Monetising the MMO

The Elder Scrolls Online, Wildstar and Rift – three different solutions to the same thorny problem.

Monetising the MMO

Monetisation. The rise of app stores and the emergence of new, low friction business models have made this divisive term one of the prevalent issues of recent times. Every game needs to make money, from the earthiest indie to the most high-falutin’ blockbuster, but the concept of ‘monetisation’ has started to creep into the general discourse in unpleasant ways. It is now a staple of public-facing statements issued by executives and developers, a constant reminder of the ambiguous connotations of the term ‘consumer’. A recent article on Gamasutra about coercive monetisation techniques was met with a polarised response, but its statements aren’t too far removed from those released into the public arena week-in, week-out. If anything, it just hit a little too close to home.

For the industry, this is a painful Catch-22. The general trend towards business models that drip-feed revenue in small, relatively painless increments has been motivated by a number of factors; some of which are self-inflicted, but in general it has far more to do with the needs of the customer than corporate greed. And yet many in the core audience find the accoutrements of free-to-play and micro-transactions distasteful. They rail against the sense of being nickled and dimed, even when the factors that cause that feeling are ultimately saving them money. And yet the subscription model – far closer to the traditional ideal of paying a fixed price for a fixed product – has fallen dramatically and obviously from their favour.

“I don’t think there’s ever going to be a time when we think this is the way a free-to-play game should be made and has to be made or you’re gonna fail”

Simon Ffinch, Trion Worlds

If there is a battleground for this conflict it is the MMO, where game after game has shifted from subscriptions to micro-transactions. One of the latest, though almost certainly not the last, is Trion Worlds’ Rift, which was launched to general critical acclaim in March 2011. According to Simon Ffinch, design director at Trion, the decision to embrace free-to-play was not taken to avert commercial disaster, but to provide its “robust and loyal” fanbase with a better experience – a recognition that the “massively multiplayer” aspect of the MMO is vital to the genre’s success.

“It was doing fine,” Ffinch says. “There was no moment where we thought we had to go free-to-play or Rift was gonna die. That absolutely was not the case. We just wanted to open it up to more people, and this is just the way the market is going. We didn’t want to be behind the curve, so to speak.”

In fact, Trion pre-empted the move in February last year with the launch of Rift Lite, which made the game free up to level 20. “It worked great, but it’s not the same as saying it’s free,” Ffinch says. “The word ‘free’ is, well, it’s magic. That’s what brings people in.

“I’ve seen a lot of games make the transition, and some have done it better than others. We wanted to make sure that all the content was always going to be free. The things we’re going to sell are things that players want, but not things that are required in the game. MMOs are better when you have tons of people. We had tons of people already, but now we have tons times tons.”

But if the transition has produced a positive outcome – for now, at least – it isn’t because Trion has done anything particularly daring or original. When I ask Ffinch about the guiding principles behind Rift’s more accessible model, he lists several ideas that are quickly becoming part of an orthodoxy of free-to-play: avoid pay-to-win, no egregious time-gating, monetise cosmetic and convenience items, and so on. If you have read coverage of any game making this kind of strategic shift in the last 12 months that list is likely to be immediately familiar, and it begs the question: after so much talking, are we finally reaching a point where a definitive framework of the ‘right’ way to handle free-to-play has started to take shape.

“We’re getting closer to that,” Ffinch replies, “but we’re not yet at the point where we’ve established a way that it should be done. And you know what, the thing that’s so amazing about the games industry is that when we think we’ve reached that point, somebody will do something that’s completely different.

“I don’t think there’s ever going to be a time when we think this is the way a free-to-play game should be made and has to be made or you’re gonna fail. But I think we’ll reach a way that the majority of people do it.”

“There’s a reason why a lot of the free-to-play games aren’t making money, and that’s your costs don’t go down a lot if you’re free-to-play”

Jeremy Gaffney, NCsoft

However, with so many games following a broadly similar network of conventions, it could be argued that we’re closer than Ffinch is willing to let on. It’s not hard to understand why: the push-and-pull of games struggling with free-to-play is so frequently problemtaic that developers have obvious incentives to demonstrate that they don’t have one hand on the mouse and the other in the consumer’s back-pocket. Finding some kind of standardised harmony between business model and game design would serve that end, and is therefore desirable at the very least. However, according to Carbine Studios’ Jeremy Gaffney, whose substantial experience with online games is difficult to rival, any such homogeneity is not something to be celebrated.

