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Subscription model works, but free-to-play will dominate

Wed 02 Feb 2011 8:00am GMT / 3:00am EST / 12:00am PST
OnlinePublishing

Frogster boss believes that a successful SWTOR could open the door for non-fantasy MMOs

Mythic Entertainment

Formed in October 1995 by Rob Denton and Mark Jacobs, Mythic is most well known for Dark Age of Camelot....

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Frogster COO Dirk Weyel has told GamesIndustry.biz that he believes that the western MMO market will be dominated by the free-to-play model, although subscription-based titles will always have their place.

Weyel, who's company is launching the subscription-based MMO, TERA in Europe this year, also revealed that he sees TERA as the premium product in Frogster's portfolio, a fact which justifies the monthly price-tag, but doesn't see think free-to-play games should be of any lower quality - something which he doesn't think many journalists appreciate.

"It was difficult at the beginning because the opinion of many games journalists was that free-to-play means lower quality," Weyel told GamesIndustry.biz as part of today's interview.

"We tried to show them that it's just another business model. So we started to market the game with a premium branding approach. So we think that in order to be successful in the long run we need to build brands and have a clear positioning and a clear brand philosophy to build up the game.

"We generally believe that free-to-play system will be the model for most of the MMOs in the future, but we also believe that the subscription model does still work. There will be subscription models in the future, and also hybrid models. We believe that TERA is the most premium title of all the games we have at the moment. In terms of production budget and quality in-game it's certainly the premium product for this year.

"That's why we're convinced that the subscription model can work for a title like TERA. I think free-to-play will be a model which will dominate the West, but I think there will also be a few subscription titles which can be successful."

Over the course of the last 18 months, a number of large scale MMOs have switched payment models from subscription to free-to-play, with varying degrees of success. For some, such as Lord of the Rings Online, it's been a masterstroke, with revenues trebling after the change.

There's a very big acid-test on the horizon for the survival of the subscription model, in the shape of EA and Lucasarts' Star Wars: The Old Republic - but does Weyel believe that game can take a bite out of World of Warcraft's audience, and would that be a good thing for the industry as a whole?

"I would say that the good thing about it would be that it's a non-fantasy title. If it can prove that a non-fantasy title can regain a big consumer base and user base. I think if you ask industry people about their opinions about the chances of success though, they'll be very diverse.

"I would say it would be a good sign. I think it would show that there are a lot of users out there willing to pay a certain amount of money each month for a good game.

"Basically, it's going to be interesting. There's Eve Online, but apart from that, the subscription-based model is dominated by fantasy role-playing games."

It's not something which Bigpoint CEO, and Frogster rival, Heiko Hubertz thinks is likely to happen - he told press last October that he can't see the MMO becoming profitable at all, despite his chairman Simon Guild's belief that the future will include subscription-based games.

"If you look at a game like Star Wars from EA and BioWare, they estimated a development budget of more than $100 million. This is an online game for many million of subscribers, so a big publisher does not understand that a subscription model is not the future," said Hubertz.

"With micro-transactions and longer lifetime maybe I see a chance for this game but I don't think that EA or BioWare will be profitable with this game. Ever."

Dirk Weyel was talking to GamesIndustry.biz as part of the build-up to this year's Game Connection@GDC 2011 event, taking place in San Francisco from March 1-3.

16 Comments

Julien Wera Marketing & PR Manager, Massive - A Ubisoft Studio

9 0 0.0
Just a note : Frogster hasn't launched Tera yet, the open beta isn't even started. Tera has been launched in its Korean version only so far.

Posted:3 years ago

#1

Klaus Preisinger Freelance Writing

1,134 1,171 1.0
I'd argue that first and foremost you need to have a good game. If you have that, you can always make your money back, no matter what your business model is. Reading through NCsoft quarterly reports, one can see Guild Wars made more than $250 million for their publisher with its four releases. No subscription, practically no microtransactions an average player would ever need, but simply a good game.

A mediocre game is not going to make more money because you slap the MMO sticker on top of it.

Posted:3 years ago

#2

Victor Perez CEO, Games GI

64 0 0.0
And Quality dowloaded games will replace the web games.. as following the natural evolution..

Posted:3 years ago

#3

Aleksi Ranta Product Manager - Hardware

276 127 0.5
Not a single company in this world operates by revenue alone. Not a single one. Profit is what im interested in and i guess a lot of other people are too. I dont care if their revenues grew 100-fold if at the same time their profit was halved. Of course there is some correlation between the two but that correlation can be negative and positive.

Its like me selling Xbox consoles at under cost and writing columns in the local newspaper hyping how my revenues had tripled.

Posted:3 years ago

#4

Radu Ciu Product Manager, Alliance Computers

21 0 0.0
@Aleksi Please be sure to let us know if you start selling consoles under cost and we'll help you increase those revenues even further :).

Posted:3 years ago

#5

Aleksi Ranta Product Manager - Hardware

276 127 0.5
@Radu I sure will. Its not like I really care about profit. Im like the wikipedia of retail sales. :)

Posted:3 years ago

#6
I believe in the future, as game demand widens and newer niche markets pop up within the industry, a scaled down version of hybrid models will dominate. There aren't many MMO's exploring the revenue posibilities of micro transactions within their subscriptions model.

