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Jon Wood: Much Ado About Paying

Columns By Jon Wood on January 28, 2010

Much Ado About Paying

Revenue models are a tricky business in today's MMO landscape. Back in the late 1990s, early 2000s, things were fairly simple in terms of how MMORPG players paid for their games. In order to play the "big names" like Ultima Online and EverQuest, players would have to pony up the dough monthly (on top of a box purchase) to keep their access.

Over the years though, as the MMO market here in the western world has matured, so too has the way that we are charged to play the game. Numerous different revenue models have been tried over the years, but until recently they've only been looked at one at a time. A game was either free to play, or it had an item mall, or it carried a subscription fee. Today though, we are seeing what many players believe to be a disturbing trend toward a mingling of revenue models for games, with developers in essence "double dipping" from their players.

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In this week's column, I wanted to take at least a shallow look at a few of the different revenue models that have cropped up over the years, with a focus on who generally benefited most from each.

Please keep in mind as you read this that it does take into account that game making is indeed a for-profit venture and that game companies are entitled to make a profit on their games as best they can... to a point.

Box Price Only

The first revenue model that I wanted to talk about is the "pay for box only" model. This one was introduced and popularized by the launch of Guild Wars. The idea at the time was to launch a box and continue to launch further companion boxes to offset the prices of development.

This particular business model was effective (to a point) at the time because it gave players a literally free to play alternative to subscription model champion World of Warcraft at a time where more and more people were getting into the idea of online worlds. Sure, this game was more heavily instanced than its Blizzard cousin, but for many players the price was right.

This particular revenue model never really caught on for one of two reasons: either it may not have been as financially successful as it could have been using this model and so wasn't repeated or other developers realized that adding an item shop to the free to play model would garner higher profits.

For the player, the benefits are obvious: it's cheaper, at least in the short term.

Who benefits most: All players

Subscription Model

As was mentioned above, the subscription model was the first business model for MMOs to really hit it big in the western market. Games like Ultima Online, EverQuest and World of Warcraft solidified the monthly subscription as a staple for the industry and held supremacy for years, even today maintaining a tenuous grasp on the title of the business model favored by the most vocal of players.

The subscription model has its ups and downs. On the up side, subscription based games give at least the illusion of a level playing field where everyone pays the same amount of money to have access to the same amount of content. There is also a feeling of security that comes along with this model in terms of how the customer interacts with the company in question.

On the down side, subscription fees seem to favor the player who is able to play their game 40+ hours a week, while leaving the more casual player more likely to spend their gaming dollars elsewhere.

Who benefits most: The "hardcore" player

Item Shop / Microtransactions

At the height of the MMO boom here in the west, a new revenue model began to become more and more popular as more and more games made it to the shores of the West using the so-called "free to play" model that included an (often optional) item shop.

The bulk of these microtransaction based game have traditionally been games imported from the eastern market. The flood of poor quality localizations that inundated the market here had a number of different effects including: 1) making truly fun and interesting well-localized microtransaction based games difficult to find among the bad ones and 2) creating a misleading stereotype that item shop = bad game.

There also exists within this system great potential for abuse. Many western players balk, for example, at the idea of being able to "buy win," or purchase for real money items that give players advantages over those who choose not to buy the item. There is a feeling that while a single subscription fee levels the play field for all concerned, microtransactions carry no such sense of fairness.

That isn't to say the free to play doesn't have its merits as a revenue model. Handled correctly, there is a large market for these games here in the west. After all, we're already using microtransactions in everything from our music to our phone applications in our non-gaming lives and it's only a matter of time before that concept expands. Microtransactions also allow players to spend as much or as little on their gaming experience as they like.

Who benefits most: Players looking for a more financially customizable option

Subscription + Microtransactions

Over the lat few years, this particular revenue model has begun to show its face more and more often in AAA MMOs. The idea behind this revenue model is that players are charged a flat rate for access to the game, but are then given the option of purchasing further game-related goods and / or services in an item shop. It started, I believe, innocently enough, on the account level in games like World of Warcraft that would charge an additional fee to players for some services (server transfers and the like).

Over time, these account level options have grown in some games to include shops with in-game access selling in-game items, everything from vanity items (cosmetic items only) to items you might find in more traditional items hops (experience bonus potions and the like).

In general, it is the latter example that people find fault with more so than the former. The reasons for this revenue model cropping up could range anywhere from the necessity of a tough economy to outright greed on the part of development companies.

Who benefits most: Development Companies / Publishers

No matter the rationale behind use of a combined revenue model, it is becoming clear that no single business plan of the past is enough to satisfy the financial requirements of today's MMOs (again, either due to necessity or greed). Moving forward, it will be interesting to see at what point players will have collectively had enough. After all, who wants to pay to be allowed into the store to buy things?

Now... where did I put that Costco membership...