$60 game model is "going to have to change"

Nexon sees the traditional publishing model fading away as free-to-play rises

Game budgets continue to rise with each successive console generation, and with the Wii U launching later this year, the industry is on the cusp of yet another costly transition. Publishers started regularly charging $60 for games this generation, but that's a model that simply cannot survive, Nexon America CEO Daniel Kim told GamesIndustry International.

The executive is naturally biased towards the growing free-to-play model, which is Nexon's bread and butter, but he's also on to something. Gamers are more and more reluctant to spend $60 and publishers are terribly risk averse when it comes to spending anywhere from $40-$100 million on a project.

"I think at some point the console makers have to make a decision about how closed or open they're going to be to the different models that are going to be emerging," Kim remarked to us in an exclusive interview. "Today it's free-to-play, and I'm convinced that that one is going to continue to flourish and expand into other genres and other categories, but there may be something else completely and entirely different that comes out that again changes the industry."

He cautioned, "If your mind is just set on keeping the current model of buy a game for $60, play for 40 hours, buy another game for $60, play for 40 hours, that model I think is eventually going to change. It's going to have to change. How they will adapt I really don't know, but I hope that they're aware enough to understand that the value proposition of free-to-play is not going to go away."

As Kim alluded to, the console makers - especially Microsoft - have made it a bit difficult to try out new business models. "Dungeon Fighter is being released as a Microsoft Xbox Live Arcade version of the game. But again we had to modify the game and the business model to fit their restrictions or requirements. It's not free-to-play, it's DLC essentially," he said. "Which is not really truly how we like to service our games, we like to service our games completely free-to-play, no limits, and earn the players' business by convincing them there's value in purchasing stuff."

Sony, on the other hand, is at least providing the ability to launch free-to-play content on PSN. Kim noted that seeing CCP's Dust 514 first-person shooter coming to PS3 as a free-to-play game is "encouraging."

All three console manufacturers definitely have plenty to think about as they prepare for next-gen. Those who are unwilling to try new business models may become the dinosaurs of a forgotten age of gaming.

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Latest comments (20)

Private Industry 10 years ago
DC Universe is already since a long time free to play on PS3 and while it works for some types aka everything thats only it would never work for offline games. I dont think the model will change too much. First of all the game price is steady at around the same since before the PS1 came out. Secondly as long as the games sell why would they change to free to play. That model basicaly rose from the ashes of all those failed MMO's because there wasnt enough money to make using the old subscription based model except for WoW. As long as the current model works and there is enough money to make why change it.
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Michael Smith Artist, New Moon Games Ltd10 years ago
I think there is a place for $60 games, or 42.99 ones here in the UK - but only occasionally.
So many times I've spent the full amount on a game, brought it home and finished it in under 10 hours. That's not value for money - which is something everyone is on the look out for these days.
I'm wondering if some (not all) AAA titles have too big a budget? Certain franchises churn out games year on year with barely a step forward creatively.
Look at some of the indie games that have influenced me over the years; Mount & Blade for example is one of the best games I've ever played, I got the demo when i was at uni years ago, got hooked, bought the license (as it was independent at the time and you couldn't get it in the shops) and i still play it to this day.
It was made by one guy. It's still being made by one guy only now he's paying the bills with it.

The fact is, with the increasing availability of technology pretty much anyone can get in on the act and knock out a half decent game - which is the best some franchises get anyway. And they do it for free compared to millions and millions of dollars...

But like i said when Skyrim came out - I loved it so much it was worth more than the asking price to me, so it's all relative anyway!

Just realised; M&B might have a few people working on that by now, but my point still stands!

Edited 1 times. Last edit by Michael Smith on 13th March 2012 6:42am

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Adam Campbell Product Manager, Azoomee10 years ago
I think games are a rip-off and should at most have prices closer to DVD and bluray. One of the main issues plaguing boxed products is the lack of money reaching the developer however after all deductions and divides..
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Bruce Everiss Marketing Consultant 10 years ago
Another very good article that faces up to the new realities of the market.

