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Reader Comments (28)

Posted: May 4th 2011 9:01PM Slayblaze said

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Just based on personal experience in dozens of free-to-play games from all over the world - not just North American or EU games:

-How do free-to-play games make their money?

This is the easiest to answer of the three questions. And Beau, you even pointed it out in one of your recent articles: it is that 1% that actually make regular cash shop purchases. The percentage might be a bit more like 2-3% in some games, but either way it is the few that shell out the cash that keep things going. And they probably spend more than most people would believe, although it is fairly obvious that some games struggle to break even much less make a profit.

-Do free-to-play games sell power?

In a very few games the answer is YES although it is mostly to end-gamers and not really so much to the lowbies. The lowbies mostly won't stay with the game long enough to make a purchase or approach end-game or level-cap anyway. The "power" is for the dedicated few who progress enough to be able to actually use it, or maybe the few who are almost there but just need that extra little push.
I think a variant of this question that might be more important to ask is "Do free-to-play games sell anything of Value?" Substitute the word power for value and you come to the real heart of the matter. After all it would be really easy for a developer to come up with an item that is simply Powerful but much more difficult to come up with something that a player can honestly look at and recognize that it represents something valuable enough to exchange for real-world cash $$. Its a subtle but important difference, especially when something goes wrong (such as when Allods first introduced their shop). If it doesn't have a real value then all we're really talking about is buying a set of pixels which are colored slightly differently than some other set of pixels

-Do most players pay more in free-to-play games than in subscription games?

Some do and some don't... I would say "most players" probably don't, although it might be closer than we think. One way to measure it would be to add up the total yearly cost spent in a subscription game when paying the standard non-discounted monthly 30-day fee (about $180 US dollars) and compare it to how much is spent at a cash shop title. I know for myself, in the F2P games where I've spent real money, the amount is usually less than 180 in a year. Its only been a couple games where I have spent more than that much, with a few months even. So the answer to the question in my experience has been NO when asking if MOST players pay more in F2Ps than in subscription games. Some do, but most do not - at least when comparing *yearly* expenditures.

Posted: May 4th 2011 9:06PM Beau Hindman said

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@Slayblaze This is a cool bit a reader just emailed me...it's a forum thread that shows players who are upset over the 150 dollar a month spending limit. Well, I should say player since I think it is mainly one guy talking about it. Still, it's interesting:

http://tinyurl.com/cashshop-limit

Beau
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Posted: May 4th 2011 9:47PM Slayblaze said

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@Beau Hindman

I imagine that Nexon's limit on credit card purchases within a month is because they've been royally burned at some point and have been forced to protect themselves from fraud claims made by scammers to Visa or Mastercard, who then hit Nexon with a chargeback. Probably happens all the time to the bigboys like Nexon, Aeria, and ijji. Otherwise I don't see Nexon turning away money - yet they do.

And I bet those people who spend that much or more at a time are vastly an exception to the rule and don't sustain that level of $$ purchases for more than a couple or few months. I've done the same in the past, there was a summer where I spent a few hundred dollars in a cash shop because I had the spare cash and also there were some huge discounts given over that summer so I got some great deals that I stocked up on.

Also, like you made the point about optional VS mandatory purchases, I almost revel in the fact that purchases I make are truly a choice for purely optional virtual stuff, and simply increase my odds at getting something I want. Seems like that Nexon thread was similar as they were talking about opening "mount boxes" that randomly contain a mount or something else. Buying more does nothing more than increase the odds of getting the mount you want. I've been really lucky in the past and got the best rarest epic mount in the entire game on the very first box I opened (or its equivalent at least) and sometimes I've had to open 50 boxes, but it's always been a choice.

It also helps to know when to quit while you're ahead, yes?
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Posted: May 6th 2011 1:47AM Space Cobra said

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@Slayblaze

"-How do free-to-play games make their money?

This is the easiest to answer of the three questions. And Beau, you even pointed it out in one of your recent articles: it is that 1% that actually make regular cash shop purchases. The percentage might be a bit more like 2-3% in some games, but either way it is the few that shell out the cash that keep things going. And they probably spend more than most people would believe, although it is fairly obvious that some games struggle to break even much less make a profit."

