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Mobile won't kill console. F2P won't kill full priced

By Rob Fahey

Mobile won't kill console. F2P won't kill full priced

Fri 21 Dec 2012 7:50am GMT / 2:50am EST / 11:50pm PST

There is no "perfect answer" to doing business with video games. Let's call a halt to the pointless "zero-sum" debates that blighted 2012

A day in which you learn nothing is a day wasted; by which standard, a year in which we learned nothing would be a pointless waste of time indeed. It's worth, as 2012 draws to a close (all that's left now is the few days of indulgence before the year, in harmony with our waistbands, croaks its last), thinking about what we've learned. What did 2012 teach us that we did not before? Never mind, for a moment, the money we earned or lost, the games we played or made; did we grow? Did we advance? Did we learn?

"Free to play is clearly going to be with us for the long haul; hopefully 2013 might be the year when the industry stops having ill-tempered hissy fits about this fact"

From a business standpoint, certainly, we learned a great deal. 2012 cemented the place of mobile in the gaming ecosystem, forcing all but the most ardent refuseniks (so Nintendo and... er... that's about it) to recognise mobile as an important part of their business - and even those who were slow to react to the rise of mobile gaming seem determined not to be left behind as tablets gain steam, with 2012 having shown us pretty clearly that the iPad and its myriad imitators are on track to become the primary data device of many consumers in the coming years.

We also learned some things - although not enough, I reckon - about where price points are heading. Freed of the artificial barriers to entry which define console platforms and physical retail, the App Store and Google Play have shown us where prices for digital content will inevitably trend towards - zero. In 2012, more entertaining, successful games than ever before launched at the princely price point of absolutely nothing. Plenty of others didn't debut at far above 99p, and several of my favourite games of the year would have given me change from a £10 note. Free to play, with all that it entails, remains in its infancy, but is clearly going to be with us for the long haul; hopefully 2013 might be the year when the industry stops having ill-tempered hissy fits about this fact, and starts engaging with making F2P work better rather than loudly and pointlessly damning or exalting it at every turn.

That, perhaps, is a reasonable lead-in to something that I don't think we learned this year, as an industry - we didn't learn to stop being afraid of zero-sum games that don't really exist. Discussions about mobile gaming, even among supposed professionals and experts, often descend into abject ridiculousness due to an insistence that mobile games will come to replace all other kinds of games, or that they are doomed to be a cynical, low-quality niche - neither of which position stands up to the slightest moment of intellectual scrutiny. The same applies to the vitriolic arguments about free-to-play which have washed over and back across 2012 like a stinking, polluted tide - when one side insists that everything will eventually be F2P, and the other insists that F2P is intrinsically evil and wrong, you're no longer dealing with professional debate, but with dumb fanaticism.

"The idea that one form of entertainment, one form of business model or even one form of distribution will emerge to Rule Them All, is simply an idiot's fantasy"

I'm not saying, by the way, that we should all be cautious fence-sitters - there's no virtue to sitting on the fence simply because it's comfortable. Strong beliefs are good, but meaningless unless tempered by reason and fact. The fact is that cinema did not kill theatre, television did not kill cinema, video games have yet to viciously murder books, home recording did not kill music and video did not kill the radio star. Media and entertainment industries are ecosystems that accommodate an extraordinary range of different kinds of product and different business models - and that is not ever going to change. The idea that one form of entertainment, one form of business model or even one form of distribution will emerge to Rule Them All, is simply an idiot's fantasy.

I say that with absolute confidence, not just because it is supported by countless years of history and the sheer wealth of culture and entertainment they have bequeathed to us, but because I recognise where the belief springs from. It's the unique curse and blessing of the games industry that it teems with “left-brained” people - logical, analytical, mathematical, and quite different from the “right-brained” people who often dominate other creative industries. Video games were born with both feet firmly in the sphere of technology, only gradually moving to straddle the worlds of both technology and art - a marriage which is superbly creative but often fraught, as evidenced by the hissing recoil of many gamers and industry types alike when presented with the (stonkingly obvious) fact that games are an artform.