“There’s an interesting phenomenon, which is not very many games actually make a ton of money, and with the ones that do you’d have to squint really hard to find two with the same business model,” he says. “In the Western market, World of Warcraft is the subscription king, and EVE Online is a subscription model with modifications. World of Tanks is free-to-play, but the way they do it is different to Maple Story and the Asian games. You can’t point to any one thing that’s dominant in terms of revenue.”

To put a finer point on the matter, it isn’t that every single MMO or online game employs a radically different model, but that the developers imitating the success stories tend to make far less money – if they make money at all. This is where the pitfalls of emulating the approach of a competitor are found, particularly in games shifting from their original model to one based on micro-transactions. Gaffney believes that when a game is designed with a model integrated into its structure on the most fundamental level it can work to the benefit of all – step forward League of Legends – but MMOs are an expensive business, and more players doesn’t always mean more profit.

“There’s a reason why a lot of the free-to-play games aren’t making money, and that’s your costs don’t go down a lot if you’re free-to-play,” he says. “Your users still use bandwidth and take up servers, and you’d better still be adding content into the game. Not many of your costs drop by going free-to-play, but your user count goes up dramatically. What that means is you get more revenue and less profit, often to the point of [making a loss]… But you’ve got to profit at the end of the day. It’s what you’re in business for.”

Ultimately, Gaffney believes that the games business is driven by innovation, and in MMOs the business model is now a crucial point for original thinking. An MMO does not find an audience through the sort of flashy claims normally found on the back of a plastic box, but through getting “the meat and the potatoes” of the experience right. Increasingly, the meat and potatoes of an MMO involves the balance between playing and paying, and there are myriad ways that balance can be struck – and myriad ways to get it completely wrong.

“Boxed games are a horrible business to be in, because 9 out of every 10 fail. It’s the same with MMOs, but the number of variables in boxed games is much higher”

Jeremy Gaffney, NCsoft

Carbibe’s latest MMO, Wildstar, has taken a more idiosyncratic approach to monetisation than Rift – a combination of free-to-play and subscription that aims to avoid reliance on micro-transactions through a player-driven economy. It is the sort of risk that Gaffney believes must necessarily be taken in the ongoing search to find non-abrasive ways to monetise – the sort of risk that could propel Wildstar to the sort of success that so many recent MMOs have failed to attain. In that sense, Gaffney explains, Wildstar is an anomaly. It is increasingly difficult to find a publisher willing to entertain an MMO model that breaks from established approaches to subscriptions and free-to-play.

“Depending on who you talk to World of Warcraft had a $65 million budget, and budgets have only gone up since then,” he says. “It’s tough to go up to your boss and say, ‘Hey, I’m gonna take $100 million and do something that’s never been done before and, trust me, five years later you’re gonna get something awesome out of it.’ You get conservative when budgets start to get that high, but that’s a mistake, because the second you stop trying to break new ground you get in trouble.

“Boxed games are a horrible business to be in, because 9 out of every 10 fail. It’s the same with MMOs, but the number of variables in boxed games is much higher… With MMOs, at least [success] maps more or less 1-to-1 with game quality. There haven’t been, I would argue, a lot of quality games that people have tried and were like, ‘Nah, the hell with it’ and stopped paying. Why would they? If you did a really good job of making levelling fun and making your elder games fun, why do people tail off? I mean they can – the invisible hand of Adam Smith tends to go and move the market around – but for the most part I like this market because it’s so tied to good games.”

And Gaffney is clear about one thing: a subscription model is the most effective way to realise certain notions of what an MMO should be. He knew that the economics of the modern industry demand that the player be given options, but he also wanted Wildstar to offer a sense of scale and balance that only consistent revenue and no strong reliance on micro-transactions can provide.

“Retention is where the money is at,” he says. “In China, there’s a billion MMOs and they’re all fighting for space, and the ones that rose to the top used to update every three or four months,” Gaffney says. “And then some innovator did that every two months, then once a month, then two weeks. Now, the biggest games over there update weekly. If you want retention, that’s one of the ways you can do it. That’s League of Legends – every three weeks, Bam, new champion. That’s the stuff that separates the haves from the have nots.”

The other example Gaffney offers is World of Warcraft, and in doing so it becomes increasingly clear how Wildstar’s business model took shape. Not every game will build an audience on the scale of WoW, or see as much return on letting people play for free as League of Legends, but a balance between these two poles might provide the most benefit for all parties. As Gaffney rightly points out, “Nobody loves a business model, but everybody hates at least one.”