There is an old link/article, and I am fairly certain I read it on Massively a year or 2 (3?) ago. It was an interview with, well I forget the gent's name (Okay, I spent time googling; seems to be Raph Kostner); he had something to do with EQ and he was starting up a new "facebook style" MMO. It was more a social MMO along the lines of HABBO, ICVU, etc. (Google answered this again and the game was called "Metaplace") He was more candid/open about his numbers. I think another link, maybe in an article after it, also had some numbers.

(Okay, I think I tracked it down! I think there was an earlier article, but this seems to fit my mind's recollection:

http://massively.joystiq.com/2009/06/10/a-closer-look-at-revenues-in-free-to-play-mmos/ )

Like you said, there is a (small) percentage of people that will "buy LOTS of stuff" and keep a game going, especially a small studio game from a small/medium-sized company. There is a slightly larger percentage that will, in effect, be prudent with their money, but may spend $5-$25) a month, especially if they actively play it. And, then there are the rest of the "freeloaders", that may spend nothing, but I am sure, during a lifetime, at least 1/3rd probably chip in $5-10 at some point.

Ultimately, Metaplace closed down; IMO, it needed a bit more advertising/promotion since the Virtual Social MMO is, IMO, overcrowded (and I am talking "teenage virtual online places to hang-out", not "games", persay; I don't know if they had mini-games, probably do, but their not the main theme of such places). Still, I think there are lessons here.
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Posted: May 6th 2011 1:51AM Space Cobra said

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@Space Cobra

I also think there was a related interview that basically "spilled the beans" on one F2P company (again, old Massively article from the same time-frame) on their operations. I've done my google-part for the night!

Basically, I it re-iterated all we are saying (such as, F2P games can be profitable and why American companies started showing interest in them at that time).
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Posted: May 4th 2011 9:49PM Carolina said

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My personal experiences and beliefs here:

--> How do free-to-play games make their money?
F2P games make money on their cash shops, but I've never studied the subject, which brings me to wonder: how else could they possibly make money?

--> Do free-to-play games sell power?
Yes, F2P games sell a lot of power: the power to look cute, to kill and level faster, to have more bag space, to have weird illusion shapes and fluffy pets.

--> Do most players pay more in free-to-play games than in subscription games?
From my experience with WoW, Rift, EQ2 Extended and Lotro: I spend less, and when I do, I buy and support what I want, and I believe that makes a difference. $15 on WoW/Rift will give me 100% of the content, but I won't use that 100%. So if I take those same $15 to EQ2X/Lotro, I can buy things that will last over a month, not to mention that I keep all that I bought, instead of temporary losing all I did, like on subscription models. So that's how I end up actually spending less then on subscriptions.

As for most players, I have no idea. From the ones I know, my guess is that F2P is cheaper.

Posted: May 4th 2011 9:52PM Plastic said

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Well, if the devs you spoke with said that paying-players amount to less than 10% of the player-base, I'd say most F2P players obviously do NOT pay more than their P2P counterparts. You can't beat $0 per month, unless you're getting paid to play (I'm looking at you, Beau). However, I'd imagine these devs are looking at registered players, as opposed to active players (a big mistake when looking at F2P game numbers), and I'd speculate that it's closer to a third of all regular players who buy at least something from the cash shop. This assumption is based simply on the number of players in-game who can be seen flaunting a cash shop item, such as a mount or cosmetic item. As to whether these paying-players are paying more than their P2P brethren, I can only offer examples of my own personal experience.

I've played a number of F2P games where I've bought everything I could possibly need from the cash shop, and I've never spent more than $100 per year doing so, which is substantially cheaper than the typical $15/month subscription fee plus initial box cost. In LOTRO, I've spent $60 worth of turbine points during a sale (in addition to $10 for a boxed copy of Mines of Moria) and I have every single quest pack unlocked, all of the bag space, 5 character slots, all classes, tons of vault space, and various other goodies. I still have 20% of my points left, and I won't need to buy a single thing until the next expansion comes later this year. In Runes of Magic, where you definitely can "buy power" and in-game gold, I was able to equip and maintain multiple characters at a very competitive level, on a PvP server, for less than $100 per year.

