MMORPG

While I didn't have the opportunity to comment last time on the news that SWTOR will change business models, the topic is still very prominent in my mind, so let’s get to it. I wasn't surprised at all by the actual announcement since I had already predicted quite some time ago that it would happen. Actually, even though I knew there was zero possibility at the time, I expressed the opinion years ago, well before launch, that the game might be better served by redesigning it to be free to play from the get-go. Nonetheless, I didn't expect EA to make the move so soon. My best guess was by around the middle of next year. Obviously, my crystal ball turned out to be somewhat misty.

In any event, the question of great interest to me now is what this will mean to the MMOG market and industry, both in the west and globally. One immediate thought is that it may further decrease the likelihood of seeing more mega-budget subscription offerings. For one thing, how likely does it seem that EA will consider plunking down another $100 million-plus to take another shot any time soon? Or even half this amount?

And what other publishers look like candidates to do so? It's may seem easy enough to name Activision, but is it really the slam dunk scenario some observers would like us to see? How long will that company restrict itself to what is roughly half the market in North America and Western Europe, but declining proportionally? Furthermore, let's not forget that these regions aren't growing as quickly as the overall global space. We also have to factor in that the subscription model is significantly smaller in the largest country as measured by both players and dollar value, China, as well as in the rest of Asia, Eastern Europe... basically the rest of the world.

As an interesting aside, there has been some speculation that Vivendi's seeming desire to sell off its very large stake could push forward the timetable for us to learn more about Titan. The basic line of thought this regard is that such disclosure would help to increase the value perceived by potential buyers, and thus to raise the selling price. The situation isn't quite this simple, but neither does such a scenario feel impossible or even unlikely enough to discount completely.

Back on topic, another consideration is that Activision is giving off indications it's growing more receptive to F2P in general. A particularly intriguing example is Call of Duty Online, the upcoming micro-transaction-based MMO extension of one of the company's key IPs. Some gamers in this hemisphere may not yet be aware of this project since it's exclusively aimed at China. What does such a plan for this version of such an important franchise tell you about the importance of this market, and also about the publisher's apparently growing willingness to embrace non-subscription approaches to monetization? It's also easy enough to envision this project coming to the west. If this happens, which may be only a matter of time unless the game is a disaster, what type of business model do you think it will employ?

To supplement to my own thoughts on this topic, I decided to poll some opinions from within the F2P industry. Hendrik Klindworth is the Founder and Managing Director of InnoGames (Forge of Empires, Grepolis et al). Jay Choi is the Chief Operations Officer at Gravity Interactive (Ragnarok Online, Dragon Saga et al). Jungsoo Lee is the Vice President of Live Development at SG Interactive (formerly Ntreev; Pangya Golf, Trickster Online et al), and Flavio Daniel Caracas is the Chief Marketing Officer at Rock Hippo Productions (Brawl Busters, MicroVolts). Not surprisingly, their feelings are pretty positive and optimistic:

What significance do you see in EA's decision to take SWTOR F2P?

Hendrik Klindworth: This step really shows that the F2P business model is superior to subscription-based. It has huge advantages for both publishers and players. Players can play a game for free and have the freedom to choose if and how much they would like to pay. For publishers, F2P helps to keep the entry barriers as low as possible.

Jay Choi: This is part of a trend that involves developers realizing that the F2P model is not just for non-Triple A titles. It should show that F2P doesn’t mean lower quality gameplay, just ease of access for gamers who want to check out a title before investing in it. This change is one of a number of companies in North America coming to the realization that the marketing landscape has changed, the players have changed, and F2P has a much wider approach to acquiring new ones.

Jungsoo Lee: It proves that even with a mega-brand like Star Wars, it's exceptionally difficult to launch an MMO with a subscription-only business model and to keep players involved beyond the first 90 days. With the proliferation of F2P games over the last five years, gamers have a huge catalogue of high-quality choices with large communities to pick from that don’t require them to commit their dollars up-front. The good news for EA and SWTOR is that unlike the subscription business model, the F2P MMO space benefits from a large market, as opposed to the direct competition that comes from a gamer having to decide between supporting one or two subscription titles.

