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Hawkins: Whatever the format, free-to-play is more lucrative

Mon 11 Jul 2011 7:00am GMT / 3:00am EDT / 12:00am PDT
Online

Digital Chocolate boss says virtual goods are key to any platform

Trip Hawkins has unequivocally endorsed the free-to-play virtual goods model by telling GamesIndustry.biz that any game using it, no matter what the platform, will make more money than it would otherwise.

Speaking to GamesIndustry.biz after his presentation at last month's Gamelab event in Barcelona, Hawkins made very clear his position on where the smart future lies in terms of monetisation models.

"Well, I don't care what category it is, any segment of the games industry on any platform - if you make it free-to-play with virtual goods it'll be better, financially," Hawkins told GamesIndustry.biz. "You'll get more people to try it, you'll get more revenue from more customers, in the end."

Hawkins was speaking specifically about the launch of Chair Entertainment's Infinity Blade in Asia under a free-to-play model - a move which represents something of a change of heart for the company which was arguing in March that Apple needed to re-evaluate its curation policy in order to help support higher price points for high-end App Store titles.

Adopting that free-to-play policy, driven by the virtual goods which Hawkins described as the "most important" factor in the making new business models work, does have its own dangers, however. Introducing the ability to buy progress and advantages is likely to upset those players who have already invested time into a gaming eco-system.

"Then of course eventually Warcraft had to give in and say, okay, we need to do this ourselves. So eventually that's the way it's going to go."

"I know in the MMO market this is where it's most difficult for them to believe in it. There are so many customers - the personality of many hardcore gamers is that they want to feel better about themselves because they're dominant in the game. They're willing to put in hours and hours and hours to create a level 65 character in LOTRO and then they get mad as heck when LOTRO decides to go free-to-play and let people buy virtual goods. That drives them crazy, right?

Hawkins went on to detail the story of Brock Pierce, a former child actor who saw a gap in the market for WoW players, founding his own company which allowed account trading - something which Blizzard had precluded.

That strategy soon made Pierce a rich man, but also incurred the wroth of Blizzard, who began destroying his inventory by deleting accounts held by Pierce's company, IGE, for violating game rules. His story is long, complex and strewn with legal action, but Pierce changed the market, Hawkins says.

"Then of course eventually Warcraft had to give in and say, okay, we need to do this ourselves. So eventually that's the way it's going to go."

Nonetheless, Hawkins believes that allowing players to buy advantages is unlikely to drive away dedicated customers. Instead, the investment they've already made in your game is likely to keep them engaged - potentially turning them into the top-level spender 'whales' which exist at the top of every freemium and virtual good economy.

"And yeah, there'll be a small number of customers who'll fight against it, kicking and screaming because it takes away an advantage they have - they can put more time in," says Hawkins. "They're still going to put the time in. They're still going to play the game better than anybody else and eventually they'll put some money in to make sure they're still better."

For the full interview with Trip Hawkins, click here.

11 Comments

Craig Burkey Software Engineer

217 412 1.9
Is he advocating a kinda Free Mario 64 style hub world with a few game worlds open by default and additional worlds unlocked in bundles/pay as you go style? I can see alot advantages or really replacing game demos with a sort of prologue.

There just for me a stigma attached to "Freemium" games that make me think of casual facebook games where you pay extra for sheep or berries

Was there any sales data published on the Fable 2 episodic release?

Posted:3 years ago

#1

Klaus Preisinger Freelance Writing

1,158 1,222 1.1
I challenge his theory of players not leaving the game, if it sells ingame advantages. People might never start playing the game in the first place and the companies which so far dared to make the switch, did it to resurrect the half-rotten corpses of an ailing game.

