10 min read

The decision to go free-to-play or pay-to-play in MMOs is all business

So what IS the difference, from a business perspective, between a free-to-play and subscription-based MMO? Find out!

This blog post was originally posted on GameGeex by Ken Serra.

One of the most prominent questions in the gaming industry most certainly is: Subscription or free-to-play for MMOs?

Anyone can argue that the industry has shifted over the years to a larger, more casual consumer base and the 'free-to-play' sticker is the most attractive sticker. With that said, it's very clear we're in the golden age of F2P. A lot of games have shifted to such a model over time but what has forced publishers to make the change? After all, aside from companies that are known for making F2P, how many large, triple-A MMOs actually start with that model? As far as well-known names go, not very many.

Naotoki Yoshida, director of Square Enix upcoming MMO, Final Fantasy XIV: A Realm Reborn was asked this very question in an interview with Venturebeat, which I'm going to reference quite often. His answer was rather compelling and made it worth while to write-up this post. As some of you may or may not know, FFXIV will be going down the subscription path but is that logical considering the game technically failed in the past? He thinks so.

MMOs are very expensive. In fact, I think they're the most expensive genre to develop. To get the green light on such a risky plan, game companies need to get money from somewhere and that 'somewhere' is usually a big name publisher. Naotoki goes on to explain the reasons behind going towards a certain type of payment model. After all, in the end, someone or something has to pay for the game:

To [make an MMO], you need a lot of money, and to get a lot of money to do that, you usually need investors to invest in your game. Because you’ve spent a lot of money on getting this game ready and borrowed a lot of money from these investors, when you release the game, the investors expect to see returns. If your game gets a lot of users and a lot of subscriptions right away, your investors will be happy and you can pay them. But what happens if you don’t hit that number right away? You have a bunch of staff members waiting to get paid. You have a bunch of investors waiting to get paid. You have a bunch of contents that needs to get made because you have to have updates, but you can’t do it because you don’t have enough money, because you didn’t hit that number you were aiming for. And so what do you have to do? One option to get instant money is free-to-play, or selling these items. To get that money so you can pay off your staff, pay off your investors, and start making new content, switching to free-to-play, selling items, and using that money is one way to do it.

Let's break the big question down logically. What's the difference between free-to-play and subscription from a business standpoint? Well, subs are generally sustained and the income keeps coming in over a long period of time. Free-to-play on the other hand, may or may not be a one-time go. Sure the cash shop that is paying for game is always enticing. Got to have that new hairstyle, no? But think about it this way. You'll have those among the player base who never spend a dime. Makes sense since you're not forcing vanity or pay-to-win on people (I would hope). Then you will have those that spend a lot of money. You'll always have both somewhere. However, during the life span of the game, the person who spends hundreds of dollars this month may never buy anything ever again, or at least not for awhile.

[With free-to-play] you don’t know what you’re going to be getting, and because you don’t know what you’re going to be getting, you can’t plan ahead. You don’t know how much money is coming in. If you can’t plan ahead, then you can’t keep staff, because you don’t know if you’ll have enough money to pay the staff next month.

Generally speaking, free-to-play gives a company a huge burst of money. People buy a lot of things now but maybe not so much later. This is fine for the publisher -- at least they're getting paid back-- but that last sentence there scares me. I've played a lot of F2P games and the content just doesn't roll in as fast and when it does, It's as bland as it gets. Larger scale F2P titles, much like Aion and Tera are a slight exception but more often than not, I see a huge burst of yummy content, then that's it... The smaller updates are extremely small and usually not worth noting.

So now let's look at the other end in Subscription models. Let's use two big-named companies and products as examples: Blizzard Entertainment's World of Warcraft and Square Enix' Final Fantasy XI. Both games are approaching double digit-year anniversaries. Both games are subscription based and still standing healthy and strong. What's the difference between these two titles and companies and their games when compared to say Bioware's The Old Republic? Now that's easy: Reliance on Publishers.

Both Blizzard and Square are well off on their own and when they need a game made, they themselves are the publishers. So what's different about that? When you don't have to rely on paying someone back right away, that means you have time. If you make your own personal investment, well that was your choice. You're not going to sweat over where to get the money if you didn't have to cash in some else's wallet. Now, you can plan ahead: Year 2014 - have this many updates, this many new areas, this many classes while having around this number of staff.

