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Two More Business Model Shifts

Richard Aihoshi Posted:
Columns The Free Zone 0

As readers of this column undoubtedly know already, the past week brought two announcements about prominent MMOGs changing their revenue models.  LEGO Universe will take the step earlier by introducing an F2P option in August.  At first glance, the new scheme looks like a relatively limited version of “freemium,” including access to two adventure zones and one property area where the player can build his or her own models from virtual pieces.  Those who want more can become members for $10 a month.

While it was stated that "... there are no plans for micro-transactions at this time," I can't help but wonder if it's likely to happen sooner rather than later.  This isn't a new thought by any means.  Shortly after I first learned the title was in development, it struck me that the actual plastic bricks are available for sale in packs of various sizes and mixes, and can even be purchased individually.  So why not create a parallel revenue stream for the in-game ones?

Yes, I'm fully aware the "I'll never play an F2P game" faction would grouse.  So?  How much do their opinions matter?  From a business perspective, they are important if they would lead to a loss of revenue.  This primarily means either (a) the people are currently playing and would actually quit, or (b) they would have subscribed, but now won't.  On the first of the above points, it's worth noting that to the best of my knowledge, the probable loss is quite small.  As for the second, my admittedly less than fully educated guess is that the opportunity cost isn't much either.  If so, the total is neither very large nor difficult to make up by increasing the overall user base, even after factoring in the near certainty that a majority of the newcomers won't pay.

But even if the reduction is substantial, the broader picture includes another major consideration, which is the net result.  If changing business models is likely to improve a game's profitability, and if the degree of risk associated with the shift is reasonable, there's obviously an argument for making the move.  What's more, it takes on greater weight as the projected effect on the bottom line rises.

Frankly, I've felt for a long time that LEGO Universe would have been better off if it had been designed to launch as F2P / freemium.  So, part of me feels like it's merely moving to where it should have been in the first place.  And if I had to bet, I'd put my money on the change working out positively. 

The second game in question is the re-branded City of Heroes Freedom, which will transition over at an unspecified time later this year.  I'm not surprised at this development.  In Korea, NCsoft has been dipping its proverbial toe in the F2P pool for a while now, albeit seemingly with some growing pains.  So, it's not exactly a shock to see a similar approach in this part of the world, especially considering the company probably feels it gained some insights from its unsuccessful experience with Dungeon Runners.

My suspicion is we'll see more hue and cry about this one since it probably has a more hardcore user base that is likely to be more vocal, particularly in places MMORPG.com readers are wont to visit.  Still, my gut tells me this change will also have a net positive effect, although perhaps not to the extent we've seen with other prominent titles that have made the shift.

A possible side issue is the possibility this change will have an impact on DC Universe Online, and whether it will be favourable or detrimental.  If CoH has a meaningful number of the aforementioned "I'll never play an F2P game" types, they won't have many options if they want to play another superhero-themed subscription MMOG.  On the other hand, DCUO may become less attractive to newcomers to the sub-category since it will still have a higher barrier to entry.

Interesting Infobits

Anarchy Online.  It's hard to believe Funcom's game is a decade old.  That it's still around is particularly notable since it looked for a time that it might not survive its launch issues.  So, happy 10th anniversary to the company, the team past and present, and the players.

Steam.  I'm curious as to whether it's significant that only days after announcing support for five F2P games, Valve followed up by moving Team Fortress 2 to a business model said to be solely based on virtual item sales.  Is there anything to this timing, or was it just a coincidence?

EVE Online.  CCP has reportedly put a number of rather high-priced new items in the game's store, to the point where it apparently costs more to purchase some virtual gear via micro-transactions than to buy real merchandise for cash.  This has contributed to a new round of conjecture that it will be going F2P before long.  I'm inclined to think it might happen, but perhaps not as soon as the rumors suggest.  Then again... who knows?


Richard Aihoshi

Richard Aihoshi / Richard Aihoshi has been writing about the MMOG industry since the mid-1990s, always with a global perspective. He has observed the emergence and growth of the free to play business model from its early days in both hemispheres.