Free or not free? The debate

May 16, 2012 | Filed under: business

Over the course of a loooong time, me and Nicholas Lovell from gamesbrief, argued about whether or not free to play games are the bright new future of gaming. I am traditionally against the current implementation of F2P gaming (although I’ve softened on this a bit). Nicholas is traditionally very pro. See who you found most persuasive in our little debate…

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Nicholas,

FreeToPlay is not the future of games, or at least I hope it isn’t. The entire business model is built upon cynicism, mainly the idea that players will think they can play game A for free, as opposed to game B which costs $30. We both know that someone, somewhere has to pay for the game’s development, and for that idea to work out, you either need to hook some ‘whales’ who pay out a fortune and subsidise everyone else, or you have to constantly nag all of the players to pay for in-game items.

Either way, the business model will lead to design compromises that do not exist in any other artistic medium. A writer or movie director can compose a piece of entertainment safe in the knowledge that the customer has bought into the idea of the entire work. Imagine the impact if the audience were asked every chapter or scene to pay a few pennies to access the next part of the story.

We wouldn’t tolerate free-plus-microtransactions in other media, why should we tolerate it in gaming? Free to play is nothing more than the new version of a very old idea, the free demo. The difference is that with a free demo, the understanding is you then make an honest pitch for the player to purchase the game at the end of the demo. The F2P model seems to rely on interrupting the player mid-game to constantly pester them for a few pennies.

How is this a better business model?

Cliff Harris, Positech Games

* * *

Cliff,

You start by making the mistake of thinking that all users love your work equally.

The idea that all users should pay the same price for a piece of entertainment, however little or much they enjoy it, is a bizarre concept born out of the limitations of physical media. In the old days, when there were no bits and distribution was exclusively by atoms, content creators had
no choice but to fix the price. It was the only way to sell an entertainment product via retail stores. The consequence was that a superfan who loved that game would get hours of incredibly cheap value. A user who found after a few hours of play that it wasn’t for them was, in effect, subsidising the heavy players.

Free to play changes all of that. It lowers barriers to entry, which means people can play and enjoy the game while they work out if they want to spend money on it. It enables people to play the game for ever, for free. As long as the player is playing, the creator has the chance to say “hey, you’re
enjoying my game. Here are ways that you could enjoy it for more, by spending some money with me.”

It’s more honest (because it allows players spend according to their level of engagement with the game), it is cheaper (because you build a title for continued play, you don’t have to spend all of the development and marketing budget prior to launch) and it is more profitable (because you let those who don’t want to pay play for free, while allowing those who love the title to spend much more than the initial price).

What’s not to like?

PRESS SPACE TO TAKE YOUR TURN

Nicholas Lovell, www.gamesbrief.com

* * *

Nicholas,
I accept people are prepared to pay different prices for games, but this is why we have collectors editions and DLC. I don’t accept that we are just being shackled by the physical properties of the medium, because that also applies to books and movies. They capture the whole audience by having
hardback or signed copies, and DVD specials with extras.

This is all fine. I have no problem with extra content being made available after a product is complete. The difference is that you are advocating designing the game around such a business model from the start, which I think makes for an inferior product. Books may come as hardback/paperback, but you don’t have to pay extra to get all the characters, that would be mad, yet it’s how F2P games are being designed.

The other problem is that the game is no longer a shared experience or level playing field. I can now be shot by someone with a gun I didn’t buy, or outrun by a car with engines I haven’t bought. Games are about fantasy and adventure and getting away from the rat-race and treadmill of real life. Is
it not bad enough that MMOs feel like a second job, without importing all the envy and unfair competition from the real world too? Real world games would never allow this. Football teams don’t get more players if their team has more money, we accept that when it comes to games, it should be about skill, not bank balances. And as for barriers to entry, there are already none when the game has a free demo

Cliff Harris, Positech Games.

* * *

Dear Cliff

I think that we are coming at this issue from two different directions. I care about players, but I also care about the businesses that make games. After all, if it is hard or impossible to make a living from making games, fewer talented people will make fewer great games.

So I start from the premise that if the market is being changed by digital distribution and the immutable economic law that if the costs of making another copy of something trends towards zero, so does the amount that people will pay for that copy. In that environment, I think it will be very hard to keep the price that an end user will pay for a gamer at anything above very low (meaning iOS style prices). It is very hard to make a living at a price point of £0.69 for all but the very lucky. Even Rovio, often shown as the posterchild of iOS development, needed commitment and luck: Angry Birds was their 52nd game.

You’ve argued that you need to gross £100,000 (I think) to make a living. That means selling 145,000 copies of the game if the price is £0.69. You would need to sell 20,000 copies at £4.99.

There is another way. What if you can find a business model that allows people who love your game to spend more? If you design the game to allow those people who love what you do to spend a day’s wages over the course of a year of playing? In the UK, a day’s wages is £100. That would mean you
would only need to have 1,000 players who loved what you do to make enough money to live on.

Isn’t that easier and more attractive than trying to appeal to everyone in the same way.

How would that business model work? You make the game entirely available for free, so that people can play, explore and experiment in your world. You offer a way for people to spend £1. They may be able to buy aesthetic changes like personalised outfits, new skins or new buildings that don’t
affect gameplay. They may be able to level up faster, unlock items earlier than someone who plays the standard mode. They may even buy additional content (although in my mind, it is better to sell personalisation than content).

Then you need to make it *possible* to spend £100 per month. Not because people will (although some might), but because you want your biggest fans to have choice – about the personalisation, the status, the progress, whatever it is that excites them – and if they are *able* to spend £100 a month,
maybe they’ll spend £10.

A thousand true fans, out of perhaps 100,000 playing your free game, and you have an exciting business that is all about making cool new stuff that your biggest fans will love – and want to pay for.

That seems to me to be the best of all possible worlds.