The whole reason for the existence of consoles, their strategic advantage, is that they provided a copy proof dongle for gaming and so they wiped out the home computers like the Amiga, that didn't. Now, with digital distribution, there are a whole pile of different business models that do not suffer from piracy so the whole rationale for the existence of consoles is going. They are hanging on by sheer inertia.

An important factor now is platform fragmentation. There are probably over 20 viable platforms to develop for.
This is where development tools like Unity become so important. A quiet revolution that has gone un-noticed by many.
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Craig Burkey Software Engineer 10 years ago
Personally I like the idea of hooking people in with a game hub at basic price and allowing the consumers to shape the game arround their own requirements
Multiplayer,Story missions,Co-op,Items,Costumes, etc.

However the backlash at Bioware for their implementation of premium content has been so irrational. I'm not quite sure consumers are ready.

One thing I think is a legitimate concern is the lack of a open market for these addons, the closest you get with the 360 is shopping arround for the best deal on points.
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David Spender Lead Programmer 10 years ago
This is where DLC has gotten us. Consumers are getting more used to the razor/razor blade model where the game is 10-20 dollars or f2p and all the money is made on the DLC. Game makers have been training consumers to buy this way in the past couple years and now it is starting to catch on.
What is ironic about this is it just seemed like yesterday that game makers decided to train the public to get used to the $60 price point. Can't have it both ways.

I think the backlash comes for two reasons: 1) consumers add up the total cost of 'shaping' their world and it comes to hundreds of dollars. 2) All the content is included in some special edition a few months down the road.
There needs to be some middle ground on both those points before consumers will really feel like they are getting some value for their money.

Edited 1 times. Last edit by David Spender on 13th March 2012 12:39pm

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Private Industry 10 years ago
I know you dont like consoles, but you should still keep in mind that this gen sold a combined amound of somewhere in the region of 350 million units not including handhelds and sales are still going very strong in all 3 main teretories.

Digital distribution isnt free of piracy and how many people can download 20+ gb in the next year per game? Not that many with the current infrastructure of the internet in the US and EU.

Also free to play isnt a model that can be used for singleplayer unless you want to charge the customer for each mission/level and weapon. We get it you like digital stuff and hate consoles, but that wont change the fact that consoles will also do very well in the future. If you dont want to work on them fine but keep in mind if the console market would colapse the games industry would be in big trouble again.

Regarding games should cost more like a DVD. A movie gives you entertainment for around 2 hours and a game even a short singleplayer at least 6 hours so you get at least three times more out of it and Movies they make money with cinema, boxed copies and than again with TV rights and unlike games you dont have to constantly maintain your full production team.
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Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.10 years ago
DLC is also not geared to every gamer. Would you as a parent be OK with your kid having access to your credit card every time they wanted the next mission or a new weapon?

Don't forget how consumers feel about DLC already being on the disc. To be honest, that's just rude. Asking consumers to pay more for content already on the disc is nuts. In fact, nothing downloadable about content already local. And as Werner noted, publishers love to released the GOTY or whatever marketing moniker they want to put on the label just to resell the same content with all the "DLC" unlocked.

The $60 model still works. What you need to do is work with platform holders and retail to generate different price tiers. We already have that to some extent. But going F2P - or what it invariably becomes, P2W (Pay 2 Win) - for everybody is not the answer. And you'll find that it will eventually anger more gamers than the $60 model ever did.
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Morville O'Driscoll Blogger & Critic 10 years ago
@ Craig

Another reason for the BioWare backlash is that it's shockingly poor communication. Having read the press release from Mike Gamble

( )

It really does read as though the game needed to be out as soon as possible (due to the financial year ending?) and that there wasn't time for the DLC to be finished. In which case, why not just come clean and say that? Instead, they obfuscated the truth, which just causes ill-will when everything is revealed.