Left-brain people (yes, modern psychology dismisses this terminology, but it's so much more polite than grouping you all as “geeks” and “arty types”, isn't it?) love perfect answers. They like problems which have a correct solution, and see the world in those terms. In many industries, they're perfect business leaders - there absolutely is a single most efficient way to extract oil or metal from the ground, to build an aircraft, to lay out a road or rail network. In entertainment, though, the idea of a “perfect” solution runs into a huge set of problems which utterly stump the left-brained - sentiment. Emotion. Irrationality. Sheer outright bloody-mindedness.

The fact is - nobody needs entertainment. Not really. If video games, films, books, music, plays, TV shows, paintings and sculptures all disappeared tomorrow, we'd be a much diminished species, but nobody would die. People need shelter, food, clothing, transport, protection, fuel - but entertainment is “discretionary”. It says so right there in your accounts. It's spending at your discretion - and what that means is that it's spending guided not by optimisation, but by sentiment.

Is free-to-play the most efficient way for money and experiences to change hands between developer and player? Is mobile or tablet gaming the most cost-effective route for consumers to engage with video games? Yeah, maybe - but what so few of us seem to really grasp is that this doesn't actually matter. Is MP3 music the perfect balance of quality, convenience and file size? Probably - but vinyl shops thrive and specialist services offering “lossless” quality music files are on the rise. Is Kindle the best way to consume books? Yes, undoubtedly - but I don't think of myself “consuming” books. Some books I just read; some I own; some I treasure. Sentiment; emotion; irrationality. I went to a shop and bought a leather-backed volume of a book I already own in paperback and Kindle alike. I'll probably never read it. I love it. Am I an idiot, failing to see that this is not the optimal consumption path and bound to realise the error of my ways eventually? No, because this is my discretion; this is how I choose to enjoy and to spend on my pastime.

"We sell experiences and emotions, and people will choose to consume those in the way that makes them feel best, not the way that is most coldly, mathematically efficient"

That's why the zero-sum game will never come to pass - not as the strident debaters of 2012 believed. A very large number of consumers will still want things like dedicated gaming hardware, expensive full-price releases and physical products, not because this makes “sense” in an economic or logical way, but because they love those things and because, beyond straightforward questions of affordability, “economic sense” isn't a welcome guest in deliberations about your hobbies and your passions.

The industry evolves and changes - never as rapidly as it did in 2012, though 2013 will probably make our heads spin just as fast - but little is truly lost. We don't sell petrol, or sliced bread, or concrete, or train tickets. We sell experiences and emotions, and people will choose to consume those in the way that makes them feel best, not the way that is most coldly, mathematically efficient. Nobody fears that releasing Shakespeare adaptations on DVD will shut down theatres, or that allowing buskers onto the streets will eventually lead to concert halls being demolished. It's time that we, too, learned that the expansion of the games business leads to more opportunities and more diversity, not to an existential threat to things we love - or worse, a chance to gloat over the imagined demise of things we hate. If you've got one new years resolution to make for 2013, make it this one - no more zero-sum arguments. Mobile won't kill console. F2P won't kill full-price. Cloud won't kill local. The forest grows ever bigger; the old tree doesn't block the sunlight from the new trees, the new trees do not strangle the roots of the old.

On which note, I'd like to wish a very merry and enjoyable Christmas (or winter holiday of your choosing) to all of our readers - not to mention a truly prosperous and wonderful new year.

From Recommendations by Taboola


David Thomson Founder, Ludometrics

9 2 0.2
Well said, as usual, Rob. Enjoy the break, and here's to 2013!

Posted:3 years ago


Yiannis Koumoutzelis Founder & Creative Director, Neriad Games

367 211 0.6
exactly as cinema didn't kill theater, and records didn't kill live music, and photography didn't kill painting, and so on and so forth!

Posted:3 years ago


Doug Paras

117 61 0.5
Popular Comment
I've said it all along I don't like playing a game that pretends to be free but limits your enjoyment unless you spend money that could be more then a $60 game. I've also said I don't like streaming games, I like a physical copy of a game incase I lose my internet.

I wonder if this article will make Bruce rage lol.

