The Design of Free-to-Play Games, Part 2

By Pascal Luban

[The rise of the free-to-play business model has drastically changed the landscape of game development. In his last feature, designer Pascal Luban described the conventional wisdom around the process. In this follow-up, he takes a deeper look at the design elements which free-to-play elements designers can address and looks at future trends.]

In the previous part of my feature, I described the business environment of free-to-play (F2P) games and I covered their design essentials. In this part, I will describe how they are monetized, and I will conclude with a few short-to-medium term trends I have spotted.

In the present state of the market, making money out of F2P game is both science and alchemy. Should basic rules be applied, they are largely implemented according to the developer's intuition and imagination.

Let's start by understanding what motivates 5 to 10 percent of players to make purchases in a free game.

Buyers' Motivations

Generally speaking, purchases in a "free" game are motivated by the following desires:

A current issue regarding the definition of items bought with hard money is whether they should give a competitive advantage to players or not. To begin with, note that this issue is essentially debated in the West. In Asia, many free-to-play games feature items that will openly give an edge to their owners. In the West, this is not necessarily the case -- but some games, including major ones, reward players that open up their wallet. However, thanks to smart design, this does not create unbearable imbalances in the games.


Zynga's Empires & Allies

In Empires & Allies, units of increasing power are made available as you level up. For instance, the player unlocks the light aircraft carrier at a low level and the medium one at a higher level. Each unit features a unique figure that summarizes its strength. The player can upgrade his units with resources obtained in-game.

However, the last upgrade for each unit can only be purchased with hard money. And this last upgrade is a big one; for the light aircraft carrier, it will give it the same strength as the medium aircraft carrier, which the player knows is further away in the game. Thus, a player can easily boost its combat effectiveness by spending real money, and get an edge against the other players he decides to attack.

This is a very smart way to give a sizable advantage to a player that spends real money without upsetting other players who can obtain the same result by playing the game longer.

Allowing a player to "buy" an edge in a competitive game is very effective from the monetization point of view because the essence of the game pushes players to out-perform others. It is possible to do it without alienating the majority of the players but it requires a very precise game design.


Monetization Techniques

Five techniques are used to generate revenues:

According to eMarketer, revenues for social games in 2012 for the U.S. should break up in the following way: Item selling (60 percent), advertising (20 percent) and affiliate marketing (20 percent). Note that this study does not include revenues generated by freemium and restricted access business models.

Item-Purchasing

The Principle

This is the main revenue source of free-to-play games -- between 50 and 90 percent. A F2P game uses two types of currency: a so-called soft currency, and a hard one. The former is earned in-game by completing tasks, but the latter can only be obtained by spending real money -- dollars, euros, whatever.

Why two currencies? The main reason is that it allows the game publisher to control the monetization of the game. If any item could be bought with money earned in-game, players could eventually buy the whole game without spending a dime. Another advantage of this dual-money system is that it gives a premium value to whatever can only be bought with hard money.

Note that in many games, there is some gateway to convert between the two currencies, allowing players with different resources (time and cash) to exchange them.

The Major Families of Items

The imagination of developers is unlimited, and monetization is no exception. New item ideas will emerge. Meanwhile, here is a list of item families that are currently sold in free-to-play games:

A Few Guidelines

Advertising

Players easily accept advertising in a F2P game because they are aware that the developer has to earn his living in some way. However, advertising only has a marginal share in F2P revenues: between 0 and 20 percent.

Advertising is very easy to set up, and will generate revenue effortlessly for the publisher, but it will only attract advertisers if the game generates a lot of traffic. Don't count on that revenue model in the few first months after launch.

A key design rule is to make sure the ads will not interfere with the gaming experience.

Affiliate Marketing

This method consists in providing a player with hard money if he visits or registers on a partner site. For instance, We Rule, Ngmoco's iPhone F2P game, allows the player to win gold coins if he accesses a partner's homepage while in-game. This mechanism represents approximately 10 to 40 percent of F2P revenues.

Freemium

The game is free, and players can carry out microtransactions to purchase items, but they can also opt for a subscription that gives them access to bonuses. It's the same principle as the exclusive lounges in airports which are reserved for business or first class travelers. All players play the same game, but certain players are VIPs.

It's the system adopted by SOE's Free Realms. Another example is Dungeons & Dragons Online - Eberron Unlimited, which started life as a premium subscription game. The player can buy quests one by one, as items, or subscribe to the freemium pack that grants access to all the quests, along with other benefits.

Freemium targets the three to five percent of players who are heavy consumers of a given game. It works best for very rich and involving games. There must be enough items to sell through microtransactions and room for an extra layer of features reserved to those who are willing to pay a monthly subscription. Needless to say, that those extra features must be really worthy! That's why we rarely seen this monetization model applied outside the MMO genre -- but this might change.


Restricted Access

The game is free but, contrary to the preponderance of F2P games, the player does not have access to the full game. If she wants to take on quests or develop her character, the player will have to pay for the access. Ankama, a leading French MMO publisher, uses this model exclusively for his hit, Dofus.

The game is free. A player can build his avatar, initiate quests, and access all social features. However, if she wants access to all dungeons and especially to be able to exchange items with other players, she needs to buy access to the full game for several months.

The main challenge with this monetization model is understanding which features to exclude from the free game. I have in mind a MMO game based on a widely popular IP, which utterly failed because it did not deliver enough in its free version.

Players could not get a taste of the full game, and some became angry at what they perceived as excessive greed from the publisher.

There are several ways to let a player get a good taste at a game without jeopardizing your chances to sell her a subscription:

A Glimpse at What's Coming Next

I will conclude this series by describing a few short-to-medium term trends I have identified.


SOE's Free Realms

Return to the full version of this article
Copyright © UBM Tech, All rights reserved