Has the world unsubscribed?
The Old Republic stumbles; Guild Wars 2 soars. Is the age of the subscription completely finished?
As the advent of increasingly powerful and accessible digital distribution platforms continues to wreak havoc on traditional business and revenue models in the games industry, one business model appears to have collapsed faster than others - the monthly subscription. As little as half a decade ago, nearly every publisher on the planet seemed to want a slice of subscription action. Spurred on by the success of Blizzard's World of Warcraft, they poured tens of millions of dollars into creating massively multiplayer worlds which would give them access to the kind of recurring monthly revenue that had made Blizzard into the most bankable company in the business.
We all know what happened. While Blizzard continued to grow - and despite recent decline, it's still operating the most commercially successful game on the planet - almost everyone else failed miserably. Some titles dared to be radically different and found a profitable niche, like CCP's extraordinary EVE Online or Square Enix' stylistically gorgeous (and console-friendly) Final Fantasy XI. Most copied WoW, to greater or lesser degrees of competence, and fell far short of commercial expectations.
Today, the subscription model is dead in the water. Electronic Arts' Star Wars: The Old Republic was a hugely expensive final roll of the dice; in the coming weeks it will complete its transition to a free to play business model, less than a year after launching to immense fanfare with a WoW style "pay up front, pay again next month" revenue model.
"Electronic Arts' Star Wars: The Old Republic was a hugely expensive final roll of the dice"
I'm not sure what company (Blizzard itself excepted, perhaps) will have the cajones to launch a subscription MMO along such traditional lines ever again. In today's market, and most likely in tomorrow's, such a move would feel less like confidence in the model and more like a stubborn refusal to acknowledge reality.
The dream is dead, then - the dream in question being the executive's dream of having a siphon directly into the bank accounts of all of your customers, deftly extracting a monthly toll in return for playing a game which had become a service, delivering solid, predictable monthly revenues of the sort which look excellent in graphs, charts and quarterly financial results. World of Warcraft was not the model for the future after all - which isn't to say that it was a fluke, but is certainly to say that it was a unique product whose ideas could be cloned but whose success was not subject to simple copying. We've woken from that dream to a free-to-play reality. Free to play business models are the new darling child of MMO and persistent world creators and operators. This new reality is similar to the subscription dream, in that it also involves generating a monthly revenue stream - but that revenue is less predictable, since it comes from a certain percentage of your dedicated players choosing to make purchases of in-game items.
Some MMOs are being designed from the ground up as free to play titles (indeed, that's been the default business model for MMOs in East Asia for years, so you could argue convincingly that we're not innovating, we're just catching up). Others - many of them very high profile, like The Old Republic - have F2P systems bolted on to them after the subscription model fails. Sometimes that works, but it's hard; balancing F2P is a tough proposition to begin with, which probably explains why so many people, creators and consumers alike, recoil instinctively from the very concept. It's done badly more often than it's done well.
"Balancing F2P is a tough proposition to begin with, which probably explains why so many people, creators and consumers alike, recoil instinctively from the very concept. It's done badly more often than it's done well."
So free-to-play is the entire future of this type of game, then? I could write that, certainly, and plenty of people would nod along in agreement - but I fear that we'd all be just as blinkered as those who confidently predicted, ten years ago, that subscriptions were the unrivalled future of the industry.
Here's a slightly different prediction, instead - free to play is going to be the dominant form of revenue model for online and MMO games in the (very near) future. Most games will feature some if not all aspects of the free to play model. However, being dominant doesn't mean being the only game in town - and free to play itself is a broad church, encompassing plenty of model variants which can appeal to different consumer groups or suit different game types. (That in itself is an important response to those who issue blanket criticisms of free to play as being exploitative or immoral. Their criticism is normally grounded in a bad experience with a single game or company - and let's be blunt, it's usually Zynga - and doesn't acknowledge the breadth of concepts encompassed within free to play.)
However, even quite a few years down the line, I suspect (and hope) that many developers will still be experimenting with business models - picking and choosing aspects of free to play which suit their product and audience, while also inventing new concepts or new hybrids of existing models.
This week's launch of Guild Wars 2 is a pretty solid example of that happening already. The game is a fully featured MMO, but instead of asking for a subscription fee, it's sold as a full-price PC game (and with a million copies sold before it even launched, it's very successful in that right already). Further down the line, developer ArenaNet has the opportunity to earn extra revenues through microstransactions (for services like moving or renaming characters, or for cosmetic items, for example) and through selling regular, albeit optional, content packs for the game.
World of Warcraft itself is another solid example. After leading the entire games industry for a merry dance for a decade, as publishers struggled to emulate its subscription model, Blizzard has begun dabbling in in-game item purchases - building its revenue from the hugely popular game by selling cosmetic items as well as its hugely successful content packs.
"We can and should accept that F2P, in its various guises, is going to be a dominant form of business model for games over the coming years."
These are developers who know how free to play works. They've clearly studied it and liked some of what they saw (Blizzard also applies the viral user acquisition idea as deftly, if not more so, as many dedicated F2P game companies do), but decided that their specific customer base was better served by a hybrid model which enjoys advantages from other sides of the industry as well. Of course, it's worth noting that making a decision like that requires really knowing your customer very well. Companies like Blizzard and ArenaNet don't make decisions based on emotional responses like "I hate F2P!"; they make them based on an extraordinarily in-depth knowledge of their product and their customer, and of what will work best for both.
Even so, they illustrate an important point. We can and should accept that F2P, in its various guises, is going to be a dominant form of business model for games over the coming years. However, those various guises are indeed varied, and the dominance of F2P won't squeeze out other models entirely either. Toyota cars are the dominant way of moving people around on the roads; they're arguably also the most cost-efficient and effective way of doing so, from a dispassionate, analytical point of view. That doesn't stop you from seeing the occasional Ferrari or Porsche, neither of which company seems to be about to disappear due to Toyota's dominance; nor does it stop some people from cycling, some from choosing motorcycles, or Sir Richard Branson from getting from A to B by hot air balloon. Just because a business model isn't the dominant form doesn't mean that it can't work profitably and effectively for certain products and audiences.
Perhaps we're even ringing the funeral bell a little early for the subscription model. Who's to say that this won't transpire to be the perfect model for some consumers; for some developers; for some types of game? The story of the games industry in the 21st century is often mislabelled as "transition", but that's not what's happening. What's happening is diversification. Our church grows ever broader - and different business models are simply becoming a powerful set of tools which developers and entrepreneurs can use as appropriate. That's a future to welcome, not one to fear.