But which one do people hate the most? It would be easy, and very possibly correct, to point to free-to-play and intrusive micro-transactions, but it should also be clear by now that there is an equally widespread – though not nearly as vocal – public distaste for subscriptions. With The Elder Scrolls Online, ZeniMax is making a strident bet against that being the case. The reasoning goes something like this: people loved Oblivion and Skyrim, buying them by the million at $60 a time, so an Oblivion or Skyrim that lasts forever would offer enough value to persuade millions to part with a monthly subscription.

“With an IP like this, it comes with certain expectations,” says Matt Firor, the head of ZeniMax Online Studios. “It’s an Elder Scrolls game. This is the way you play it. With other models, you have to change the way its played or the rules to facilitate new forms of monetisation. I’m not doing that with this game. I can’t. No Elder Scrolls player would ever accept that.

“We really did look at all of the alternatives, but we were building it to be an Elder Scrolls game… If we’d started out with another business model in mind, it would not have turned out that way.”

“we were building it to be an Elder Scrolls game. If we’d started out with another business model in mind, it would not have turned out that way

Matt Firor, ZeniMax Online

In a sense, The Elder Scrolls Online’s choice of business model was informed by the same factors that guided Gaffney on Wildstar. Firor understands that a lot of people regard the IP as a solitary experience, one defined by the exploration and discovery of a completely open landscape. While there will be multiplayer content and options, it is imperative that the game accurately evokes the experience of playing Oblivion or Skyrim. That means there should always be something new quests and locations to find, and that those quests and locations should be worth finding. That requires time and money, and that’s harder to guarantee with free-to-play.

“This isn’t a referendum on revenue models for other games,” Firor says. “For this game, it’s the right decision, mostly because of the expectations that come with the IP. When you’re playing the game, you’re playing the game – you’re not worrying about pay gates or whether you have access to some content. We really feel that paying once a month and not worrying about all of the other monetisation things, that’s what will appeal most to the Elder Scrolls fans.”

Is this asking too much of the modern gamer? Even for the Skyrim crowd, there is surely an expectation that MMOs now generally cost nothing to play at first. Once someone starts to give a product away for free, it becomes far harder for a competitor to charge for the same basic thing. Wildstar at least gives its players an option, but Firor is confident that the strength of the Edler Scrolls IP – and the fact that the beta has seen more than 3 million registrations – will be enough to make its single-minded approach work. “It’s a big deal,” he says. “Free-to-play is out of the window with that.”

Of course, the last MMO on this scale with so much confidence in subscriptions was Bioware’s The Old Republic, and the Star Wars IP is no lame duck. But the announcement is now made, the wheels have been set inexorably in motion, and all that remains now is the all-important launch. Firor claims that ZeniMax is ready as it is possible to be for the “massive IT exercise” of releasing a persistent online game – a challenge that has defeated companies the size of Blizzard and EA – but he admits that guarantees are impossible to make.

For Gaffney, that’s a huge risk, regardless of any rigorous supporting calculations. If there’s a way for people to play for free, there are more ways to bounce back. If there isn’t, you need a strong start. The entire game need to be in place and fully functioning at the moment of release.

“”It’s not like [subscriptions are] dead, but there’s a barrier: you only have a month to make your case. When games come out and try to fit in the end game stuff after launch… Nope, you got a month, and guess what? You’re gonna be running like a monkey on meth amphetamine for the course of that month, so you won’t have the time to cram it in. You’ll be running around and fixing whatever thing went horrible wrong at launch.

“And something always goes horribly wrong at launch.”



Can The Elder Scrolls Online Survive With a Paid Subscription?


Yesterday, Bethesda Softworks announced that their upcoming MMO The Elder Scrolls Online will be using the highly questionable paid subscription model instead of the new standard free-to-play model. Will this franchise be able to succeed where others have fallen? The Daily Reaction crew of Sebastian Moss and Dan Oravasaari discuss.

Dan: With gamescom going on as we speak, it is difficult to stay up on all of the news, so if you haven’t heard, Zenimax has announced that The Elder Scrolls Online will be using the subscription model, and players will have to pay $15/month to wander around Tamriel.

Having seen so many major IPs abandon the paid subscription model after trying so hard to get it to succeed, only to eventually move over to the F2P model, it just seems weird for TESO to try and reintroduce it to the market. With the success of Skyrim and the previous games under the The Elder Scrolls moniker, it is easy to see the power of the franchise, but that still won’t guarantee its success.