Posted:3 years ago


João Namorado Project Manager, Portugal Telecom

73 88 1.2
Thanks for a great article Rob.

I'm not ready to ditch my HD console gaming and full priced AAA blockbuster games, but I do enjoy lot's of free games on my smartphone everyday on the train to and from work. I like to own some games but I do find it more than satisfying to play some others on my game streaming service.

And Doug, I've been enjoying some free to play games too. I've tried some that do force you to spend money to enjoy them, but others are quite balanced.

I wish you all, staff and community, a great holiday season and a great 2013 with all kinds of good games!

Posted:3 years ago


Daniel Hughes Studying PhD Literary Modernism, Bangor University

436 497 1.1
Thanks, Rob--fantastic article. I wish there were more voices echoing this message, because it's something I firmly agree with and believe in. Here's to the games industry diversifying, growing, and becoming better and better.

Best wishes for Christmas and New Year, everyone.

Posted:3 years ago

I don't entirely agree with you.

While it is true that different media can certainly co-exist, thats not necessarily true with business models.

For instance, except for a few very specific niche products, anyone who has attempted to sell a web browser has failed.
Why? Because the free browsers have taught the customer to have no respect for the browser as an artifact worth paying for.

All salesmen know of the anchoring phenomenon. This is that customers set value in their minds based on
the price they have seen charged for an item. We tell the consumer what a reasonable cost for an item is
by how we price it.

Right now, desperate F2P grabs at some kind of ROI are taking all the money out of the MMORPG space by teaching the customer that such games have little value. They have taught people that MMORPGs aren't "worth" paying for and the most commonly heard comment on the release of a new one is "I'll wait til its free:. This is robbing the space of consumers and revenue that is vital to sustaining the very expensive level of production a major MMORPG requires.

This segment is dying and, barring a sudden mass return to sanity in the industry, will be replaced by schlock produced as cheaply as possible in order to get the customer in the door and creating micro-transactions. We will not see another WOW, and the micro-transaction model is to blame.

Edited 2 times. Last edit by Jeffrey Kesselman on 21st December 2012 3:44pm

Posted:3 years ago


Brandon Jaquez

12 2 0.2
I value time over money. Money can easily be replenished. Time cannot. Thus is why I don't care much about spending $40 on a 3DS game I know I want and will enjoy. Hey, and I do want to put money in the pockets of those who made such fantastic game. A team of 100 folks. Why not?

Posted:3 years ago


Jack Nilssen Independent Game Developer, Dark Acre

20 35 1.8
Well, duh. Anyone who made those claims might as well have followed up by shouting "... AND I DON'T UNDERSTAND HOW BUSINESS WORKS."

Posted:3 years ago


Emily Rose Freelance Artist

109 93 0.9
Jeffrey, cheap schlock mmos don't get players, even if they are free. Without players you have nobody to sell MT to. The f2p market is increasing in quality, not decreasing (in mmos).

Posted:3 years ago


Greg Wilcox Creator, Destroy All Fanboys!

2,611 1,686 0.6
cheap schlock mmos don't get players, even if they are free.
But somehow, people will pay up front for an unfinished game like War Z?

Well, it's not a MMO (unless you count it as a MMOFPS), but whaddever.

There are great F2P MMOs ans not-so great ones, period. Not all survive, some that could be better survive and get better, others don't. Players aren't all the best judges of overall quality sometimes. If they get hooked in by pretty visuals, can get into the world with not too many hassles and the game works in giving them their fantasy fix, it's good until they find stuff they don't like. or hate paying for stuff they can't seem to earn no matter how hard they grind.

Posted:3 years ago


Michael Gunter Monster Hunter

15 5 0.3
We will not see another WOW, and the micro-transaction model is to blame.
I can see where you are coming from, and it would appear you are taking the business approach. With that I agree, we will likely never see another massive MMORPG that hit the market in the same way that WoW did, with a AAA buy-in price and a recurring subscription fee required to keep access.