Love

Nicholas Lovell, www.gamesbrief.com

* * *

Cliff says:

“Ah but here is the fundamental contradiction. You suggest that because stuff can be copied, it’s natural price is zero, but then you also talk extensively about ways to get money from people for games by other means.

Ultimately, it’s just a shuffling of payment from all gamers equally to a few wealthy ones, but the same amount of money is being generated. The ‘free to play’ games are clearly nothing of the sort, they are more like ‘patronage’ games, where some wealthy people who suffer from gaming addiction subsidise everyone else’s leisure time. An interesting way to do it, but not something that is being done in the interests of making games better. If your business strategy relies on milking a core group of hardcore wealthy addicts, then it means games get designed effectively for a small hardcore subset.

Besides, the popular ‘thousand true fans’ model doesn’t require micro-transactions and free-to-play, they are unrelated. You can have your thousand true fans who buy the game, without requiring them to be a subset of 100,000 casual players who value their playing time at zero.

 I could just about get by with a thousand true fans by selling them $30 games, and many people do exactly this, like spiderweb software and the guys making hex-based WW2 strategy games. There are many people out there happy to pay $20-40 for a game that they really like. It’s a myth that gamers will only pay $0.99 for a game, it’s just that those gamers are a very loud, shouty minority.

You can have your thousand true fans who buy the game, without requiring them to be a subset of 100,000 casual players who value their playing time at zero.”

Cliff Harris, Positech Games

* * *

Dear Cliff,

Of course you can get by with 1,000 true fans paying $30 for your games. The difficulty is in finding them.

Free-to-play games suffer from this discoverability problem too: they need to spend to acquire customers in the same way that traditional games companies have to market their games. The difference is that, because their games are free, they can get many more people into the game to discover if they enjoy it. They can play the game for longer – often forever – before the paywall comes slamming down. They can get their friends playing without having to persuade them to shell out $30. And when they find a true fan, they can make a lot more than $30, while offering things that the true fan values.

There will still be companies making money from games that are single upfront payments for quite some time. Most of them will have established reputations, while new businesses are more likely to start by assuming the free is the optimum price point for consumers AND for the company.

The important thing is that a wider variety of good games will have a chance to get developed than ever got developed before. I think that is something that we can both agree is a very good thing.

Nicholas Lovell, www.gamesbrief.com

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So who won? TELL US NOW!!!

47 Responses to “Free or not free? The debate”

  1. jack_norton says:

    Cliff WINS!!!!!!!!! :D

  2. Helge says:

    I think Puzzle Pirates is an exampe of a game that meets Lovell’s stated goals without falling into the traditional scammy F2P trap.

    Basically, they have a free demo-mode in which certain areas of the game are restricted – you can’t buy nice clothes in the shops, you can’t captain your own ship, and the minigames (smithing, poker, etc) are only available on specific days of the week. To get past that, you have to buy a subscription.

    In this model, you basically have the free demo thing, BUT – and this is important – since there is only one payment tier, once you’re in you’re in. There is no nagging to spend more money to get “more better game”.

    I’m usually frustrated with F2P (recently uninstalled Stronghold Kingdoms in a fit of rage), but the Puzzle Pirates model seems honest and pleasant to me.

    http://yppedia.puzzlepirates.com/Official:Pricing

    (They also have specialized servers with microtransaction functionality for those who want that.)

  3. I think you’re both right about certain things. I think letting people who really like you game pay more for it is a really good idea, whether via special editions or a “pay what you want” model. I also think that giving away some part of your game for free is often good sense (whether a demo or trial version).

    Some “free to play” games do manage to do one or both of these things without getting sleazy about it, but I think you’re absolutely right, Cliff, in being wary of the “keep paying money to get the missing bits of the game” model. I think it’s manipulative, and I’m immediately turned off any game that uses it.

    I guess my conclusion is that it’s not a matter of free-to-play being either good or bad – it’s a lot more subtle and complex than that. But where is the line between fair and manipulative uses of the model? That’s the really tricky question.

    We can let the customers vote with their wallets, but the whole point of manipulation is that many will make decisions that are not necessarily in their best interests, which will certainly (as Cliff fears), skew developer interest away from making better games.

  4. Chris Park says:

    I think that Nicholas keeps ignoring the concept of a demo, which is mentioned briefly by Cliff at the start of this but then never again. “Games that are single upfront payments” makes it sound like players are buying a game blind in a brown paper bag and have no idea what is inside.

    The thing is, there are demos, word of mouth, and all sorts of other ways to get player attention. I didn’t start as an indie dev until 2009, but it didn’t take long to find several thousand true fans because of all the sites that cater to niche audiences that were specifically targeted to the sort of game I had.

    To look at a game in isolation is to wonder “how will anyone know it exists?” And for a casual games, sure — that’s a problem. If you’re not on the news or in the endcaps at Best Buy, how will the Grandmas and Grandpas of the world ever hear about your latest casual game?

    When it comes to core gamers, though, they tend to read magazines, websites, and frequent forums. They probably have at least a few offline friends who also game and who they discuss games with. This is, ahem, very much like how most “midlist” novels spread.

    The key thing is making something that is engaging to your players, and that makes it easy for them to find out if it’s engaging. I do lengthy demos for my games, as does Spiderweb software and many other companies using more traditional models. If you buy our games without trying the demo, without knowing that you already like it or love it, the only reason I can think that you did that was based on word of mouth or the fact that it was on discount at the time.

    Some games are well-suited to F2P, and there are F2P games that I enjoy on iOS in particular. But as a widespread business model? What this is really advocating is drastically changing the way games are made in order to accommodate a new method of selling games. Like Cliff said, this can be accomplished in a much more straightforward way simply by offering good-value DLC to the players who would be the “whales.”