Over the last decade we have seen the switch over to the free-to-play model, leading to the death of the subscription-only model in some of the biggest names in the entertainment industry. Star Wars: The Old Republic was set to be one of the biggest MMOs ever to launch, and was thought to even be the one franchise that could be capable of dethroning the legendary World of Warcraft that has single-handedly dominated the scene for years. Sadly, the launch of the game had a mixed reception forcing EA to add in a F2P option, making the game a hybrid of paid and micro-transactions.

The Lord of the Rings Online, a game that in 2010 the NPD Group called the ‘third most popular MMO’, have said that the F2P model was to thank for its growing install base – showing just how influential the new business model had become.

Now, with the PS4 and XBO are set to launch later this year, we are seeing numerous F2P games of various genres hitting the console space. The PS4 will have an unimaginable number of F2P games coming out at, or around, its launch, already setting to clutter up the market for anyone looking to start a subscription plan. Lucky for fans, but not so much for TESO, DC Universe Online, PlanetSide 2, Dust 514 and War Thunder, which are all MMOs of sorts, will be hitting the PS4 without any form of subscription – also not to mention the addition of the F2P shooters: Blacklight: Retribution and Warframe.

Simply looking at the market from that perspective, it is difficult to see why TESO would even have a shot in any space using the subscription model. Bigger IPs have tried and failed, the market is flooded with ‘freemium’ content and they will also be competing with people who are just playing free games with PlayStation Plus.

If we look at the most successful MMO of all time, World of Warcraft, it is odd to see that after all of these years it is still a big success while being able to use a paid subscription model. But, looking at a simple fact, we might be able to not only understand why the others have failed, but why TESO might succeed. Unlike the other franchises that were turned into games, Warcraft has always been a gaming platform, much like The Elder Scrolls, so it has proven itself to fans already. This idea that maybe it isn’t the strength of a powerful IP that matters, but the power it already has within the gaming demographic.

Seb: Yeah, it was a surprising announcement, that’s for sure, and I think this price model will really impact its success.

If any franchise can pull off charging people, it’s The Elder Scrolls. World of Warcraft peaked at 12 million subscribers (now 7 million), which is only slightly ahead of the 10 million sales of Skyrim.

Of course, Skyrim is singleplayer and only costs you once, but the RPG format lends itself perfectly to MMOs, which is why an impressive 3 million people have signed up for the beta. A significant number of people love the franchise’s universe and play style, and even more trust the brand.

With the PS4 and Xbox One focusing heavily on connected experiences, most next gen console users will have the internet speeds to play an MMO, and have a credit card linked to their digital account.

If all goes well, a few million people could sign up for the game, earning Zenimax a significant amount of cash in the long run. If all goes well.

The problem is, as Dan touched upon, there are a significant amount of hurdles to cross. First off, the game has to be really good to build up hype and retain users. Wood liked the game in our preview, but it’s important to note that this game is from a new developer, Zenimax Online Studios, rather than franchise creator Bethesda. This new team has to work on a truly massive game, as well as deal with all the usual problems of a multiplayer game.

And, even if the game is really good, and part of a strong IP, it’s not a guarantee of huge success. Guild Wars 1 sold around 7 million units, and its sequel, GW2, has so far ‘only’ sold 3 million, with an enviable Metacritic score of 90. And, even though Guild Wars 2 is F2P game after you buy the disc, the game’s peak concurrency is around 400,000 players.

The game will also need to keep its audience for years to be a true hit. Star Wars: The Old Republic, thought to be the costliest game ever developed, became the “fastest-growing MMO ever” with 1 million subscribers in three days… but soon began to hemorrhage fans, ultimately leading to the F2P move.

Next, there’s the problem of console subscriptions. Xbox users are already paying for XBL, PS4 gamers will soon all be paying for PS+, and multiconsole owners have to pay for both. Do they really want to add another subscription to that?

And then, of course, there are all the free MMOs that will take up their own share of the market, and be more appealing to price-conscious gamers.

Despite all these clear problems, I’m sure many publications will label this a ‘World of Warcraft Killer’, just like every other MMO as it nears release, but it won’t be (WoW will just die naturally).

What I predict, should the game get decent enough reviews, is a strong start, but a drop in the price of subscription relatively quickly, and a free-to-play capped version within the year. F2P has become the inevitable outcome of all MMOs, and, honestly, I think Zenimax knows this – they’re just trying to get extra money from the core fans via subscriptions while they can, before finally giving in.