Shift gears for a second and look at it from a consumer standpoint. The value-proposition is definitely shifting to be cheaper, but that doesn't mean we are going to get "schlock produced as cheaply as possible" from here on out. I don't know what level of gamer you consider yourself to be, but there are plenty of free-to-play offerings out there to satisfy the core and life-long gamer, many of which are on par with or superior in several ways to the inexplicably-industry-gold-standard-of-MMO's (read: had a HUGE budget) WoW.

Take for example two Nexon games that hit America in 2009 and 2010, Dungeon Fighter Online and Vindictus respectively. I have gotten more enjoyment out of those two free-to-play games (and put more money into than WoW), but when I compare them to where they are now with what I remember just 2 and 3 years ago, the games have evolved significantly for the better with every patch. Being an avid gamer at their launch (and still), I would recommend them to other gamers, but would hesitate sharing with more casual players because I could still see the flaws that would damn mass market appeal. Now, however, they've grown significantly thanks to continued support of micro-transactions, and have reached a point in their development where they look and feel like something you might pay to gain access to, but they're free. 100% enjoyable and feature complete without paying a single dime (minus the assumed investment in a PC for gaming).

In this case, we have micro-transactions to THANK, not BLAME for their creation. It acts more like a hidden form of crowd-funding. If it is profitable and obvious that people like the game and are willing to put more money into it, then the studio developing it knows they are on the right track and can continue to grow. This makes for a much more organic and user driven experience than a game like WoW could ever provide, because WoW had the benefit of a mountain of gold in Blizzard's coffers to develop with before it hit the market. It made sense at the time that if you wanted to grow that mountain of gold, you would HAVE to charge every head that entered the world a base fee, and the recurring subscription was a way to gauge if people were sticking around and enjoying the game, and therefore justifying the next big patch and development.

Don't get me wrong, I've seen the schlock of which you speak, and I've also seen those fade and disappear because they just weren't good enough (played my fair share of free-to-play MMOs that just vanished one day without a peep). They may have had good intentions, and quite possibly loved their own creation, but the masses didn't agree, and wouldn't sustain the effort based on their initial attempt. They aren't necessarily failures, because they represent just one of thousands of ways to NOT make a light bulb, so-to-speak.
desperate F2P grabs at some kind of ROI are taking all the money out of the MMORPG space by teaching the customer that such games have little value
Not exactly. The actions of execs switching to a F2P model would indicate that the businesses themselves were taught that THEIR effort wasn't worth what their audience felt it was worth. I doubt that a couple recent notable MMO's were honestly initially backed by the notion that their subscription models weren't sustainable. The companies that developed and produced those games probably had estimates for how many subscribers they'd get. They knew how many sales and subscribers they would need to make a decent ROI. They probably had a map of updates and future content. They also probably had a moment of panic when they realized after the initial sale of the game that people were leaving in large quantities and that their current production schedule wasn't sustainable and eating into profits. As a result, we've seen some down scaling and a switch to a different model with the hope that it will generate a larger ROI. Was it the right choice? I don't know, I'm just one consumer with no (limited at best) insight into their financials and detailed production costs.
They have taught people that MMORPGs aren't "worth" paying for and the most commonly heard comment on the release of a new one is "I'll wait til its free"
I can empathize with this point a bit. Dropping the initial price point is definitely an interesting proposition, but more often than "I'll wait til its free" I tend to hear more gripes about Free-to-play having "really annoying monetization/ads/greedy tactics" which is a boon to the paid MMO. People expect with a paid game to have circumvented all of that "money-grubbing" that I also find terribly annoying in a vast portion of Free-to-Play offerings. However, I don't think your average consumer has lost the sense of "worth" when it comes to MMO's. What seems to have happened is a merging of the concept of WHAT we are valuing. More than ever consumers seem to have grasped the old adage "time = money," and MMO's have become notorious for being HUGE time sinks. With that in mind, the question becomes how can a company prove that time spent with THEIR MMO is worth the money of the consumer? If a consumer enjoys the MMO and wants to get the most out of their time with it and is presented with some form of perceived value through micro-transactions (be it game-play advantages or time-savers), then the relationship is good. If the game is well made and the perceived value of paid offerings align with consumer expectations, whales are born. Ideally for the company, every consumer would be a whale, but let's face it, the core of your gaming audience has yet to reach a point of financial maturity.