    Nicholas had a lot of good points, and a pretty healthy way of looking at F2P, but in my opinion Cliff definitely made a more convincing case. Of course, in my case he was preaching to the choir. ;)

  5. baz says:

    I am put off by most f2p, or games with excessive dlc and iap. I feel like I’ll be nickel-and-dimed. I assume the ‘free’ bit of a game is probably pointless — I’ll need to pay to get anywhere. I might be old-school, but I’m looking for a coherent, complete package in a game. I dont want to go to a new area and be hit with a paywall. Maybe its more about the implementation of these things – too many companies doing it wrong, spoiling the reputation of it.

  6. Burzmali says:

    I’d say that Cliff wins, if only because Nicholas engages in a few rounds of goal post moving, but as I support Cliff’s premise I’m a bit biased.

    A few points that didn’t come up:

    Nicholas makes the assumption that quantity is at least as important as quality for games, that’s at least a questionable leap to make, as it suggests that the gaming public derives some direct benefit from more people employed in making games.

    Nicholas also assumes that this model is scalable, which is still open to debate. You can make hundreds of Angry Birds games for the cost of a Call of Duty. Ergo, to fund a AAA title under the F2P model, the nagging will either need to be incessant or you’ll have to be tapping your whales for tens of thousands of dollars to break even.

    Finally, F2P games are forcibly social, especially when they are new. They have to be to reach that 100,000 customer base and find the whales. For the nagging games, they need to constantly rub how awesome your friend’s night elf looks in that pair of ass-less chaps he spent a buck on, in order to me you jealous enough to open your wallet.

    The biggest tell that you are on the correct side of this debate was this exchange Nicholas comments the premiums are a way for the developer to say”(h)ere are ways that you could enjoy it for more, by spending some money with me”. But when giving examples latter he comments that players can buy “aesthetic changes like personalised outfits, new skins or new buildings that don’t affect gameplay”, and that is just plain misguided. Players enjoy a game more if it has more items, classes, places to explore and puzzles to unlock, not silly hats (okay, TF2 players want hats, but they are insane) and shiny useless bits. When your first thought is “how can we add useless bits to this game to increase revenue”, you aren’t designing a game, you are designing a cash vacuum that looks like a game.

  7. Wow, what a grownup debate. I know that Cliff has sensible followers, but thank you all for engaging in the substance of the discussion.

    @burzmali: I think that you are using *your* definition of a game. For some people, the personalisation for some people is what they really enjoy (the silly hats).

    In many ways, I feel that this argument, generally, often ends up as “the type of games that I like will be made less often under the F2P model, and that is bad”. I think that the first statement may be true. I don’t agree with the second.

    And I don’t believe that demos are the same as free-to-play. Being able to play a fun game for free forever (e.g. Temple Run, Jetpack Joyride) is very different to content-locked demos.

  8. cliffski says:

    The thing is, I can play world of tanks, free, forever, which is better than a demo, I admit. But if I realistically want to play that game with a tiger tank, I can either quit my job to grind it full-time, or I need to spend money on the game to get the tiger.
    So in effect, although the demo is genuinely time-unlimited (which is great) it is a de-facto feature limited demo, because realistically, some features are out of reach of the non paying.
    The only difference between that and an old-school demo, to me, is that you know what you get and do not get with the old school demo. To me, that’s fairer and more honest :D

  9. Markus Ewald says:

    If Freemium / F2P developers didn’t design their games to coerce the players into buying stuff, their games wouldn’t earn them any money.

    That why most, if not all of these games to converge towards the same general theme of competitive grinding — coercing players to pay in order to jump ahead of their friends or (the hostage approach) to avoid losing their stats, crops or fluffy animals they invested so much time in.

    Yes, both games need to find the fun, but whereas for traditional games, the fun is the sales pitch, in Freemium / F2P games it’s only one side of the balance between keeping the players coming back and squeezing money out of them.

    I’d rather have game developers spend their whole time on making an entertaining game instead of wasting the other half on creating a masterpiece of psychological manipulation.

  10. Cliff,

    Personally, I find Nicholas’s argument very flimsy. He is stating that “true fans” will pay for the game. The issue I have here, is what’s a true fan? By his definition, it’s someone that is willing to pay for the game.

    What really annoys me here, is simply the direction that the free to play games typically follow. Simply that they design the game to be either very difficult and the way to level the battleground is to purchase (via In app purchases) weapons and gear that help level the playing field.

    Or large sections of the game are just not available until you pay for the game.
    Often these sections are the best, or worst area’s of the game. So you really can’t say that you’ve played the game, since you haven’t purchased it.

    Free to Play, is becoming the “Free to Download” of the 2010’s. Sure, it’s free to Play, but you can’t play the game, until you buy it….

    Some games (ie Angry Birds Space) handle this quite well, with either higher levels / worlds not being available, but still having 30 odd levels available for Free to Play, but then only being a few dollars to enable the later worlds…

    Or just having very game neutral add-ons (eg clothing) being available for In App purchases…

    But quite simply, a game should be able to be played fully, without having an in-App purchase… To many game creators are crippling their games, and wondering why no one is purchasing or playing it.

  11. Burzmali says:

    @Nicholas, fair enough, but I’ve never seen gamers banging down Nintendo’s door to get the option to have Mario run around in a top-hat and a Speedo ;)
    Just seems like more whale hunting to me, not to mention that it eliminates the modding community. I guess I’m just getting a bit itchy as I see F2P starting to creep into Linux via Ubuntu’s Software Center.

  12. Chris Park says:

    I agree with Cliff’s above comment on demos. F2P is just as feature-limited as a demo or else it has nothing to add of substance.

    I would argue that TF2 is a poor game to model to F2P on, because Valve are enormously popular in general and it was a sequel to an already-popular game. They also started out with that as a paid app IIRC, and captured all the early adopters at one price; then later switched to F2P to vacuum up more players, experiment with a new model, and make more money from people who wanted cosmetic upgrades. And their revenue on the game did indeed skyrocket. Fair enough.