Right now people might be unable to quit a time investment above 1000h, because never before have human beings been asked to do such a thing. Have you learned to give up your main hobby? Because that is the type of situation MMOs put you in. At best we learned to walk away from small time investments. We might learn to quit a game, but not gaming itself. Never before was there a situation where single games coult take up 85%+ of the gaming hobby. But players will learn to walk away from these huge amounts of time and in the interest of cannibalizing customers, the gaming industry's PR divisions will even actively teach players how to do it. Then we will have an arcade type situation at best. Tons of arcade machines and not enough dimes. Good for me having all that choice how to spend the dime, bad for the creators because there is all that competition to deal with.

Edited 2 times. Last edit by Klaus Preisinger on 11th July 2011 12:38pm

Posted:3 years ago

#2

Mark Raymond Gamer; Consumer; Blogger

40 0 0.0
Personally, any game where I can be beaten because someone spent more than me is unbalanced, and I won't play it. That's just me, though, and I don't represent the market of F2P players since, well, I don't play F2P games.

It all depends on whether enough people are willing to accept this or not. In my opinion I feel that people who play games will see through this as the money pit it is. (I hope.)

Posted:3 years ago

#3

Ola Holmdahl General Manager, Junebud AB

4 0 0.0
@Mark PC gaming is an extreme "equipment sport" as is. It's hard to play most games and be competitive unless you have a fairly powerful PC (all components), a good screen, and a decent mouse: all things that tend to age fast and cost money.

I like both pay-2-play and free-2-play games, that's not the issue for me. I play and enjoy both types. But the fact is that in my experience, pay-2-play games, especially shooters, tend to be real money sinks. The difference being that the money goes to the hardware manufacturers. It is beyond me why a lot of hardcore gamers obsess over hardware and are willing to outspend the competition, only to sneer at F2P the next moment.

Please note that I do not assume that this is your standpoint. I merely associated to this phenomenon in reading your comment.

Also note that this is less of an issue on consoles (quality of your TV notwithstanding). But then, F2P is not as big on consoles and they usually aren't as interesting to hardcore PC players.

In closing, I'd like to say that I find it equally hard to make a successful game in P2P or F2P. Both take a lot of skill and energy and you can make money and earn respect doing either, at this point. Personally, though, I think free is on a killing spree.

Posted:3 years ago

#4

Christopher Bowen Editor in Chief, Gaming Bus

459 738 1.6
I kind of appreciate Trip's honesty here. He's basically saying the following: "FTP is better because gamers are kinda dumb. The whole business model is to exploit the worst hoarding elements of mankind, and the hope is that enough of you are stupid enough to get hooked to the point where dropping out would make all of that money a sunk cost. We're the electronic version of smoking two packs of fags."

Am I the only person seeing a free to play bubble here? Everyone thought the same thing about MMOs ("it's perpetual, guaranteed income! Players can't leave because it'll be a sunk cost!"), and... well, how are Tabula Rasa, Age of Conan and Hellgate: London doing?

Posted:3 years ago

#5

Luke McCarthy Indie Game Developer

35 0 0.0
The problem is that gamers are not dumb, or alternatively, only the dumb gamers will become "whales" (which is a terribly insulting term - should you be insulting your best customers?)

Personally I avoid MMOs and games which emphasis in-game virtual items. Why would I waste my time playing a free game, and waste my money on virtual items, when I could buy better non-free games instead? If I make significant investment in to one game, that crowds out other games. As a gamer I like to play a wide variety of different games, not spend all my time on one game. I don't care how many new stupid items you keep adding to it.

Posted:3 years ago

#6

Mario Tommadich Technical Requirements & Compliance, Keywords International

32 28 0.9
In the end, every MMO player will stop playing a certain, game eventually. Moderate amounts of money invested or not. I'm sure there are plenty of pay to play games on a gamers' shelf that will never be played again, without being considered sunk cost. Although quite addic tive, any MMO will eventually vanish, for the simple reason that they do not contain nicotine.