This means micro-transaction based games are likely to receive more profit from a more mature audience, with a few rare exceptions of "kid with daddy's credit card." Does this mean "kids" (I'd go so far as to include college students without full time jobs) aren't profitable? Based on the number of raging hormonal kids I have encountered across all spheres of subscription based games (Xbox Live being one of the chief source for easy age verification (thanks countless screeching children *shudder*)) I would surmise that a good portion of the subscription base profits come from low-income gamers. They are low-income because they are (usually) time rich, and the prospect of unlimited play within a month is an easy value proposition. The service is usually solid, and a lot of services play off the fact they have a huge install base and grew to such a size before free-to-play was even viable.

There is obviously still a market for subscription based gaming. WoW peaked at about 12m subscribers, dropped to about 9m, and then rose back up to about 10m as of their last earnings call. Can't really argue with the numbers on that point. People are obviously still seeing value in subscription if they are sticking around, or even coming back to it. Blizzard has been doing micro-transactions for quite some time as well on top of their monthly fee. These usually revolve around some "elite" status pet/mount/title/whatever that increases the users sense of in-game value. It is no wonder then that a lot of their retention tactics revolve around offering "free" digital incentives (something a regular subscriber might have to pay for) to returning players that pay again. In this sense, it is somewhat ironic you use the wording
We will not see another WOW, and the micro-transaction model is to blame.
because the fact we have continued to see WoW be as big for as long as it has been is largely because of a micro-transaction model...

Posted:3 years ago


Abraham Tatester Producer

76 76 1.0
Rob, I'm glad you wrote this article, but I feel the need to quote a well-worn American expression—perhaps you Brits are familiar with it as well: "Duh!"

If you really want to "call a halt to the pointless 'zero-sum' debates that blighted 2012," please stop running a story every time some dev or suit opens their piehole seeking to push their own agenda that "tablets will kill console gaming," "phones will kill handheld gaming," and "phones will kill console and PC gaming." Reporting nonsense is not journalism—it's PR. And this appears to have become a sure-fire way for these people to get publicity for their company, their products, and themselves.

This may sound corny in this context, but "if you're not part of the solution, you're part of the problem."

Edited 1 times. Last edit by Abraham Tatester on 22nd December 2012 5:11am

Posted:3 years ago


Craig Bamford Writer/Consultant

44 59 1.3
"Is Kindle the best way to consume books? Yes, undoubtedly." Really? Sez who?

Kinda given towards confident pronouncements of the contested and unprovable, aren't we?

(Me, I prefer print.)

Yes, industries can move away from one model towards others. Vinyl endures, but cassettes didn't, and there's every indication that CDs will follow them. There's certainly no specific reason in economics or common sense to believe that there should be a multiplicity of models when one is more profitable; common sense would actually suggest that most companies (if not all) would more towards that model, just as (say) companies tended towards gravitating towards the most popular console no matter HOW crowded it is.

I mean, come on. We have endless example of bursting bubble markets, including the American video game industry's own infamous crash of the early '80s, that prove that markets aren't necessarily always sensible and that they can stampede towards sub-optimal (or even hilariously terrible) models. You can argue that that won't happen, but you need actual reasons and evidence for that, not bluster. Otherwise you sound like the guys who were saying that the housing market would rise forever in 2005, or the people saying that the dot coms were sustainable back in 1997, or that tulip bulbs were a great investment back in 1636. Same deal.

Pride goeth before a fall, Rob.

(Oh, and by the by; rather a lot of people are very much afraid of streaming home video is doing to theatres. Those people are called "theatre owners".)

Posted:3 years ago


Craig Bamford Writer/Consultant

44 59 1.3
Oh, and Rob? Old trees do block the sunlight from new trees. That's one of the reasons old-growth forests look the way they do.

Posted:3 years ago


Andrew Ihegbu Studying Bsc Commercial Music, University of Westminster

490 219 0.4
WarZ had the fortunate advantage of having a great idea behind it. It's not seen as 'buying' to most, its seen as 'investing' å'la Kickstarter.