So, to the people who claim that you MUST spend more than $15 per month to be competitive or truly enjoy all the features of a F2P game, maybe THEY do, but I sure don't. I'd suggest either planning your purchases out more carefully, or moving on to a more reasonably priced F2P game.

Posted: May 4th 2011 10:16PM Fakeassname said

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I don't feel like writing up one of my big long rants ...

there is one key area that you need to look at with cash shops and that is the community.

It's a rare thing to see a game offer items that blatantly provide PvE advantages 'cause thats just spelling out "we are going to rip you off."

what you need to look at is how those items from the cash shop effect player interactions, sure that XP/gold booster may not seem like much from a PvE perspective it can have massive effects on the games economy, access to limited resources, and PvP competition.

another thing to look at is how exclusive the prices are. sure western markets do not directly sell empowering equipment, but but there is not much separating selling an item that is required to manufacture a powerful in game item and selling a powerful in game item. an extension to that is when said item only results in a successful enchantment less than 75% (usually more like less than 90%) of the time, and costs over $10 for a single one.

Sure I'll believe that it's rare for most F2P titles to get over double digits on the # of people who buy from their cash shops, but then again I find it quite amazing that it's even POSSIBLE to break double digits on the number of players who CAN afford to buy 10+ enchantment items (at 10+ dollars each).

so the next time you get one of those developers on the phone it might be a good question to ask them whether or not the limited number of paying customers is due to restrictions they themselves have placed on who can afford to pay.

Posted: May 4th 2011 10:17PM Fakeassname said

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@Fakeassname

how did 290 words turn into all that?
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Posted: May 4th 2011 10:20PM xilr said

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-How do free-to-play games make their money?

By creating a problem, then creating the solution in the cash shop.

Perfect World Games as an example. Problem: High level play is to difficult without a quality pet/gear. Solution: Gear upgrades/Pet Upgrades via gambling in the cash shop. Some Battle of Immortals players are sporting pets worth over $1000.

Problem: High end zones are Open PVP so other players will slay you. Solution: Aforementioned $1000 pet, and cash shop items to stop you from dropping gear.


-Do free-to-play games sell power?


Abso-friggen-ultely. Anyone who says no hasnt got their head on straight.


-Do most players pay more in free-to-play games than in subscription games?

This is where you hear what you want to hear. If you are in Beau's camp, you believe those poor devs barely see 10% of their players spending money.

This might be a "fact" but its filled with "fact-y-ness". Consider that "fact" in the same way you consider the U.S. Unemployment rate. They tell us that we only have 8-9 percent unemployment, yet you know so many people out of work right? Well, they dont tell you that only 44% of Americans are working. 44+9 is 53. What happened to the other 47%? They are neither considered Unemployed, nor are they exmployed. So is 53% the new 100%? No, its based on the standards you use to measure it. What if I log on a F2P game play for 5 minutes, hate it, uninstall it and never go back? They count me as an "account". So for every person that ever TRIES the game, they are counted as a "player" forever. They cant cancel their account because its free, so the developers are free to refer to them as players. When they measure all the people to ever try the game get lumped into the "arent paying" category. This artifically inflates the "arent paying" side of things, and allows them to say "boohoo, barely 10% pay...." What if we only measured people who have put 3 or more hours a month into the game and measured the "Payers" vs "Not Payers" I bet the numbers would be VERY VERY different. What if we only measured people playing at the top levels? If the level cap is 80, say we measured everyone level 60 and above, then compared "Payers" vs "Not Payers"? Now what kind of number would we see?

Its all in how you measure it and which measurement you accept. The people representing the F2P cash shop will insist you count ALL accounts even the "try it, hated it, uninstalled it". Guys like me would say its perfectly fair to only measure the top end players, since most games revolve around the top end. Somewhere in the middle is probably where it should be measured but that isnt what happens. Instead its measured the was the F2P cash shop people want it measured.......