As to good or average games making it, I think it's more in the delivery rather than just being "premium". A LOT can go wrong with a premium game, especially in those first 6 months.

Posted:3 years ago

#7

Mark Hill Studying Computing & Networks, University of Abertay Dundee

21 0 0.0
You have to keep in mind the discontent of a large number of players when it comes to microtransactions and 'freemium' titles - look at the outrage on the EVE Online forums when the developer (CCP) suggested adding microtransactions, for example.
Microtransactions are great for the bottom line, but they also put off customers - a lot of companies are posting huge profit/revenue gains in their first few months of switching away from subscriptions - but I'd wait and see if those games hold out in the long term.
There is a definite feeling among some players that microtransactions lead to them being squeezed for more and more as time goes on.

Posted:3 years ago

#8

Radu Ciu Product Manager, Alliance Computers

21 0 0.0
I would very much hate to see microtransactions in a game i already pay a monthly fee for. We all saw how well Bioware did with Dragon Age on $$$, and everyone that played it knows what squeezing means. Overall i played DA much less than other RPGs because i resenteted paying for DLC on first day after i bought the game, and i felt the game had "gaps". I also did not buy the addon and i will favor other games over DA2 this spring.

I can totally see how microtransactions can ruin even a free mmo if not managed right. My hat goes of to Turbine on that account they make good decisions and a good buck.

Posted:3 years ago

#9
Frankly this article seems to focus on stating the obvious, from a common sense prospective, subs games have made profit and so will likely to remain so for the foreseeable future, as do free to play games, and as do hybrids offering both (like LOTRO), and so all models will likely exist for some time, whilst having free to play games is a great way to draw people in, anyone who's ever played one for any length of time realises they end up paying more for the same things they got for a fixed price in subscription model's and if there isnt one available they may will quit, so I think hybrid game's offering both free to play options and subscription will be the future, as exclusively free to play games simply cost to much monthly for dedicated player's to support the same dedicated paying user base long-term as subscription based games can, by combining the two you end up with a more sustainable system.

Most players will based on personal experience at least, play f2p using paid items where neccessary for the first few months and should they decide to stick with the game subscribe, some people seem more ideologically opposed to being subscribers then anything else, and will stay f2p (though they often end up more paying more then subscribers) along with some for various other reasons (school kid's and so on), but even a couple of items a year that they purchase will pay for their hosting costs, so best for both developer/publisher's and consumer's with a hybrid model, least in my opinion.

Edited 1 times. Last edit by Alexander McConnell on 2nd February 2011 5:35pm

Posted:3 years ago

#10

Rick Ellis Tech Director, ArenaNet

15 0 0.0
Until someone starts sharing numbers, this is all speculation. Making hard claims about the future is a bit silly, especially when nobody is providing hard facts.

Saying "revenue increased by 500%" is useless if the original revenue number was horrid. I'd like to see real numbers to back up all the claims of success and hard speculation about the future.

Posted:3 years ago

#11

Philipp Karstaedt Producer / Product & Project Manager

7 0 0.0
Real numbers? From game publishers? From f2p publishers, even? Oh, come on. You should know better than this ;)

As written in the bible, it is easier for a camel to go through the eye of a needle than for a f2p publisher to show some real numbers.

Posted:3 years ago

#12

Matt Hackett Game Developer, Lost Decade Games

49 2 0.0
We recently launched a web game for $1.99 with weak sales and have seen many reviews suggesting that players aren't buying the game because they are accustomed to playing web games for free.

This might be the way MMOs are heading; players could become used to playing them for free, to the point that when one asks for a subscription fee, players are very turned off.

Posted:3 years ago

#13

Rick Ellis Tech Director, ArenaNet

15 0 0.0
@Philipp

Yes I do know better than this which is my point. You won't convince me that f2p will "dominate" without providing some real evidence.

Posted:3 years ago

#14

Eliot Lloyd Studying Computer Games Design and Production, Northumbria University

23 0 0.0
All I can say is this, every F2P MMO I have tried, has been pretty poor. The same goes for the games that were subscription based and then went F2P because they weren't profitable. I'm pretty sure there's a correlation somewhere along the line there.

Posted:3 years ago

#15

Curt Schilling Chairman/Founder, 38 Studios

3 0 0.0
"With micro-transactions and longer lifetime maybe I see a chance for this game but I don't think that EA or BioWare will be profitable with this game. Ever."

This was a decent read right up to this quote. That's just not true. How much do you think this game is costing to get out the door? IMO it's far more than ANY MMO ever done, by a long shot. But 500k subs, which I think for this title is VERY doable, at the accepted price point of 13-14.99 a month? How is that NOT a profitable venture?

Or are you suggesting Bioware is making its first AAA bad game? I'm not seeing it, not by a long shot. This game, I hope and I believe, is going to grow the industry fan-base, while at the same time showing us just how good Bioware is, and at the same time offering us folks in the 'creating' steps of an MMO new and unique innovation in the design space of MMO's.

Let me amend that statement, the article makes it clear Mr Hubert, and NOT the writer, is the person believing Star Wars will not be profitable.

Edited 1 times. Last edit by Curt Schilling on 4th February 2011 1:42pm

Posted:3 years ago

#16

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