Posted:3 years ago

#7

Mark Raymond Gamer; Consumer; Blogger

40 0 0.0
@Ola I think the idea that it costs loads to play retail games on a PC is more of a myth now than anything because most games tend to be multiplatform and therefore are designed around old hardware. You can buy a good gaming PC for 600-700 with a decent monitor, and which does everything else you'd expect a computer to do. I just don't think you need to spend that much to be competitive. If you can get 30 FPS+ on low graphics then that will be enough, and anything above that only really has an impact on people who play pro.

@Christopher

Am I the only person seeing a free to play bubble here? Everyone thought the same thing about MMOs ("it's perpetual, guaranteed income! Players can't leave because it'll be a sunk cost!"), and... well, how are Tabula Rasa, Age of Conan and Hellgate: London doing?

You are not the only one, and I am both glad and slightly worried how you just read my mind. I very nearly said the same thing in my original comment.

Posted:3 years ago

#8

Jeffrey Kesselman CTO, Nphos

112 0 0.0
Trip Hawkins is jealous of Steve Jobs because Jobs still has *his* reality distortion field.

This is a ludicrous claim in the face of real data. According to their S1 filing, Zynga grossed $3.21 per *year*per active account in 2010.

[link url=http://worldwizards.blogspot.com/2011/07/real-zynga-numbers.html
]http://worldwizards.blogspot.com/2011/07...[/link]

Compare that to even the low end of subscription pricing, which is $60.00 per year.

F2P is a low return, high volume business that only makes sense if you can keep your costs bare bone and hit the hump of the bell curve for usership. As the competition in the space increases, games will become more expensive to run and the market will fragment. That will spell the death of F2P.

Edit: Oh, and mobile already has its first subscription success...

"Order & Chaos"

Edited 1 times. Last edit by Jeffrey Kesselman on 11th July 2011 6:12pm

Posted:3 years ago

#9
agree with the Dolly Palton, in fact the online experience could have a major "money" factor that will be a side effect since companies are not blind, they will allow you to unlock virtual goods and objects only if you pay. Farming will be over^^

And they will certainly focus on specific objects in order to force the consumer side of the gamer.

For example: you are a WoW player, you are in a guild and you have to go in a raid to down, let's say, Illidan (yeah i stopped wow after BC^^). In order to get it done, you will need specific objects for your specs and abilities etc, but it will only be available on the online shop. So the thing is, if for one important raid, everybody has to buy an object because it's not available by simply spending time in-game, then yes, it's a major side effect and bridles the gaming experience.
I personally think the free-to-play game is not a bad idea, but it has more potential for ruining the gaming experience on the long-term.

(excuse my poor english :( )

Posted:3 years ago

#10

Ola Holmdahl General Manager, Junebud AB

4 0 0.0
@Mark I agree with your assessment that one can get a fair gaming PC for 6-7000, though I think this also drives to my point. You can play most any F2P without ever paying a dime, but you might play it on "low graphics settings" (i.e. look & feel plain and boring) and you will probably be unable to go "pro", (i.e. full out competitive).

I think we all know people who believe they have to play new games the way the "developers intended them to be played". This tends to mean at max resolution, max GFX settings, max FPS, perfect sound, even for single player games. Are such people greater or lesser "suckers" than players who pay subscription fees or who buy F2P hard currencies? I think that's debatable.

In my experience, even with current gen PCs, you might need to swap out GFX cards, get more / better RAM, or buy a new headset -necessary for online play - quite often (even the 'quality' ones break sooner rather than later). You'll also need to spend a lot of 'free' time updating drivers, trouble shooting incompatible software, fidgeting with Teamspeak settings, etc.

@Jeffrey "F2P is a low return, high volume business that only makes sense if you can keep your costs bare bone and hit the hump of the bell curve for usership. As the competition in the space increases, games will become more expensive to run and the market will fragment. That will spell the death of F2P."

I agree that this is a real challenge for F2P - and the markets it caters to. I expect that unless the market(s) grow to accept lower production value games across a segmented offering, the F2P market will belong to a small number of capital strong publishers and studios. I very much doubt F2P will die.

Posted:3 years ago

#11

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