Posted: May 4th 2011 11:12PM Yukon Sam said

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Don't imagine that cosmetic items are without serious game impact. A distinct "cool" look can facilitate social interactions.... and the best power of all is a large network of powerful friends.

Posted: May 4th 2011 11:50PM ImperialPanda said

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F2P MMOs should theoretically make more money than P2P MMOs. Basic economics: everyone values your game differently. Some people are willing to pay $100/mo to play your game. Others might only want to pay $2/mo to play your game. If you charge a flat $15/mo, then you're losing $85/mo from the person who'll pay $100, and you're losing $2/mo from the person who didn't subscribe. By letting players chose how much they pay, you maximize your profits.

Of course, in practice this is a just little more difficult. There's a clear distinction between value in the game and value in cash shop items. It takes a degree of creative design to properly balance core gameplay while still creating the proper level of incentive for cash shop items.

Zynga makes twice as much money as Activision Blizzard. WoW is nothing compared to FarmVille. So yes, aboslutely, F2P earns more money when done right.

(and yes, I know, FarmVille is not quite an "MMO". But it demonstrates that the payment method works)

Posted: May 5th 2011 12:07AM ImperialPanda said

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@Tempes Magus

You can play F2P games without playing anything. That is a huge difference in itself. There are, of course, lots of other differences as long as you stay practical in your comparisons.

Posted: May 5th 2011 1:34AM digitaldisharmony said

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One point that tends not to give enough emphasis in this discussion is exactly what Beau referred to as "games that allow the trade of cash-shop items for in-game currency."

Many games such as Grand Fantasia, MegaTen, Forsaken World, and so forth do not automatically bind cash shop items to the buyer. And in some games, it is even possible to directly trade your real dollars for another player's ingame currency. Though I have no proof that under 10% of players are using the cashshop, it would not surprise me if that were true. Furthermore, it wouldn't surprise me if under 10% of the ACTIVE players are using the cashshop. When I played MegaTen for a period of time, I easily spent $60 in the cashshop, but my mother has played Grand Fantasia for over a year and has never once paid money for the game. Despite that, all of my MegaTen purchases were completely optional items that I could have bought off another player ingame just by taking the time to earn some off the ingame currency, which is exactly what my mother did. Does grinding the extra hours to earn the gold ingame to buy the exact same item take time? Well, yes, of course. But it's a lot cheaper on the wallet and certainly is not hard. My mother is almost 50 years old with very little tech knowledge, but she was able to get the best gear for her level, the best pet, and continually has gold left over to share with her friends.

As a player of both F2P and P2P, it often seems to me that people assume that they need to buy from the cashshop THEMSELVES, but is often not true. In many ways, F2P cashshops support their own economies that are very effective at distributing goods even to players who don't pay.

Posted: May 5th 2011 1:58AM (Unverified) said

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How do free-to-play games make their money?
I can't answer this question really. from the cash shop there are two types of players who purchases from a games cash shop. 1 is the hardcore power leveler that uses every item possible in the shop to reach the top or be the best first - these types are a fraction of the player base but they spend lots of money on their characters like $1000. 2 is the casual type of player that wants to skip all the annoyances and boring parts who buys things from the token shop to either speed up the game or make themselves look cooler. these players make constant purchases. ultimately, it depends on the game.
Do free-to-play games sell power?
Yes. you would be lying if you say no. i haven't seen any f2p MMO (LoL is a great example of a shop done right but its not a MMO) that does not. some players are naturally competitive and want to win at all costs which is how cash shops function.
Do most players pay more in free-to-play games than in subscription games? it varies from game to game. but most player keeps it in reality. the last two f2p MMOs i played faithfully are Allods Online and Zentia. Allods was horrible. if players are going to use the cash shop, they would have to spend over $15 a month to play the game. Zentia on the other hand, you don't have to pay a dime to enjoy the game. but zentia do have players that pay in $1000, but they are minority. ultimately, paying players have to watch out how much they spend because its so easy to!