    But isn’t it curious that none of their other games are F2P? Either the F2P model of TF2 is something that they feel only works for certain styles of games, or it’s something that they feel only makes fiscal sense late in the lifecycle of games. Valve are extremely savvy, and they now have direct high-profile experience with F2P, yet their latest games have all been of the traditional model. That’s somewhat telling right there (partly telling about who their audience is, really).

    Anyway, to make blanket statements about what demos are like is also fairly misguided. Some are a gig to download a single level. Some are some crazy time-limited thing where you can hardly get a feel for anything. Others give you hours of playtime and you can replay those sections as much as you want, but can’t ever finish games.

    My demo for AI War gives players 3 hours per campaign for as many campaigns as they want; it doesn’t limit any features beyond that. In the structure of that game, that means they can get really solidly into the game under a variety of settings and so forth, do all the tutorials, and generally get hooked or get bored. But they can’t finish what they started on any campaign, as even the shorter ones tend to take around 7 hours to do.

    But I never nag them — when they start the game, they can enter a license key, click a buy button, or click continue trial. That’s it. No extra splash screens to extoll the virtues of the full game, or anything of that nature. I don’t need them — they’re already playing the full game, just getting cut off on how long each campaign can be. The nag is that if they play 3 hours of a campaign and want to keep going, implicitly they need to get a key. Looking at my Steam stats for the demo, I see that the life-to-date conversion rate for AI War’s demo to the full version is 16%.

    In a lot of respects I think that sort of model is standing at the intersection of shareware, free to play, and traditional demos. But the cool thing is that at no point did I have to redesign my game to try to pull in more players. At one point I had to sit down and think “okay, what’s the best way to do a demo where people can really sink into this and get hooked without giving away the farm,” but that was after the game was done and that was a short process.

    I think that’s a lot better than having monetization being an ongoing goal of the game’s design throughout the whole design process, but that’s just me.

  13. Will says:

    It’s a big world, and there’s room for multiple models to flourish.

    For example, comic books (err, graphic novels) have long spun out stories over multiple issues, each one selling for relatively little. Anyone can buy a single issue, at little risk, and see if they enjoy it. Then the publisher creates an omnibus, which sells to the true fans/people who don’t like to wait around for a serial. The truly price conscious can check out the omnibus from the local library eventually.

    Economists call it price discrimination, and you can see it in movies, cell phones, and electric utilities.

  14. Kiddex says:

    I’m voting for Nicholas, only because I want to see my dream of CliffskiBucks™ micro-transaction tokens come to life.

  15. jd says:

    Cliff wins! Demos let you see if you want to play the game. If you like it, buy it.

  16. Sean says:

    I think F2P is hard to nail down because there are so many different F2P models: one-time fee, subscription, micro transactions, pay to win, cosmetic only. I’m sure there are more, but you get the idea.

    I think we will see an equal number of each. You need to trust the people making the game not to abuse the model either way.

  17. Sorry Cliff. Microtransactions let you fill in all of the cracks under the revenue curve. http://4.bp.blogspot.com/_Y34GkxwgiRM/SPSs1BVFpKI/AAAAAAAAAI8/NtVSUOgGcKg/s1600/wtp1.jpg

    If you’re skeptical about free, you should read “Free – The Future of a Radical Price” by Chris Anderson – here it is for free: http://www.wired.com/images/multimedia/free/FREE_Audiobook_unabridged.zip I found it very eye-opening.

  18. Arowx says:

    As an indie game developer, I’m divided I would like to be able to provide games that will sell without going down the F2P route.

    Why?

    I want to be a game developer not a shop assistant.

    I want people to have fun and not feel as thought they have to have the latest fashion items, to keep up with the Joneses.

    But I also want to make a living doing this hence the division, do I need to make my games free to get the players in and create the social buzz needed for a game to take off, and do I need to setup a ‘shop’ in the game so I can ‘fleece’ the virtual punters for every dime I can get?

  19. Wayne Elgin says:

    @Chris Park: Regarding Valve’s switch to F2P, while it remains to be seen what the cost of Dota2 will be, it may be free, as well. And it makes sense for many of the reasons that TF2 did. Gabe has mentioned in a couple of different interviews that treating a game’s audience as a monolithic group with one mindset and one reinforcement mechanism is probably erroneous. That is one of Nicholas’ core points.

    It’ll be interesting to see the evolving results of their experimentation with community reward and “punishment” as it applies to their future games.

  20. cliffski says:

    The big problem with the book ‘free’ is that the guy clearly did not impartially look at the data. How do I know this? Because I am mentioned in the book, in the section about my ‘talking with pirates’ blog post. The author never bothered to contact me to clarify what I concluded from the experiment, and attempts to extrapolate some issue regarding pricing from it which uis 100% wrong. In fact, contrary to what he would *like* to belive I found all the complaining about pirces to be complete nonsense, as later price experiments showed that revenue actually dropped dramatically if the prices were lowered…

  21. John Lopez says:

    I think the problem with pinning F2P down is that there are so many models and among them, so many bad models. In the long run I think consumers will wise up, but there is a lot of bad blood about F2P because, for example, of the treatment of Whales.

    Whales are tricky: give them too much power and the free players feel abused. In some games F2P users are little more than targets that are being provided to the whales: the classic example being FPS games that give the free players low quality weapons and armor. Considering how brutal some FPS communities can be *without* that aspect, that doesn’t seem like a good long term business plan.

    Give them too little power and the free players spend their time abusing them both in words (“coiner” is a derogatory term) and by focusing on making their game worse (I know I have been on both sides of “ganging up on coiners”). Not a good retention strategy for the Whale, especially if such ganging up can actually allow the “taking” of assets of players.

