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Freemium: Dive Right In

Robert Levitan discusses why now is the time to move into Freemium game development.

It's time for a New Year’s resolution to start off 2012 on the right foot, and I've got a great one for traditional MMO game publishers: Make this the time when your company embraces the free-to-play (F2P) business model.  Recent sales data makes it clear that the old staples of the game publishing world (i.e. box distribution, subscription models, and pay-to-play) have been on the decline for some time.

On the other side of the fence, F2P gaming is only growing stronger. Last month, our company published a study of F2P game distribution using Pando Media Booster, and the recent growth has been staggering. In the last two years, the number of gamers worldwide downloading F2P games via our platform has gone up 450%. In some territories, the growth has been incredible -- in Latin America, we've seen growth of 595%. During 2011, 38 million people downloaded a free game using Pando’s services, and we’re hardly alone in our success. Look at the rest of the MMO landscape, including publishers not working with Pando – World of Warcraft started offering freemium content last year with tremendous results, and when DC Universe Online shifted to the F2P model, the response was so immense it brought the servers down.

Obviously, for those of us in the F2P business, this is fantastic news. Growth like this represents a huge opportunity for game developers and publishers. It also signals potential trouble for the traditional pillars of the industry. Overall game adoption and population did not significantly rise in 2011, which means a lot of those new recruits into the F2P fold were traditional gamers, migrating to the F2P model and leaving their old buying habits behind.

The old guard is fighting a rising tide, and if you still doubt that this is an industry-wide trend, look back at the biggest game company rising stars in 2011. Who made the big splashes with over $1 billion IPOs this year? Zynga, a company built entirely on freemium content, and Nexon, an early pioneer of the F2P MMORPG model. Where are the new titans of box distribution and traditional media? Who’s the daring upstart clamoring to be the next EA, Activision, or THQ?

These old models aren't going to go away entirely, of course. As alluded to earlier, there will always be a few blockbusters that will shine. It's easy to assert that box distribution is as healthy as ever when you look at record-breaking titles such as Modern Warfare 3, or that the subscription model is just fine when you see Star Wars: The Old Republic bringing in so many players. However, it's important to take the broad view and realize that there are very few EAs and Activisions in the world. Not everyone gets to be the biggest shooter franchise in history, and not everyone has access to the most celebrated sci-fi property in generations. For the rest of the industry, the market is making a rapid shift into freemium, digitally distributed games.

In 2012, smart game publishers need to focus on F2P gaming as a core element of their business plan. Gamers are swiftly embracing digital distribution as their retail solution, vastly preferring a system that lets them browse, share, download and purchase games on their own terms -- you need to make sure you provide that access. Players are making informed purchase decisions through F2P's try-before-you-buy content offerings -- you need to make sure there is at least some portion of your game which is easily available to hook curious customers. Buyers are deciding the amounts they can afford to spend on their games, and more importantly, showing a willingness to spend money long after their initial entry -- you need to offer them that opportunity.

Big breakout titles can also benefit from this advice. Even WoW has seen new benefits by adjusting their business model and offering some free play. Star Wars: The Old Republic may have had an incredible launch, but just imagine how enormous the launch could have been, had they embraced F2P -- as if a million servers had cried out in terror, and... well, you get the idea.

Allow me to make a prediction for the coming year: 2012 is going to be the year that F2P gaming outperforms the rest. Traditional sales are going to keep declining, the physical market is going to wither and shrink, and the companies that see dramatic success will be the ones with a solid presence in digital distribution and a F2P plan for monetization. Here's to another year of incredible growth, and my sincere wishes that you're on the right side of it.

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