Posted: May 5th 2011 2:48AM Anique said

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Hmm... Allods Online has a cash shop item sale(strongboxes) many times a month and some of the drops from these items are announced. Judging by the amount of announcement, they're making an ef ton more money than a $15 sub per person. Too bad the population is too low because of it.

Posted: May 5th 2011 4:56AM tmarg said

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Somebody said that it was "create a problem, then put the solution in the cash shop", and they are right. You don't need a bunch of statistics or interviews with developers to prove it, its blatantly obvious.

When enchanting your weapons, they have a chance to explode? Buy items to protect yourself in the cash shop!
When you die, you also have a chance to lose stuff? Again, look to the cash shop!
Getting from level x to level y is a terrible, unforgivable grind, filled with long, generic quests, boring enemies and dull scenery? Buy an xp potion!
In game travel takes way too much time? Buy a mount/ teleport scroll!

There are no F2P games that only offer vanity items in their shops. It's a straw man argument. They don't exist. It isn't a valid business model, and as such it isn't used.

When people say that playing a F2P game costs more than a sub game, they aren't saying "you have to spend more", we all know that spending money is optional (hell, the cheapest option is not to play games at all, and that is a perfectly viable option used by the vast majority of people), they are saying that you have to spend more in order to get anywhere near the same amount of content. And they are right.

Posted: May 5th 2011 6:28AM BGExorcist said

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Unlike my readers walls, i will be short.

Do F2P games sell power?: Absolutely, yes, no question about it. That is what the model is all about- you had your fun in the early levels, want to try endgame - then pay. 2 exeptions out of 100 makes no difference. 9 Dragons comes to mind, but it died. Some games offer the trade between cash shop/ingame currency, which softens the blow.

Do much people spend? Well yes, many spent a little, some spent very much. I heard a player in BoI spent thousends of dollars (yes this game is heavy cash shop dependant).

How do they make their money? Have you ever thought maybe 15 usd sub fee for p2p is just there, because people pay, not because they strugle to pay their bandwidth? Its pure player milking all the way. How much do you think they pay to programmers to make an expansion with already existing tools? Its like a rts's map builder tools imho.

Posted: May 5th 2011 9:12AM Jenks said

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I'll never play a F2P cash shop model game seriously. I don't even understand the appeal. Why bother playing a game for a new hat when you can just buy one in the shop.

Posted: May 5th 2011 10:37AM Superman0X said

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Here is my opinion (for what it is worth)


How do free-to-play games make their money?
They sell goods and services... just like any other business. They key to their business is to convince the customer that they do not 'need' the goods/services to enjoy the game... but that they 'want' them despite that fact. It is a fine balance between soft and hard sales.


Do free-to-play games sell power?
Most definitely. The best example of this is Turbines F2P conversions. They pretty much sell you the 'good' game content. They don't try to hide it in any way.
Does this mean that you cannot get it for free? No, but they want to make it as clear as possible that your money gets you a better value that you time.
It is also interesting to note that in F2P, you compare those that pay to those that don't. In P2P, when you do the same thing.. you find that it truly is P2Win..


Do most players pay more in free-to-play games than in subscription games?
This is a tricky question... because it assumes several things. Lets start with the basics...
How do you measure the cost? For P2P, do you add in the purchase price, monthly fees, service charges, lifetime subscription, etc? for F2P are you averaging across the total play time, or only for the months that you paid? Are all players counted in the average, or just those that pay, and if only those that pay, is it only in the month that they pay?
In F2P, the number of paying players is under 10% (more like 3-5%) in a single month. This means that the amount paid in a single month on average is not very high. However, in that single month, paying players likely pay more than the average $15 monthly fee for a P2P. This does not take into consideration that they may also play for multiple months without paying at all.
For games that allow players to resell the items/services that they buy, there is a secondary market. This market is much larger (~30%) than the initial point of sale, and allows for better distribution of the goods. Do these players get counted, even if they didn't buy directly?

Part of the problem is that with F2P and P2P there is an apples/oranges comparison. They are making money in different methods, and as such it is hard to compare them directly. The best approach is to look at this in a broader scope, and compare common values. The question is, what are those values?

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