    [To illustrate: my wife was playing an online game with Sky in the name. She was doing fine, having a good time and was reaching the upper ranks on the server. Then she bought some coins and was immediately beset upon by the three largest guilds in the game with a 24/7 assault while her inbox filled with profanity laced diatribes about how evil coiners were. Obviously she left the game with a bad taste in her mouth.]

    Optimally, you shouldn’t be able to tell via *gameplay* that a player is a coiner. Team Fortress 2 gear can be obtained both via gameplay and grinding and seems to be a far better community for it.

    Meanwhile, these aren’t sins of F2P only: many of the traditionally marketed games are making “mandatory DLC” where the gear in the DLC is so markedly superior that it effectively turns the DLC users into power whales, with all of the blowback from the community it entails.

    In the end, gamers want their games to be *fair* to all players, for skill to shine about fat wallets, regardless of the distribution model. F2P gets more flack because there are far more blatant muggings going on at the moment. Consumers will hopefully learn to evaluate F2P at least as well as they do the traditional model (where I get mugged from time to time by an over hyped game: I’m looking at you Dungeon Siege III’s absolute garbage multi-player mode).

  22. wraith808 says:

    I think the concept of winning on such things (also juxtaposed with x-killers) shows the primary fault of things. I don’t think that any strategy that can support what the market likes is better or worse- just different. Each has its strengths and weaknesses. And each can be misused in horribly different ways. I think that both of you are winners- because the debate did cover several issues and did so in a very adult manner that showed the strengths of both well. In the end there is a big market, and experimentation in all areas, including funding, is a good thing for all involved.

  23. Chris Park says:

    @Wayne Elgin: This is true, I forgot about the DotA2 comments. There again, though, I think it’s a matter of Valve looking at each game individually. DotA2 caters to a very specific sort of audience, and in a lot of respects is pretty niche (compared to, say, Half Life 2 or Portal 2).

    Valve are also ones who seem to like to experiment — and they are one of the richest companies around. So they can throw this game out there and see what happens with a game that is “freemium” from the start (unlike TF2). If it is financially a success, great. If not, they still built their brand up and it’s not like they need the cash.

    Smaller companies — heck, even most AAA dev studios — have a lot more to lose with each title. Clearly F2P is viable for a lot of smaller companies as well, despite skeptics — I used to make and sell SaaS software, of which many people were very skeptical when I was first involved in it. The thing is, while SaaS is still around and doing very well, it’s not like everything moved to the cloud. A lot of things that were well suited to it did, but it’s not like the number of programs physically installed on most people’s machines have dropped.

    So in the end I think that wraith808 and others have it right with saying that ultimately the market is going to be diverse and that’s great. Sometimes it feels like the F2P proponents are trying to convince the whole world to use their model, though, and there are others of us on the other side of the fence who simply don’t see that as a wise move for ourselves at the present time. Let the market be diverse! F2P isn’t a religion that we need to be converted to, or a cult that needs to be stamped out either.

  24. Wayne Elgin says:

    My friend and I were discussing this debate. I think that one of the finer points that Nicholas makes at the end is that new businesses now need to develop their value proposition with the assumption that a large segment of gamers across many different genres already have plenty of viable, free options at hand. This may be why the F2P model doesn’t adversely affect me as merely a pragmatist customer but could be extremely detrimental to the indie developer with the balls to price their game higher than $10.

    On a game-by-game basis, I’m a skinflint, but that’s only because I’m an industry-wide whale. Free games don’t intersect with my habits, but their existence also doesn’t bother me.

    What I’d like to see come out of F2P, and I suspect that the group of gamers that appreciate the niche projects (e.g. many of the Kickstarter goals) share this sentiment, is a reason to be amazed and a justification to pay more. Lots of us have indie devs that we feel a connection to and we buy into their pre-orders, we contribute to the forums, and we recommend the games to specific friends. It’s a bigger leap of faith, but rather than the race to the bottom, it’s much more interesting to be amazing (whatever that means to you) and blatantly ask for the price you believe in.

    The biggest worry I have as a customer is not getting my money’s worth from a game when I actually play it (in gameplay, quality, multiplayer, length of content, etc…). Naturally, good demos solve some of this but not all. And if you are an active participant in one dev’s games, when that dev moves to a F2P model from one that you’ve demonstrated support in other ways, it could likely be a big slap in the face to the most dedicated of your community (especially if handled poorly).

    In “Predictably Irrational,” the author discusses an observation of a problem where a daycare had so many parents arrive late to pick up their children that they decided to implement a fee to punish the parents. The rate of late parents increased, because that made the behavior no longer socially unacceptable and more like a paid service. When they tried to revert back to the fee-less model to reduce the late pickups, it was unsuccessful. The lesson drawn from it was that once an economic norm is established, it is very difficult to return to a social norm.

    That’s probably a good insight into why some communities reject the payments for F2P games they use. Particularly if their prior contributions go unnoticed, it could convert their experience to a bitter one.

  25. Vampyre says:

    Personnaly, both have good arguments. But I also hate the F2P. In free to play, I hear free… That means to me that I won’t need to pay to play it.

    I’m an oldschool gamer. I buy games because I know I will have fun with. I don’t need to wait for a review. It’s 30 years I’m playing and following who does what. I know the people behind the teams and I know if I will like the game based on the people behind it.

    And I never regret the games I bought.

    In free to play, I expect the game to be free… With that in mind, I start the game, play two hours maybe, before I’m told “Hey, you want a health potion ? Come and give money for it, you’ll enjoy it.”

    And there, even if I love the game, I simply just rage quit in frustration, because I was begged for money. If I want to play the full game, well, I buy it. Place a damned option to buy the game… That’s all… As easy as that. I think it’s Aeon who got this model not long ago, where you can play free to play. But you can also buy an option where all the zones are good to explore. Ok, it’s a MMO… So there are monthly costs linked to that “vip service”.

