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

June 9, 2009 Article Start Previous Page 3 of 3

Jeremy Liew seconds those numbers, even though he isn't a developer. Liew is managing director of Menlo Park, CA-based Lightspeed Venture Partners, a major VC firm which has recently focused on funding free-to-play MMOs, mostly multiplayer, web-based games like Friends for Sale by Serious Business, which is on Facebook.

In a recent blog post, Liew reports that, according to his research, ARPU at several popular sites averages $1.25 per month, specifically $1.62 at Club Penguin, $1.30 at Habbo, and $0.84 at RuneScape.

"Having spoken to many other MMOs and virtual worlds on a private basis," he writes, "this estimate seems to be a good gauge for what a well-performing MMO can aspire to from a free-to-play business model."

In terms of ARPPU, he says, the range is from $10 to $50 per paying user per month, which typically comes from 5-10% of the total number of users in any given month. Sports and gambling games tend to be a bit higher, social games a bit lower.

Liew believes that free-to-play MMOs present a huge opportunity for smaller companies, which is why his firm invests in them, of course. He sees the business model as a "disruption" that, he says, larger companies have a difficult time surviving.

"The business policies that made big companies so successful can sometimes blind them to the things they now need to do to become successful on the other side of the disruption. It's hard for them to change," he observes. "Small companies transition much more easily."

Another advantage to building free-to-play MMOs compared with subscription-based games is, simply put, that peoples' expectations of their quality is dramatically different, says Liew. And with the bar set lower, development time and expense are easier on the budget.

"If you're putting out a World of Warcraft and are charging $60 for it, people are expecting a pretty good game for their money," he explains.

"But if it's free, you can practically throw anything up -- even if it's buggy, even if it's not feature-complete, even if it crashes sometimes -- and see how people react to it. If they like it, great. If they don't, you can either fix it and watch what your customers do -- or abandon it altogether. That's the great thing about the Web and about free-to-play."

His best advice to developers is to jump into the sector only if you can get your mindset around a lower-level of quality when launching your beta... and then iterating quickly.

"If you are a master craftsman who likes to spend six years making everything just so before releasing it to the public, then you're probably better off sticking with the older business models," Liew says. "Because you're going to have a tough time reconciling much, much lower revenue with high cost.

"But," he adds, "if you can wrap your head around the implication of less money in and less money out ... and you can develop the games with relatively small, multiple teams that are constantly turning them out like an assembly line ... you're going to find that free-to-play MMOs are an exciting and worthwhile place to be."

Article Start Previous Page 3 of 3

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Aaron Murray
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My hat's off to Daniel James for sharing this information. I too would like to chip in with some numbers that I recently shared at a talk I gave at IGC Boston. They should serve to back up James' statements as I've seen similar results with my online game (Domain of Heroes), though on a smaller scale as DoH is new and only has about 30k players so far.

I'll break the figures down into Lifetime (8 months) and 7 day (last week). Daniel didn't mention this, but I would add that the numbers seem to get better each month as long-time players continue to make purchases and new features are added that retain/convert newer players.


ARPU: $2.03

ARPPU: $59.27


ARPU: $3.51

ARPPU: $46.66

I'd also like to add that "Sales" events are huge. As in 10x revenue generation. This is why the 7-day ARPPU numbers (no recent sale) are lower than the lifetime ARPPU numbers this week.

Additionally, ads and "sponsored offers" (think TrialPay, Offerpal, PayBuyPartner, Gambit, Super Rewards, etc.) Represent an additional 10% on top of the purchases. Not a huge share, but an extra 10% is nice.

One final interesting tidbit that I've seen is pricepoints. Our microtrans game has pricepoints from $0.99 to $349.99 and about 80% of the revenue comes from purchases at the $19.99 pricepoint. So even though games are pitched as "free-to-play w/microtrans", the transactions can actually be major ;)

Information sharing like this really helps the industry, especially for smaller Independent companies like mine (Tandem Games).

Konrad Kiss
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Thank you for the awesome article, Paul, and thanks Aaron for sharing further details. Our (indie) company, Bitgap Games is about to come out with a free-to-play MMP (Xenocell) before September, and it is great to be able to relate to something later on when it comes to crunching numbers.

