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What Are The Rewards Of 'Free-To-Play' MMOs?

June 9, 2009 Article Start Previous Page 2 of 3 Next
 

While Raph Koster says he'd like to discuss how much revenue Metaplace generates, he can't. That's because his social web site is brand new, having just moved into open beta last month.

But, having chosen to adopt a free-to-play model, Koster -- who is both founder and president of San Diego-based Metaplace -- has certain expectations. [In his previous life, Koster was associated with more traditional subscription-based MMOs, including Ultima Online and Star Wars Galaxies.]

"Free-to-play is all about upping your ROI," he explains. "All the costs of boxes and distribution that are associated with a subscription model go away. The cost of development is significantly lower. Even your marketing budget changes radically; our product's reputation will spread primarily via word of mouth. And because it lowers the barrier to entry for people to come in and try things, it gives you a huge shot at acquiring large numbers of customers."

The biggest reason to go with a micro-transaction model, says Koster in a recent blog post, is because "it opens up both ends of the curve. People who would not be willing to pony up the full $15 a month [subscription fee] are enticed to pay at least something, thereby hugely broadening your market."

However, he continues, the big reason not to go with a micro-transaction model is that it "doesn't have the commitment fallacy in its favor. Once we make a choice, we tend to stand by it. A subscription can be seen (like buying a game in a box, which is also a hugely powerful psychological buy-in tactic) as essentially making a commitment; you then attempt to live up to the commitment, which is why two games of comparable quality will have different first-month conversion figures depending on whether the user had to buy a box to get in or not."

While Metaplace's earnings will come primarily from an assortment of micro-transactions, the only one currently in place is a relatively unusual one, which Koster calls "an event."

"In Metaplace, everyone gets a world of their own," he explains. "Because you're not paying for it, it's not a very big world and there's a concurrency cap, so you can't squeeze more than 10 people into it at once."

"But, if you want to hold a party or host something special, for example, you can pay us $10 and, for the next 24 hours, your concurrency cap goes up to, say, 100 people. That's just an example of one way to monetize your product without restricting it to selling virtual goods."

Koster says it's way too early in the game to share financial results, although he says he'll be happy to when there are numbers to share. "It's been kind of a habit inside the industry to keep your budgets and revenues a secret, which I personally think is kind of silly. Especially since, now that much of this is happening on the web, you can go to comScore and see how many people are actually playing a site. So it's getting harder and harder to hide your numbers."

Despite his having no Metaplace data, Koster's observations of other free-to-play MMOs are that they typically earn from 30 cents a head up to $2 or so in terms of ARPU and from $10 to $60 in terms of ARPPU.


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