    A very good example is Diablo 3. I bought it months ago, as soon as the pre orders where started. Of course, I play it. I’m an old school player. I’ve played Diablo 1 until 2000 when diablo 2 came out. I’ve played Diablo 2 for 8 years. I knew Diablo 3 was a buy for me. No need to know more. Now that the game is released, you can come and see the general chat. Just ask people what they think about the in-game shopping. Basically, you can buy with real money stuff for the in-game. I bought Diablo 3. I won’t spend a dollar in this in-game shop. Diablo might be considered as a free to play if you are a WOW player, because it’s offered.

    Ask in game, to old players like me, what they think about it. The answer is simple : “I won’t touch that shop, because I don’t see why it exists. It didn’t existed in Diablo 2, I don’t see why it should exist in diablo 3”.

    When I play a free to play, I have that same logic. If it’s free to play, to me, it means that some people pay the bill for me. That’s illusion, but that’s what happens in my mind.

    For me, if i want a game, I look at who is behind. If I know the guys, I know that they do a wonderful job, I will buy it. No matter the price. If I don’t know, I try to know more about the game. I try a demo. I know it’s limited and it’s fine with me. But games in kits, no, I hate it. It stops my mood to play that game on frustration… And even if I liked the game, I’m frustrated on the dev for having done something like that. I would prefer he asks me to buy the game after level X is reached, rather than bugging and begging me with stuff…

    I simply call that Pay To Win. I hate that.

    WOW do that. Download the demo, try the game. WHen you reach level 20, you get a message : please buy the game to unlock ALL its content. That’s fine with me. That’s honest. Do not hide behind “Come it’s free !” Just claim your rights. “I’m free from A to D and you buy the game from E to Z”. Not “I’m free from a to z, but from d you will need to pay though some extra stuff”.

    You develop a game, you know how it is worth, you go for it. If you claim “free to play”, than you do it without any extra hidden charge. If there are costs to progress, than it’s not free to play.

  26. dataferret says:

    ‘So I start from the premise that if the market is being changed by digital distribution and the immutable economic law that if the costs of making another copy of something trends towards zero, so does the amount that people will pay for that copy. ‘

    That’s a broken assumption which supposes that Digital is special because it has a flat MC curve. Marginal cost for the reproduction of books and other similar physical goods have been trending down as well for a very long time now. It’s actually 10% of the price of a book now and is flatter than it has ever been thanks to computer and automation. Using the same simplistic logical reasoning the above quote alludes to, books should be worth at most 10% of what they are now.

    But reality is different and fundamentally more complex.

    Once marginal costs get down that low (pretty much goes for any product with low resource costs), book pricing becomes primarily based on fixed costs divided by the serviceable addressable market. Irrespective of what the customer wants, THAT is going to be the floor of any market price. A market without suppliers is useless. The battle is in the competitive or value-based pricing that occurs above it.

    Any niche market player like Positech Games would be insane to price the same as another company who’s addressable market is 100x larger. Lowering the price doesn’t increase the market size. It might increase your addressable market a bit, but each market reacts differently to price cuts.

    You may suffer a bit from a Substitution Effect, but that part also varies by how much the two markets differ. A Positech buyer isn’t going to jump ship and only play Angry Bird games because it’s $15 more. So each market segment equilizes at some price. It’s naive to try to define market in the broadest sense (eg: all things video games) and peg pricing that way.

    As far as F2P goes, the free or sliding price scales aren’t new. You see it everyday when you go to Walmart or your local grocery store. The coupons and end-of-aisle loss-leaders are meant to ‘convert’ you. Is it a viable business model? It works well enough. Blindly apeing it however is a fool’s business plan.

  27. Avalon says:

    Free2Play is Bullshit! I don’t like the idea of things being free. Everything has to cost something in one way or the other. All this de-valueing of software and games is a huge step into the wrong direction!

  28. To put it simply, I’ll happily pay £30 for a good game. But give me a free game and plaster $ buttons all over it, suddenly I don’t want to play any more, no matter how good it might be.

  29. Michael says:

    The whole debate just makes me think of those awful facebook games. Play everyday for free while paying players always have an advantage. I prefer to try a demo and read about other players feelings regarding a game. Then, I wait for the sales and buy the game. Halfway between f2p and full price.

  30. Watsong says:

    F2P is inherently a time sink based method. Not enough time in = no micro transactions out. Given the finite playing time available to the players, F2P has a major market saturation limit.

    Conversely, the purchaser of a full price game may buy it and not play it for 6 months; May play it half way; May play it for 5 minutes and trade it in for pittance. But the money is made when the purchase is made. The purchaser remains free to buy many more games, because their time isn’t being eaten by playing a F2P game.

  31. Scott Fadick says:

    The argument seems to be centered on a ‘fair’ pricing model but I think the most important point is one Cliff made early on, ‘the business model will lead to design compromises’. For a f2p game to be successful one of the first questions a designer must answer is ‘How can I annoy the player enough to get them to pony up a few bucks’. I’d much prefer designers to be concentrating on making a game fun, exciting, challenging… anything but annoying.

  32. zeek says:

    I think the entire argument is silly: There is no one answer, and I believe Nicholas is more correct simply by stating that there is no one-size-fits-all solution.

  33. James says:

    I’ve only enjoyed playing two F2P games and those were: Puzzle Pirates (like the user before me) and APB Reloaded. That being said, I never was hooked on Puzzle Pirates but APB is keeping my attention. APB is very competitive but I’m good enough to not buy stuff and compete with everyone else. I could play this game forever and never pay a dime. That being said, I’m probably going to drop $20 on premium or an item eventually. However, wouldn’t they just be better off charging me $30-40 (guaranteed if I purchase it) and offer expansions, DLC, or addons?

