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The Quinquennial (or sometimes more often)

Various thoughts on online gaming, often pulled from articles I've written for other sources.

Author: Quizzical

The other way to compare game business models

Posted by Quizzical Tuesday December 30 2008 at 2:24AM
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A lot of people evaluate the payment methods of a game in terms of, how much will I have to pay to play the game? That has its place, I suppose, and can be a major restriction on kids without access to a credit card.

But for people with a real job, $15/month for dozens of hours of entertainment really isn’t that expensive. The difference between $0/month and $20/month is far less than the value of the difference in quality from one game to another.

Some game mechanics are often dictated by the business model. Corporations exist to make a profit, and the relative profitability of various game mechanics can vary by business model. I would argue that, in many cases, the most important effect of the business model is the incentives that it creates for companies. That is, different business models push companies to design their games in different ways—and that can greatly impact the quality of a game. Let’s look at some examples.

Perhaps the classic (pre-Internet, even) example is a game where you buy a box, and then can play the game basically forever after that. If people have to buy the game before they can play it, this pushes companies to heavily hype a game and take lots of pre-orders, to sell as many boxes as possible.

The quality of the game matters somewhat, because the company does wish to sell future products to consumers, and not everyone who buys the game will do so immediately at launch. But with many players choosing to buy a game without personally knowing whether the game is any good, the quality of the game isn’t as important as with some other business models. Customer service is especially devalued, if the customer has already paid for the game, so that the company will never get another dime from him on that game. And the long-term depth of the game is especially unimportant, particularly since the early reviewers won’t have a clue about that before they have to file their review.

The rise of online gaming brought the monthly subscription model. Here, you have to keep customers happy or they’ll quit. If someone picks up your game, plays it for a couple weeks, decides it is stupid, and quits, you don’t get much money from that player. Keep him happy and paying the monthly fee for two years and you get quite a lot of money from him.

This model creates much stronger incentives to keep players happy than the one-time buy-a-box approach, which is a good thing. The ideal approach would be for companies to have an enormous amount of well-designed and balanced content for players to enjoy. But with development resources finite, that simply isn’t the case.

That leads to the monthly fee model pushing companies to stretch out their content. One common result of this is grinding for levels. If half the time you play the game, you have to do something stupid for the sake of leveling, which means it takes you twice as long to get through all of the content. That means you pay the monthly fee twice as many times, and the company gets twice the money from you.

Various other game-slowing nuisances are intentionally inserted into games for the same reason. These include spending large amounts of time running back and forth. Sometimes, instead of “running”, it’s flying or waiting for some public transportation system that takes time, even if it lets you go AFK. Some games require groups for some content without providing an easy way to actually get a group, so that players have to spend much of their time trying to find a group. Raid lockouts serve the same purpose: if you’re going to do a raid ten times, it takes a lot longer at once per week than once per day. In all of these, the purpose is the same: slow players down, so that they’ll have to pay the monthly fee more times before they run out of content.

Games with monthly fees can have truly awful end-games for the same reason. The basic goal of an end-game is to keep the player paying essentially forever, without having high development costs for the end-game content. That requires heavy doses of grinding and various other nuisances.

If, however, a company confronts a player with a bunch of nuisances from the very start, he’ll quickly catch on that the game is stupid and quit. Rather, the company needs to let players play for a while with minimal nuisances, and slowly increase the grinding and other waiting time as the player levels up. Someone who has already spent several months on a game is less inclined to quit and start over with a different game than someone who first played the game yesterday.

If the only way that the company gets money is from box sales, the company doesn’t care how long you play the game. Indeed, with server costs, they’d almost prefer that you quit more quickly, all else equal. Thus, the incentives to put lots of grinding and stupid nuisances into the game simply aren’t there.

That brings us to the model that has become more common of late: “free to play” with an item mall. With no money paid up front, nor even for quite a while into the game, the company has to make the game of sufficiently good quality for players to hang around quite a while. This can sometimes only mean of good quality compared to other “free to play” games, as the game will attract a lot of people who would never have played if they had to pay up front.

The problem that arises is that if players can play the game with only minor disadvantages without paying, then most players will. The company thus gets no revenue at all from such players. And that is a huge problem, since the company exists to make a profit.