When you can do something like that, you can keep subscribers coming or at least in your game because why do subscribers sub to games? Well, it works like YouTube and any other content-based website. CONSISTENT CONTENT! I'll gladly pay $10 to $20 a month if I know my money gets back to me in the form of in-game entertainment. If I'm getting the content I desire in a reasonable amount of time, I'm going to stay and I'm sure that applies to a whole lot of people.

[Blizzard and Square] are the only two companies in the industry, basically, that are making MMOs with our own money. That gives us an advantage, because where other companies have to get money from investors and have to pay that back, we don’t have a lot of time to build slowly and be able to pay that back. Investors want their returns right away. With Square Enix and Blizzard, because we’re putting our own money into it, we don’t have those investors to worry about, and that means we can release something and maybe take a little bit of a hit at the beginning, but as long as we’re increasing the amount of people we have, then we’ll get that money and make the players happy.

It's also not likely you're going to drop a whole lot of subscriptions unless your game tanks that hard. Maybe I got a ton of content last month. Maybe I got none this month. You know, it's alright as long as the content last month was chunky enough to keep people in your game. Mind you, not everyone is hardcore and sometimes, it takes months for an average player to finish content with most still several game patches behind! That's really the only issue with subscription-based is the promise of content. If the content isn't coming in, you won't hook someone for the next month.

With a subscription base, if you get maybe 400,000 members, you know that you’re going to have the money from that monthly subscription for the next month. You also know that you’re going to have 400,000 this month, and it’s not going to go down to 200,000 users next month. That type of jump really doesn’t happen with a subscription model. So you know that you’re going to have a steady income. Because you have a steady income, you can plan ahead further.

And while we're hear, I'm going to say this: FFXI had some of the greatest expansions and patches I've ever seen in a game. Nothing is copy and pasted; the new jobs are unique and you can almost always expect a totally new endgame continent. You get your money's worth. I'm 100% sure WoW is the same way since every other month, there's a major patch worth noting and that doesn't include their very large-scale expansions.

Both these companies can plan their content ahead and realistically make it happen since they have no immediate deadline to pump money back to their publishers. Just themselves. So folks, one way or another, the money to sustain the game has to come from somewhere. Mind you, with Free-to-play titles, there will come a time where the publishers will be paid off and that puts significantly less strain on the MMO's developers but that's worth a whole discussion on its own.

A lot of companies that chose the subscription model, that wanted to do what we were doing, but were forced to free-to-play. They didn’t go to free-to-play by choice, because if that was the case, they would have gone free-to-play at the beginning. They’d develop it for free-to-play, not full subscription, instead of being forced to go free-to-play. We hear a lot of people saying, “Star Wars is free-to-play now, it’s great!” But then you ask them if they’re playing free-to-play Star Wars and they say, “No, not really playing it.”

The above statement's last sentence is very true, unfortunately. Yea, doesn't apply to everyone, I get it but I'd be willing to bet more money that the random gamer I pick out in the crowd played the game originally but not anymore.

What about Guild Wars 2? It's a great game with great patches and it's free to play. Well, the game had a box price. I'm sure combined retail value was close-to-enough for ArenaNet to pay back NCSoft the costs to publish the game. That goes back to my statement on publishers being paid back eventually. With a one time purchase, companies are guaranteed a specific amount of moolah from everyone that joins PLUS the cash shop explosion. Paying the publisher plus continued support from fans put free-to-play titles like that on par with AAA subscription based ones. More power to you.

So how do you guys feel? Currently, there are 3 different options:

1) Subscriptions

2) Free to play + optional pay-to-win cash hop

3) Free to play + Retail price

Yea, there are some combinations around those three but that's it.

The issue I see with subscription-based titles is the feeling of being forced to play something. If I don't use it, why would I pay for it? That's a valid argument but to me, it saves me money in the long run by buying less games overall. See, I think because of all these huge titles like The Old Republic and Tera going free-to-play, I think people are getting the wrong idea that subs are bad, and that subs just don't work. I think that's false. It came down to subscription games not meeting expectations and having to switch to p2p to pay back publishers in a SHORT amount of time. Though, if your game tanks then something was probably wrong in the first place, just sayin.

For those who have experience with these MMO types, what are your thoughts? Personally, I do not mind monthly fees if I get the most out of my money. I can sacrifice a few less energy drinks if it came down to it. Obviously, people have other reasons too such as financial or time.

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