    You can’t really argue with the finances of the F2P market or business aspect because when it work, it works. You’re pretty much golden. However, I do feel much of the appeal or uniqueness of the game is lost on F2P when they start charging for everything and it does not appeal to me.

    Then again, it all comes down to cost. If something F2P is reasonably cost then I don’t have a problem with it. The problem is that too many games charge you too much and give you too little in return. Sure, people do buy it and spend the money but that’s not something I’d do unless the game was just AMAZING.

    I keep seeing a future where games like Skyrim are F2P and just don’t see it working. Imagine some of your favorite or the best games starting to charge for access to features, content, weapons, or special items. That can’t be much fun.

    Pricing needs balance, options, and accessibility. Don’t rely on F2P, don’t overcharge on pay items, give a variety of play options, and don’t force the players to do something.

    Lastly, why not have F2P with an option to just purchase everything in a normal $40-60 package? It’d save the customer money and guarantee the company that much money.

  34. Alstein says:

    APB was a pay game that got turned into F2P due to poor sales I believe.

    F2P model does work if it feeds on addictiveness.

    There will always be folks who reject the F2P model, most of which tend to be likely supporters of Positech-style games and genres.

  35. Why does it have to be one or the other? Why can’t both models exist?

    Why are games so cheap to buy? Because developers made them that way. In an effort to one-up their competitors they lowers their prices, with other developers doing the same. Soon prices were rock bottom and no one was making enough money. Developers, assuming gamers didn’t want to pay money for games anymore, came up with the free-to-play model to counter.

    I don’t remember all gamers going on a bit petition to lower the cost of games. Developers did it all on their own. And now we have free-to-play games and everyone is going to go and make one until the world is sick of them and either a new model comes along or we re-has an older model.

    It’s kind of why I respect developers like Cliffski and Mojang, who sell their games at real prices, and aren’t giving in to this fad of spending shed loads of time and money on developing a game that eventually gets sold for less than a can of Coke.

  36. @dataferret I like your argument about spreading the fixed costs (I don’t entirely agree with it, but I like the argument).

    Do you have a recommendation of a book that sets it out in more detail?

  37. Lots of good points for and against, here’s my 2 cents.

    The film analogy mentioned is wrong. A more accurate analogy would be the film viewer is asked during the movie whether they want better special effects in the film? or perhaps do they want to explore the story of a particular character which they like in the film. Free to play shouldn’t be about just staggering static content to get extra revenue from players but instead should allow the player to explore the game in more depth, which otherwise they wouldn’t be able to.

    The idea that the old model of paying up front was a fair and just system is a joke. How many times have you bought a game, just to play it for a few mins/hours and then you never go back to it? but yet it’s cost $30-$50, money you don’t get back.

    The 2 models will not be able to co-exist once free to play gets a bigger foothold in the players minds, sooner or later players will expect to be able to play a game without having to pay for it, and will know that enhanced enjoyment of that game will cost, they will be aware that is the price to pay if they like the game, but equally they will know that if they don’t like the game they haven’t lost anything other than some time.

    The old revenue model also seems at odds with the dynamic and social world of games today. In the old days, you paid your money and you got the entire “world”, that was possible because that world was finite and defined, dependent upon how long the developers spent working on it, it also usually was a single player experience. Now fast forward to todays games, where people expect to be able to play with/against friends and for the game “world” to be constantly changing and added too. This can’t be done via one set price. You have to get extra revenue from people to keep giving them what they want. One way is via subscriptions, which I think is a viable revenue model, the other way is through IAP’s. IAP’s is definitely the more sophisticated way of doing it, but at the same time is a lot more difficult to do right.

    As a developer I don’t want to earn most of my revenue from a few players “whales”, I would much rather earn from a broader player base, and I will always design my games with that in mind. That’s not to say I’m designing a game to appeal to everyone everywhere, on the contrary I think it’s better to be more specific and have a game that appeals to whatever specific audience I’m aiming for.

    What I will say is that Free to play, F2P is perhaps misleading. I suspect a lot of the issues people have with that revenue model simply stems from the terminology. Free to Try, Free To Start Playing, Free to Experience or Free to Enjoy might be better.

  38. dataferret says:

    @lovell Information pricing is covered in Information Rules by Carl Shapiro and Hal Varian, published by HBS Press. It covers quite a lot of economic theory without going into curves amazingly. Mostly drawing from other established industries as examples.

    Spreading fixed costs is more of a fundamental business concept, which they don’t explicitly bother explaining. They assume you’re not always selling at a dramatic loss, and go into cost leadership vs diversification strategies.

  39. Who wins? Consumers and indies. Consumers get a product they really like and if so, they pay for it, thereby giving indies and even big game companies an indication of what the market really wants.

    Before only movies entertained. But only big movie studios could create. Now you have all these small sitcoms, miniseries and some really stupid reality shows, but you know what, they entertain. Who won? Viewers who wanted entertainment more often instead of waiting for big screen movies and all the many small studios who create this new content, some good and some bad.

    In the end, it makes for a world where more and more people can make a living. If your argument is that opening up market niches can lead to bad quality products, you’re right but eventually that new competition will lead to a learning curve and a better life for all!

  40. […] War, Arcen Games: 15% lifetime conversion (source: Cliffski’s blog comments) Related […]

  41. BOB says:

    The real issue is most F2P games are severely limited in terms of Design and PLAYER OWNERSHIP. Probably the most important point – players no longer own their games in the F2P model. If you want to go back and play an old game well you’re SOL. Games can no longer be preserved and passed on to newer generations. The game only exists so long as the “IP holder” allows it by funding the servers.

    We can take a look at diablo 3 a game that sits almost in the ‘f2p’ category and does feature the problems of ‘f2p’ (chained to online, players never own the game).

    Single player client code that would normally be run on the client is forced into being run via servers, this introduces more lag/latency and poorer gameplay. Not to mention severely limiting modification of the game as well as rolling back player and customer rights.

