT had a simple and elegant way of framing it when we spoke a year ago at WonderCon: the game has to be AAA-quality and there needs to be enough for players to do.

      Scott’s right, but let’s push this a bit further. MMORPGs follow the same burst-decline-plateau sales phenomenon you see with console games and box-office movies. So IMO the question is not “is the game is ready to ship” but rather “is the game sufficiently good that our early adopters will stick around x months from now and we’re creating a virtuous / viral cycle in terms of growing the playerbase?”

      The industry has gotten into the (bad) habit of releasing games that are essentially still Beta quality and iterating on the fly. That works with Social Games, which can be updated iteratively and easily and the user simply gets the newer version the next time they log into Facebook.

      But that doesn’t translate as well for MMORPGs and other rich single-player games because of the inherent complexity of the game, time of the Dev / QA cycle, and size of patch installs.

  5. Larz020 says:

    One thing MMO’s could take from Wargaming’s World of Tanks (F2P) is that if you buy a premium account you earn 50% more experience and ingame money. This way content will not be exclusive to those who pay but those who do will simply get there faster. In MMO’s this can work for leveling, end game raiding, pvp and maybe even craftingskills.

    Another aspect that could work for MMO’s is the more varied duration of the premium accounts. It ranges from a day, 3 days, a week all the way up to a year.
    Important here is that you don’t feel handicapped when you don’t have a premium account.

    Personally I would love to occasionally jump back into WoW and do some battlegrounds with my Disc Priest much like I occasionally jump into my WoT tanks now. But hey.. for now Blizzard is still rolling in green so why should they change ;)

    • taugrim says:

      Larz020 :

      One thing MMO’s could take from Wargaming’s World of Tanks (F2P) is that if you buy a premium account you earn 50% more experience and ingame money. This way content will not be exclusive to those who pay but those who do will simply get there faster. In MMO’s this can work for leveling, end game raiding, pvp and maybe even craftingskills.

      Understood and agreed. I’m fine with games provide monetization based around convenience, like the example you gave around faster XP / money.

      What I’m not OK with is cash shop items that are essential to effectively compete, which was the case back with Allods Online and the death-debuff removing “perfume” right before it launched for NA:
      https://taugrim.com/2010/02/21/allods-online-debacle/

  6. Trey says:

    The distinction about the Guild Wars model is important, if only because it is demonstrated from my personal experience.

    Guild Wars is the only MMO that I have ever “quit” and then returned to later. I had multiple months-long periods with the game. I never returned to WoW, Warhammer, DAOC, RIFT after making the decision to move on.

    And I think the no subscription model is part of the “good feelings” I continue to have toward the Guild Wars brand.

    As far as Free to Play- you nailed it, as an MMO player I’m suspicious of this stuff. BUT if it means that more experimental / innovative titles can be developed using that economic model then I’m all for it. The budget to do a AAA title is crazy and it means that the risk threshold when it comes to design has to be remarkably low.

    So, yeah, bring on the Free to play titles and let the market sort it out.

    • taugrim says:

      Trey :

      The distinction about the Guild Wars model is important, if only because it is demonstrated from my personal experience.

      Guild Wars is the only MMO that I have ever “quit” and then returned to later. I had multiple months-long periods with the game. I never returned to WoW, Warhammer, DAOC, RIFT after making the decision to move on.

      And I think the no subscription model is part of the “good feelings” I continue to have toward the Guild Wars brand.

      That makes sense: the barrier to return is essentially zero, you just pick up with the last version / expansion you paid for.

      I had always wondered why ArenaNet pursued the unique model with GW, and hearing feedback from players like you validates their approach.

      Trey :

      As far as Free to Play- you nailed it, as an MMO player I’m suspicious of this stuff. BUT if it means that more experimental / innovative titles can be developed using that economic model then I’m all for it. The budget to do a AAA title is crazy and it means that the risk threshold when it comes to design has to be remarkably low.

      So, yeah, bring on the Free to play titles and let the market sort it out.

      F2P from the get-go makes sense for titles that don’t require a significant investment to launch, to attract as many players and convert them as possible.

      For games migrating from F2P to P2P, it would behoove the developer to know long in advance that that will happen, and to design the game accordingly.

      I spoke with a developer down in Santa Barbara yesterday, and the CEO was stressing the importance of designing the game with an intended monetization model from the ground up.

  7. […] a way to fund a lot of games that I enjoy (like League of Legends for example). My problem is when free to play games abuse the idea of microtransactions and game design to manipulate and addict their users, […]

  8. […] the threat of online piracy, used game sales, and the recent success of freemium payment models have been pressuring the conventional gaming scene more and more with each passing quarter. Budgets […]

  9. […] the threat of online piracy, used game sales, and the recent success of freemium payment models have been pressuring the conventional gaming scene more and more with each passing quarter. Budgets […]

  10. Vanko says:

    Wow talk about foreshadowing SWTORs future. Nice job Taug

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