Although as you mentioned, it is really hard to draw consequences from different games - let alone different genres - it is still a huge help for us little people. So, thank you guys once again.

Caleb Garner
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Yea that's awesome, thanks for sharing. I attended the flash game summit the day before GDC in San Francisco and did my best to pump as much information out of these folks as possible. It's very discouraging at times because there is this wall of mystery, not just from MMO's but also sponsorships and impressions and anything else that relates to "rubber meets road". My data is not as personal, it's more flash game development oriented and it's not as fleshed out, but only because they didn't specify. This is stuff straight from my notes, heck maybe someone out there can fill in the gaps :)


3% of mulitplayer gamers tend to pay, only have a few games out so far… 2% single player games tend to pay. Kongregate offers $5, $10, $20 per… $5 is the most common chunk. $3 per transaction is the most common unit of purchase amount.

Puzzel Pirates:

22% of Puzzel Pirates pay to play of active (regular) players. $20 average per active player $4.95 minimum for getting starte. 60% / 40% credit / PayPal

Dino Wars:

9% of Dino Wars active (regular) players pay something to play…

Zynga Notes (Social Networking games):

200 million people on facebook, Kongregate has 5 million

Mafia Wars over 1,000,000 a day

Some games making $10k – $30k a day on facebook

Pet Society 2.8 million daily active users

MindJolt has 300,000 active users daily on facebook

Zynga income is in three parts 33/33/33 ad revenue, Microtransactions and form filling out (?)

Simon Carless
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Caleb, the form filling out for Zynga is the 'incentive'-based business model where you'll get in-game credits in Zynga's games if you, say, sign up for Netflix, and then Netflix will give Zynga money for that referral. It's an interesting angle that hasn't been discussed much just yet outside of social network games, but I'm sure will be soon.

Caleb Garner
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ah ok that makes sense. very cool thanks :) yea that is an interesting angle

Mike Lopez
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Bravo to you guys for a call to action for others to share data in the free to play space and for sharing your own. I am not affiliated in your space but I agree with your premise that more data shared across the board is better for all.

Tim Holt
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There are some interesting parallels between the idea of free to play and the "free demo, pay for the full" model like some iPhone apps have. Here's a great post from NimbleBit going over the numbers for their iPhone development -->

Kudos by the way for people who post this kind of stuff.

Dave Endresak
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Just FYI, there has been some discussion and pressure within academe to have professional research studies offered for free public use. Obviously this would be a great step in the right direction for any field of endeavor. It's great to see some people in gaming take a proactive stance with regards to this type of issue.

Jason Park
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I'm disgusted with Jeremy Lliew's view on encouraging poor quality in free-to-play, as should any pc gamer or publisher. Our users deserve better.

Eddie In
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My job for the past number of years doing biz-dev for Korean free-to-play developer/publishers has been digging up this data. Something I can share is that a big reason for all the hush hush is the very real fear that the numbers will be misunderstood. At the moment the most widely used KPIs to measure the business success of a client based MMOG are peak concurrent users (week/month), unique logins (usually monthly), percentage of those unique logins that pay and the average size of transaction (ARPPU). The danger comes when you try and compare these numbers with other games. The variance in the data across genres, regions, seasons, you name it is very large. There seems to be a perceived threat of some investor making a change in project funding because he suddenly thinks FPS games in Southeast Asia monetize better than browser games in Europe. This is an extreme example but I hope you all get the idea. Cheers.

Don Langosta
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A little disheartening to say, "we can throw any crap we want up there and see if the idiots'll pay for it." However I love F2P and am far more likely to give an F2P game my money than buy a subscription. The a la carte approach makes me feel more empowered but more importantly, if I stop paying money I can still play. In WoW, if you stop paying your subscription there's nothing you get to keep using. You just can't play anymore until you start paying again.