    Having games chained to an internet connection and then screwing up the game by holding part of the code hostage through the use of dedicated servers is underhanded period.

    There is no discussion, most F2P games are simply IMMORAL. Now while there are a few F2P games that ‘buck the trend’ it relies on the masses stupidity and people who have poor judgement and impulse control.

    If you can’t play a game 20 years after the servers have shut down that’s all the argument you need to put a sock in F2P and ‘always online’ nonsense.

    Games people love can no longer be owned, modified and expanded upon by people who paid for the game and thats a tragedy.

    The publics money goes into a giant intellectual property black hole and that IP is never returned to the commons. The public is being turned into serfs and slaves in a new form of feudalism through poor laws and legal conartistry. By expanding and twisting the concept of intellectual property to deny the rights of the customers and the public at large to actually own the products they buy. It’s sick and twisted.

  42. @Bob

    I think the concept of “Player ownership” is changing form. In the past it was they owned a physical object, i’e a disk/tape etc now it’s in the form of an account, which is held online, which gives them access to a game, or games or service.

    I suspect those “old games” will always be around and available to future generations via online services. As for losing the game when the server goes down, well I can’t remember an instance when I’ve lost any account because a server has gone down. Obviously it can happen in theory but as more and more services move online, backup of that data will become more and more important.

    You also seem to be ignoring how it actually was over the past 30 years in regards to games. As I said previously, there have been lots of times when I’ve paid a good deal for a game just to find out there’s bugs in it, or it’s just not very good, which was was completely at odds with how the game was portrayed in the advertising and even reviews. But it’s too late I’ve bought the game (and this is when games were seen as children’s toys so mostly advertised to kids, the idea of games for adults is a recent thing), so how was that not immoral?

    There will always be companies that try to take advantage of individuals through whatever the medium is, it happened before and it will happen in the future, but that is not what “Free to Play” is about. F2P means you can play/try the game without paying anything! and then if you like it, then decide to pay something (not even the full price, but a fraction of that if it’s a game with IAP’s) and you pay as much or as little as your enjoyment dictates, how is that a bad thing??

    Games have changed from a product to a service, and that in turn is a reaction to our busier lives and the nature of an always connected world. F2P (or subscription) fit’s that situation better than the older revenue models.

  43. BOB says:

    @gameviewpoint

    You’re wrong, where can you still play earth above and beyond?

    http://en.wikipedia.org/wiki/Earth_%26_Beyond

    You have to wait years/decades and thats only if the company doesn’t sue you into the ground for making an emulator.

    What about all the old games for consoles you can no play online?

    http://kotaku.com/5901420/demons-souls-servers-shutting-down-on-may-31st

    You’re simply wrong, period.

    The fact that you buy into the removal of gamers rights by trying to ‘redefine ownership’ is SICK. You are sick in the head. Imagine if I tried to ‘redefine’ ownership of your car so that I kept part of the cars functionality locked away from you until you checked in with me.

  44. dataferret says:

    @Nicholas Lovell

    Information Rules: A Strategic Guide to the Network Economy, Shapiro & Varian might be interesting read to start. It goes into information pricing and competitive strategies. It also goes into versioning information and variable pricing which might be useful to F2P.

  45. Gavin Scott says:

    I agree that a main driver of Free to Pay games is the idea that a game is worth different amounts to different people.

    But what I dislike is the fact that more and more game publishers are not so much targeting the people who would buy the game if it were half as much, but the people who really love a game and get way more value from it than whatever the fixed retail price is.

    So for example I think most (active) MMOG players get way more than $15/month worth of value from WoW or whatever they play, and the publishers are all asking themselves “how can we get that $200/month from our players that really reflects the value they get from it?”.

    Taken to the limit, publishers will find ways to squeeze out of their players just exactly as much money as there is value to the player. Maybe this is the future of game economics the way it seems to be in many other areas these days, but I find the prospect extremely depressing.

    The consumer should be allowed to profit from a purchase rather than simply being farmed like cattle.

    G.

  46. T-Bone Biggins says:

    F2P is a type of evolution of Shareware games. Shareware was one of those things I would never buy, and 99.9% of the games I played shareware were not fun. I even got the free CD’s in the mail full of shareware packs, and right in the middle of the best of these games they will ask for money to continue. Shareware might as well be a demo, no difference to me.

    But F2P is cancerous beyond repair. F2P won’t get better with time like FPS and RTS games did (notice difference in Dune 2 and Starcraft 2, or Doom 1 and Quake 4) but F2P is a game model that makes a game deliberately less enjoyable until a player buys in. It is not a demo, it is a form of haggling where they say if you like the free bits then pay, you will enjoy it more. Furthermore many games punish non-buyers with lesser equipment and abilities. F2P, like any cancer, needs to be removed before it keeps growing and eventually kills gaming.

  47. Anthony says:

    I agree with John Lopez, in that you there are some attrociously bad F2P “markets” out there and those are the basis for this comparison.

    Cliffski’s thoughts on how games should be marketed and sold are relatively enlightened, and comparing “free demos” with “bad F2P markets” is hardly a fair comparison.

    I think F2P has a lot of excellent potential, but we haven’t really seen anyone do anything competent with it yet. There are plenty of people talking about things they’re willing to pay for, but this is rarely the sort of things that appear on F2P markets.

    F2P markets have the potential to allow a player to customize his game, which I think it a really nifty idea. It supports a continually-evolving and ever-supporting game whereas in the traditional model, the publisher needs to eventually move on and support/market their next game.

    A F2P market can keep a game alive, and fresh with new content, whereas supporting a paid game that has made the bulk of its sales already is a bit of sinkhole for the publisher.

    When it comes right down to it, the line between F2P and gobs of DLC is really just semantics. Supporting one and not the other doesn’t make too much sense to me.