I've done it before, I dropped $120 on a Legendary Founders package for MechWarrior Online just to be able to play the beta (and that's a F2P game) simple because I loved MechWarrior so much that I had to try it. I'm happy that this article has been written, as it reminds me that people have been saying that PC gaming is dead since PS1 and broadband and probably further back than that. The fundamental difference for me (from the point of a player and not a maker) is usability.

For the same reason that I will read my emails on my phone/tablet but write my emails on my laptop, I mostly wont play games on my mobile device if I have my desktop or a console to hand. Usability. Maybe one day I'll start enjoying Fruit Ninja more than that aforementioned MechWarrior MMO, but by then I will probably be too old and senile to maintain a decent kill/death ratio.

That's not to say it isn't fun, I just can't love it like I love MWO, Halo, and my RPG and RTS collection.

Edited 1 times. Last edit by Andrew Ihegbu on 22nd December 2012 10:56am

Posted:3 years ago


Jason Pullara Podcaster

31 74 2.4
I love how everyone here loves to talk about the businesses and their value. It seems every single businessman here has forgotten that people and communities make their businesses succeed.

Oh well, we've been yelling about this "mobile is the new gaming industry" idiocy for years now on our podcast. Guess we'll be over here talking about how these businesses constantly fail because they don't understand what makes up their core audience. See you in 2013!

Posted:3 years ago


Daniel Amofa Account manager

7 4 0.6
I have said this so many times and I am finally glad that the "experts" realise that too.

Posted:3 years ago


JEAN-PHILIPPE ALLANGBA Studying Marketing Management, London Metropolitan University

7 0 0.0
"The forest grows ever bigger; the old tree doesn't block the sunlight from the new trees, the new trees do not strangle the roots of the old."
that kills all !

Posted:3 years ago


Curt Sampson Sofware Developer

682 540 0.8
Jeffrey Kesselman writes:

For instance, except for a few very specific niche products, anyone who has attempted to sell a web browser has failed.

This is true, but there are also counterexamples. Windows and MacOS still bring in heaps of money for Microsoft and Apple, despite there being very competitive free solutions out there. There's certainly no need to pay for an operating system in the majority of popular use cases, but people still do.

...will be replaced by schlock produced as cheaply as possible in order to get the customer in the door and creating micro-transactions. We will not see another WOW, and the micro-transaction model is to blame.

While people are certainly trying to do this, the bad is not driving out the good. Take World of Tanks as an example. This is a game where virtually everything is available to you without paying any cash at all if you're willing to spend the time playing to grind the credits you need to purchase stuff in-game. It's also a very high quality game. How can this work?

The secret is in price differentiation: you need to make a certain amount of money to fund your development, but you don't need to distribute the load equally amongst all players. The $150 I've put in to the game since I started playing a few months ago is carrying three or four other players who've contributed little or nothing. This works because I earn enough that $150 for the amount of entertainment I've had and will have is a reasonable trade for me.

Posted:3 years ago


Aaron Brown BA Computer Science Student, Carnegie Mellon University

67 29 0.4
I agree with Rob, the zero-sum arguments are totally illogical.
I’m just happy that the industry expanded the way that it did this year. There are so many new platforms for games to thrive on. And there are also so many business models that developers can employ to make a profit. One isn’t inherently more lucrative than another. The freedom that developers have to experiment continues to grow, and it is the reason why I cannot wait to start working in this industry.

Posted:3 years ago


Phil Marley Creative Director, Lightning Fish Games

3 1 0.3
"While it is true that different media can certainly co-exist, thats not necessarily true with business models."

No, it isn't. But it can be. When I bought my first mobile phone, the cheapest contract you could get was £20/month PLUS a few hundred pounds for a phone. Then Pay-as-you-go came along. Then really cheap phones came along (you can walk into a high street store now and buy a phone - no contract - for £2.99 plus £20 of top-up credit). Surely with £5/month SIMs and £2.99 phones, no-one would even think of paying £35/month for an iPhone? And yet they do. Different options for different people who want different experiences.

Posted:3 years ago


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