Josh Thompson
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It's great to see some numbers; I've always wondered how well F2P really worked. Now I'm wondering how more data could affect the market -- companies thinking, "Ah, we can throw something out there and stand to make a profit" or "Ah, we should take this more seriously"? While Jeremy Liew's statements seem to support the former, I'm hoping (and thinking) he meant: developers should understand that their initial earnings are going to be quite low, and should plan on that. But also plan to improve the game quickly and significantly post-launch once the revenue begins trickling in.

Anatoly Ropotov
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These numbers are meaningless as you can't compare most games directly.

There are many types of F2P games: session-based games, standalone social worlds, mmorpg games with item malls, mmorpg games with single virtual currencies. All of them have different values, be it ARPU, ARPPU, active to regs, price of reg, retention, etc.

Then you start taking into account other things, well...

There's number of online players per game. Is it per server or per shard? Or total? Peak or average? Does your peak and average includes actives and fresh new regs as well?

Active players - is it 2 weeks old number or 1 month old? Regs - do you purge db or not, etc?

How old is your game? What is your active churn rate, how often updates are pulled in, session time, etcetc.

And then the biggest question - WHAT IS YOUR USER COST.

I could go on and on, but it all doesn't make sense, you can't compare apples to oranges, unless you are really comparing 2 equal games, e.g. both are MMORPG games with real F2P (no premium features, players could earn all money without paying) in the same region (as ARPU between Germany and China will fluctuate by tens of percents for the same game after a year of running). And then it comes to the science of game design to determine the reason of the higher/lower ARPU.

F2P game revenue evaluation is a science where you should evaluate layers of profits inside the game and really know what you are talking about.

Now, spend 5 days playing 50 different mmo games and filter out 10 money-worthy out of them ;) Write me a mail, I'm looking for Country Managers in Europe to work with the games that have a lot of money - anatoly at astrumonline dot ru

Joe Hernandez
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Aaron Murray, thanks a lot for post and congrats on your game.

Would you mind sharing some info on marketing / distribution?

How much did you spend on marketing so far, what type of distribution deals did you do, etc?


Aaron Murray
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@Joe - I don't want to hijack the comments, but I'll answer briefly. You can email me at if the answers aren't what you were looking for.

Distribution (currently) is solely through since the game runs without plugins...there isn't an easy way to hand a swf off to other sites.

Advertising - I spend approx 25-50 cents to acquire each player through online banner ads. That takes into account the click-through/sign-up conversion rate. Over half of the players are not coming through ads though, so that is good (free). I purchased a magazine ad but that didn't convert well at all (tracked with a signup code/freebie). There are some little 'viral' hooks in the it can Twitter major events for you, etc. There is a MySpace and Facebook group. Stuff like that. Nothing grand yet. I'd say I spend about 10% of the revenue on acquiring new players.

Billy Joe Cain
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Thank you everyone for participating here.

I am working on a virtual world (in the planning stages) and I am trying to find costs and schedules for the more popular MMOs. Is there a shared resource?

Max Yankov
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Anatoly made a great point. It is important to notice that ARPU and ARPPU are far from the all data you need to get full financial figures.

You have to keep in mind:

1. The cost of registration (wich can go up to 1$)

2. % of users that completed the tutorial and newbie phase and became active users.

3. Typical lifespan of an active player in the game before they leave it

4. The server-side player cost.

That data is valuable not only for the marketing and business owner, but for game designers. Basically, operating a live game you want to bring it's revenues up, and by looking at it, designer can decide, what is more cost-effective for the game in the current situation: improvement of a tutorial stage or creation of content for the end-game.

As for the figures, I don't have an authority to announce the ARPU and ARPPU of games I've worked on, but can only provide you with the numbers from public sources. For example,, the most succesful game on russian F2P market was stated to have 200$ ARPPU with 10-15% of paying userbase. Of course, unlike Puzzle Pirates, it is much more hardcore browser-based game with many gameplay elements similar to "big" client games like WoW and Lineage 2.

Antonio Moro
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There's a place where to find some raw market numbers, like the size of the F2P market and the increase in the last 4-5 years? this ARPU/ARPPU numbers are interesting, but we also need to know some global numbers and how the different continents compares in terms of total market size and total market increases..

Any help is welcome, thanks