Live Free: Freemium Thinking For Console Games
Whether they know it or not, today's most successful console games are using freemium ideas to extend their shelf life
Among the various concepts which underpin the "freemium" business model, one of the most difficult for developers and publishers to accept is the idea that you're going to be giving away the vast majority of your work for free. Not only will most of the people who play a freemium game do so without paying anything - even those who pay will actually be paying for add-on content, consumables or customisation items, rather than directly parting with money for the core game you've laboured to build.
I suspect that that's part of the reason why some people in the industry have such a strong, instinctive reaction against freemium. To those brought up in the culture of spending years building a game and then selling it at a premium price, the suggestion that they should instead give that game away for free and make their money by selling cosmetic items or energy potions to a minority of players seems somewhere between farce and blasphemy.
I don't feel all that guilty about playing a copy of Arkham City I didn't directly pay for, because the game is an excellent example of a kind of "quietly freemium" title.
Those who recoil from the very concept of freemium, however, might do well to consider the proposition from another angle. It's popular to characterise freemium as a market-upsetting, disruptive approach to making money from games - but I think there's a more rational perspective which simply says that freemium is a way of describing and understanding something that's already happening anyway in this business. It's not an attempt to replace existing business models with something new - it's just a recognition of a reality that already exists.
Take, for example, Rocksteady's absolutely fantastic Batman: Arkham City. An immensely successful game which has sold millions of copies at a premium price point, it would seem like something of a stretch to describe Arkham City as being a freemium game - yet I'd contend that that's exactly what it is, to a significant body of its users.
Certainly, there are plenty of gamers who bought Arkham City for £30 or so, paying for access to the content up front. Equally, however, there are many users who access Arkham City through a service like Lovefilm or any other rental service you care to mention. Then there are users who bought Arkham City second hand, or borrowed it from a friend.
In all of those cases apart from the borrowing example, the users did pay some fee for access to the content - but from the perspective of the developer and publisher, all of those users are effectively accessing the content for free, because none of them paid for it in a way which returns revenue to the creators. Lovefilm makes money from its subscribers, and retailers make money from their second-hand trade, but publishers and developers don't see anything. From the developer's point of view, those users may as well have picked up Arkham City from "Free: Please Take One!" bins on high streets.
I'm one of those consumers, I'm afraid. Arkham City dropped through my letterbox from Lovefilm - a service that I'm using to keep me honest in my pledge to spend this year dispensing with, rather than accumulating, stuff on my shelves, games included.
Yet I don't feel all that guilty about playing a copy of Arkham City I didn't directly pay for, because the game is an excellent example of the kind of "quietly freemium" titles I'm referring to. Within an hour of play - and realising that I was really enjoying the game - I'd spent 800 Microsoft Points on the Catwoman pack for the game. Having finished the main story missions and embarked on the challenges - many, many hours of play down the line - I dropped another 1200 points on the pack containing Nightwing, Robin and various challenge maps and Batman skins. There may also have been a shameful incident involving a few hundred points spent on Batman avatar goodies.
Total expenditure? Almost £20 - not bad for a player who didn't buy the game and, in theory, should have been a dead loss to the bottom line of developer and publisher alike. Extend that kind of expenditure over a significant percentage of those who rent, borrow or buy the game second hand, and you're looking a fairly major chunk of income coming from what is effectively a freemium model - despite the price tag the game has up front.
Indeed, I'd argue that this looks very much like the model which many MMOs have preferred in recent years - subscription up front for the dedicated consumers, followed by a long tail of freemium for the less devoted. Although this is a business model which emerged from desperation - a last-ditch effort to save MMOs with collapsing subscriber bases from extinction - it actually maximises revenue very nicely, making the game expensive up front and cheap (even free) later on.
Perhaps publishers could make life harder for the rental market, but there's very little they could do about the second hand market, and absolutely nothing they can do about game borrowing - unless they want to risk completely destroying the console game market in the process. Many in the industry grumble regularly about these aspects of the market, but it's telling that people are very nervous, in general, about rumours that Microsoft's next console might be designed to prevent second-hand sales entirely. Nobody knows what actually happens to game sales if you deny consumers the ability to trade in or loan out their games. It's not hard to see how decreasing the effective value of a product, thus essentially making it vastly more expensive, might not exactly equate to sprinkling magical pixie dust on your sales figures.
Games are on shelves for a few months and then they're dead - except that now, they're not, because there's this ripe opportunity to exploit what is effectively a freemium long tail.
So instead of trying to destroy those things, the rise of things like DLC, online passes and so on suggest a market that's turning to freemium (whether it wants to call it that or not) for a solution. For the early weeks and months of a game's lifespan, the majority of consumers pay for it up front. After that, second hand copies - sold or borrowed - flood the market. You'll still make some sales, of course, but you have to accept that it's now possible for consumers to access your content in a way which may not be entirely free to them, but is definitely free to you - in that it generates no revenue. Instead, you need to apply freemium ideas to pull in revenue from those people - and perhaps from some of your premium customers, still playing after all this time, as well.
Denying this market opportunity and instead trying to find a way to shut down second hand sales or lending would be like a movie studio refusing to let its products ever be shown on TV, instead insisting that they should only ever be seen in the cinema. Games business leaders have complained for years that unlike movies, games only get one bite of the cherry. Movies sell cinema tickets, then DVDs, then pay-per-view and airline deals, then TV syndication. Games are on shelves for a few months and then they're dead - except that now, they're not, because there's this ripe opportunity to exploit what is effectively a freemium long tail, even after the games in circulation stop returning revenue to your coffers through direct sales.
Of course, the trick to this isn't an easy one. You need to make a game that people seriously want to engage with and don't mind spending a bit of money on as a consequence. That's why Arkham City is a good example - you get to the end of a very sizeable game but are left wanting more, and the developers have created content which scratches that itch. A game you're bored of half way through will never sell add-on content. A game that's simply too short but has a store full of extra content looks greedy and off-putting. The old rules of making great games still apply, then - build something amazing, something substantial, but something that leaves your players hungry for more. The difference is that today, you have the opportunity to feed that hunger - and in doing so, take advantage of the realities of today's game market, instead of just complaining about them.