EA will also benefit from removing one of the entry barriers that SWTOR has. Going F2P will generate an influx of new players experiencing the game for the first time. If they can support it with regular updates and events, as other successful F2P MMOs do, SWTOR will be more successful and profitable that it is currently.

Flavio Daniel Caracas: This is just one more example of gamers’ increasing acceptance for alternative and flexible business models. Several high-profile titles have already made transitions to F2P, with some even planning the move during development. SWTOR in particular is taking a hybrid approach, since you still need to purchase the game itself and there are features that will only be available through monthly payments.

How and to what extent do you think this will impact your company and other F2P publishers in the North American market?

Jay Choi: I don’t see this having an large impact on the F2P landscape, but it will ripple the water and get other Triple A development companies to consider F2P in their development pipelines as the monthly subscription model has changed, with micro-transactions being so commonplace and easily understood by the current generation of electronic gamers.

Jungsoo Lee: Having one of 2011’s most anticipated MMOGs entering it is only going to be positive for the F2P market as a whole. Many of the high-profile, big budget, branded titles of the last few years have either launched as F2P or converted shortly after, and the North American market is embracing the business model.

Also, I believe these high-profile, high-quality MMOGs entering the space will help improve the proposition that existing F2P games can be high quality.

Flavio Daniel Caracas: One game going F2P would not make a significant impact; however, the trend is obvious. Larger North American publishers are starting to see the value of F2P in terms of increasing their player base and of course, this creates more competition. We’re optimistic about this development since the overall quality of games will keep improving, and players who were hesitant about the model will take notice.

Hendrik Klindworth: This will mainly impact publishers of client-based games. More and more companies will switch to the F2P model. However those that did not release with it before will have a challenge to make the right adaptations to their existing titles.

As our focus is on browser and mobile, we do not expect significant impact, but it really proves that the F2P model is the best one, and our experience in this model will be a strong asset in the following years.

What implications if any do you see for other regions of the world?

Jungsoo Lee: I can say that F2P games dominate the markets in other areas of the world and have expanded to areas that North American publishers have overlooked, like the Middle East, the Nordic region, Russia and the Ukraine. Similar to the North American market, we’re seeing greater adoption of F2P gaming in Europe and Australia. Personally I think there will be more companies that have been developing F2P games in the Asian market challenging the market with better quality and well localized ones. SWTOR going F2P will be a good example that this space in the North American market is growing, and will accelerate the invasion of Asian games.

Flavio Daniel Caracas:Since the F2P model was pioneered in Asia and became accepted fairly quickly in Europe, I think the biggest impact will be in North America. These pioneering regions have been developing games for the F2P market from the ground up for a long time, and western developers now have to catch up.

Hendrik Klindworth: F2P is growing in popularity worldwide, and we believe it will only continue its success. Not only are F2P developers now capable of making graphics that are catching up to AAA console titles, players are getting used to not paying for this upfront. There might not be any going back from that. People want to be able to test things before they buy, and micro-transactions are perfect for the impulse-buying behavior that the modern gamer exemplifies.

Is there anything else you'd like to say on this general topic?

Flavio Daniel Caracas: At the end of the day, F2P is just a tool which can be used to get games in the hands of as many players as possible. It’s not a simple process and there is a fine balancing act which must be performed to keep a game competitive. The success of any game, F2P or not, will ultimately rely on its ability to provide a fun experience and to keep players engaged.

Jungsoo Lee: It’s becoming clearer to everyone that F2P is here to stay. I think that many of the bigger players in the game publishing space are going to look to implement it as the default business model for new and emerging MMOGs. The days of gamers associating F2P games with low-quality, poorly-developed children's games is near extinct. There will always be room for another F2P MMOG. Can the same be said for the subscription-only sector?