The company basically has to ensure that a large fraction of players will eventually feel compelled to either buy from the item mall or quit. And, of course, the company wants players to choose buying from the item mall, rather than quitting.

As with the monthly fee model, players are more hesitant to quit a game that they’ve already spent several months playing than one they just picked up yesterday. If item mall items don’t seem to offer much of an advantage for quite a ways into the game, then players aren’t faced with the “buy or quit” dilemma until they’re far more likely to choose to buy than if they had to choose right away.

Likewise, if it’s a choice between pay $1 or quit, paying is a lot more likely than if it’s a choice between pay $100 or quit. While companies want to eventually get players to spend a lot of money on the item mall, the way to do that is to start small and make players pay progressively more as the game goes on.

The item mall model thus encourages games with minimal grinding early on, but add more grinding or other obstacles that you need the item mall to get around as you get higher level. The item mall encourages this to a considerably greater extent than the monthly fee model, as the goal is not merely to slow players down, but to slow them down enough that playing without buying things from the item mall becomes intolerable.

Conversely, for players who do buy things from the item mall, there isn’t a need to slow the players down, at least if they’re buying one-time use items. If a player is going to spend $2 per level in a certain level range, it doesn’t particularly matter to the company if he gains a level once per day or once per week. Needing to slow players down only happens if item mall items are useful for particular amounts of real-life time, as in, you can do something for 30 days. Then the usual incentives of a monthly fee apply.

Where this really gets insidious, however, is that making higher level content more dependent on item mall items isn’t the only way to push players to buy them. A company can add brand new items to its item mall that didn’t previously exist. Someone who figures that he’ll pay a particular amount of money to be competitive now has to either pay more or not be competitive.

Again, if a company makes the amount that players have to pay jump by too much at once, players are likely to be shocked by it and quit. But scale it up a little bit at a time and some players will pay far more than they thought they would before playing the game. That’s the way to make a lot of money off of players through an item mall.

There are, of course, a lot of other business models out there, but most are some combination of the above, and hence yield some combination of the game incentives. For example, a free trial followed by a monthly fee has the item mall incentives to get players who actually play the game to like the game initially rather than the hype and overpromise incentives of a buy-a-box system, but the long-run incentives are indistinguishable from a game where you have to pay a monthly fee right from the start. Having to buy a box and then also pay a monthly fee combines the company incentives of both models. Having to buy repeated boxes for expansions is really just several iterations of the buy a box model.

A knowledgeable reader can probably cite exceptions to quite a few of the general statements made above. Indeed, there are quite a few out there. Sometimes it’s a case of good gameplay taking preeminence over immediate business incentives, as repeat customers are good for business in the long-term. Sometimes it’s a business mistake that the company will correct with time.

So why does all of this matter? It matters because the business model often tells you quite a bit about the game mechanics. From a player’s perspective, the game mechanics are the dominant factor that makes a game fun. The business model matters because they influence the game mechanics, and indeed, this can sometimes be a more important effect than the amount of money a game costs you to play. $20/month to play a game you love is a great deal, but even completely free is far too expensive for a game you hate.

A game where the company expects the average player to be completely done with all content in the game within two months is unlikely to go with a monthly fee. A game where the company adds enough grinding that it thinks it will take an average player two years to get through all the content once isn’t going to let a player play all that time after only buying a box once, with no additional revenue. A game where the company will never add anything unbalancing to the item mall will not rely on the item mall as the main source of revenue in the first place.

Reading up on a game can tell you a lot about game mechanics, too, but the business model can often tell you a fair bit that hasn’t even been officially announced to the public yet. The business model dictates not merely where the game is right now, but where it is headed in the future. That should matter greatly to any players considering whether they will play the game in that future. 

Egamst3k writes:

Good post. Granted, it's not necessarily hidden or secretive information, but it's presented clearly and concisely.

Kudos, and personally I prefer monthly dues.

Tue Dec 30 2008 2:52AM Report
behindtheed writes:

Interesting.

 

Good food for thought.

Tue Dec 30 2008 5:31AM Report
kiddyno071 writes:

Wow man you have way too much time on your hands!

Tue Dec 30 2008 11:35AM Report

MMORPG.com writes:
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