Free-to-play set to take off on consoles?

Chris Morris talks to devs about F2P and how it may actually be better suited to consoles than the PC

World of Tanks

Consoles, traditionally, have been centered around the traditional retail model. Pay for a game. Take it home. Enjoy. (And, lately, pay again for DLC.)

But the rise of mobile has made free-to-play titles one of the fastest growing segments of the industry. And Microsoft and Sony are attempting to position their current and next generation systems to capitalize on this growing segment.

So far, for Microsoft at least, there has been a definite learning curve., which is currently in the midst of a public beta for its World of Tanks on Xbox Live, made waves last month when its outspoken CEO Victor Kislyi called the quality assurance and certification processes for the Xbox 360 “totally unacceptable“.

“Since these are dedicated gaming systems, you’re more predisposed to try something, whereas when you’re on the PC, you might get distracted by, say, Facebook or something”

SOE’s John Smedley

Some news sites ran with that sound byte to imply Wargaming was fed up with the console manufacturer. However, Kislyi was making a larger point – and the team that’s working directly on World of Tanks for Xbox 360 says that while there have certainly been hiccups, Microsoft has been working hard to accommodate the free-to-play gaming giant.

“I’d be lying if I said this is clear and precise,” says Denny Thorley, head of Wargaming’s Chicago-based studio and former president of Day 1 Studios. “What we’re trying to do is something Microsoft hasn’t attempted to do before, but they’ve been terrific partners in trying to be flexible where they can.”

For instance, he notes, incremental changes to the game are now being certified faster than they have previously – as testers are already familiar with the game.

While Microsoft is working through some issues, Sony has a bit more history in the space. Its Sony Online Entertainment unit has been the internal torchbearer for free-to-play games – and it has seen notable success.

“The single fastest growing segment of our business is DC Universe Online on the PS3,” says John Smedley, president of SOE. “70 percent of our revenue [on that game] comes from the PS3 and 70 percent of our players come from the PS3.”

Because the company has been offering deep free-to-play experiences longer, it also has worked out a system to more quickly approve updates – something that could aid it in the next generation.

“One of the advantages we have had is we were the first with Free Realms,” says Smedley. “With that, we’ve helped the QA group set up the system. What happened is there’s a trust level that builds up. They do certain checks every time – but over time, if you don’t screw up, they start to trust your [internal] QA.”

Consoles, he says, actually have some notable advantages over the PC when it comes to free-to-play. There’s consistently stable hardware and software and the installed base is constantly growing. Most importantly, though, the barrier to microtranscation purchases is lower.

“There’s a higher likelihood of having a payment system on file,” he says. “And since these are dedicated gaming systems, you’re more predisposed to try something, whereas when you’re on the PC, you might get distracted by, say, Facebook or something.”

When it comes to monetization of free-to-play titles, Microsoft and Sony approach things differently. While both take a cut of microtransaction sales, Microsoft gets two bites at the pie, since players hoping to play World of Tanks for more than a one-week trial must be Xbox Live Gold members.

(Wargaming, Thorley notes, will not begin monetizing the game until it is out of its beta period – something that will happen “real soon now”.)

“They’re looking at what we’re doing on the [Xbox] 360 to understand all the issues and I’m convinced it will get easier and easier on the next platform”

Wargaming’s Denny Thorley

While the console audience is certainly vast, not all free-to-play game makers are interested in pursuing that audience. Kabam, for instance, says there are no plans to work on a console version of any of its games at this point.

“Sure, there are games you absolutely want to play on the console, but there are plenty that people want to play with convenience [in mind],” says Chris Carvalho, Chief Operating Officer of Kabam. “They want to play in the living room or the kitchen or wherever. … There’s a huge growth factor in the table market – and consumers are saying loudly that they want the convenience.”

The factor that’s driving that decision is less about the longer certification process – and more about growth forecasts of platforms. Juniper Research estimates there will be 64.1 billion games downloaded to tablets and smartphones in 2017, which is more than triple the 21 billion downloaded last year.

Those are impressive numbers, to be sure. But it’s certainly too early to count out consoles. Both Microsoft and Sony have shown in their pre-launch maneuvering that they plan an all out war against each other – and other platforms – to retain their strength in the gaming world.

“They are a very sharp group of people and are clearly paying attention to the questions we ask – which usually begin ‘why can’t we?’,” says Thorley. “They’re looking at what we’re doing on the [Xbox] 360 to understand all the issues and I’m convinced it will get easier and easier on the next platform.”