Also, I must agree with the lack of an open-market with DLC; even on the PC there's little choice, and it only hurts the consumer. (Steam is a God-send in this sense, since it's another place to purchase DLC, which you can be sure the publishers would like to keep all for themselves).

Edited 1 times. Last edit by Morville O'Driscoll on 13th March 2012 1:15pm

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Massimo Guarini Founding Director and CEO, Ovosonico10 years ago
Funny how everybody still insists on the "60$ x 40hrs" VS "Free to play x 5 mins" diatribe, like there is nothing in between.
So typical of obsessive-compulsive market trends. Free to play or nothing. Social or nothing.

60$ is surely a high price tag when you compare it to other available entertainment forms, like music or movies.

But you don't need to be an industry guru to see that a 29$ x 6hrs high quality Game is and will be a totally viable business strategy. Like it or not.
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Morville O'Driscoll Blogger & Critic 10 years ago
@ Massimo

Absolutely agree.

What gets me is that people are still discussing tiered pricing without realising it already exists, just it exists in the console and PC download area. Look at Steam - look at how many games there are between $/7 and $/30. Look at PSN, with the same pricing bracket. There's less on the PSN, no doubt, but there's still an absolute ton of games (some from mainstream publishers, most not). It's obvious that there are publishers who realise they can't charge $40 for their game, but they can charge $20, and still make a profit.
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Jeremy Stein Game Designer, MocoSpace10 years ago
Totally agree with Morville and Massimo.

This already exists. The rigid $60 model has been dying ever since digital distribution platforms started taking hold of the industry. XBL, PSN, and Steam all sell a huge volume of new games at a variety of price points. Still, the console channels -- XBL and PSN -- aren't as aggressive or as creative as Steam when it comes to price points.

The notion that a title must be a full $60 or a smaller experience for $10 or an even tinier experience for free(mium) is already antiquated. And while this shift could mean the death of consoles, it absolutely does not have to lead there, so long as the MSFT's and Sony's of the world allow their platform and third party publishers to adapt to the new market realities.

Otherwise, Apple, Steam and the other emerging digital platforms will eat their lunch.

Edited 3 times. Last edit by Jeremy Stein on 13th March 2012 4:20pm

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Private Industry 10 years ago
PSN and XBL offer a wide variety of games from only a fee euro to full price with titles coming in at prices between 10 and 60 i.e. 15, 20 and so on. Sony doesnt say the price needs to be x amount. Digital distribution works so great on PC because you can hardly buy the games in store unless its a major release. It took me ages to find a copy of Sins of a Solar Empire. Game and Gamestop have a tiny little selection of PC games.

People also seem to forget that games didnt really go up in price compared to everything else despite the fact they are a lot more expensive to produce now than 15 years ago.

Apple wont do anything against consoles and while steam is good there a lot more games on consoles tham PC like almost all 1st party games from MS, Sony and Nintendo. So why would the console gamers change to PC where the hardware cost substancialy more and their favourite IPs are not available there?

Given all the comments from facebook, app, free to play devs and so on, one could think they feel threatend by the console market. Sure you need to promote the platform you work on but dont come up with outlandish comments like "we will destroy consoles". We where already there years ago and people always seem to forget that its always the same over and over again. All platforms are viable and at best apple is fighting against facebook but for sure not consoles. Would be interesting if Zynga would expand to mobiles because they go after a similar market.

Also I want to question the starement regarding Wii U as another costly transition. Except for Nintendo the devs make HD games since over 5 years and the reports of the power of the hardware dont show a huge cap between Wii U and 360 and PS3 so what exactly would be so costly? I could see it costly for Nintendo because they have no experience working on HD games, but why would it be costly for devs who make 360 and/or PS3 games for the last 5+ years? They have their engines, modelers, artists and so on already setup. They just need to port games to one more platform and that shouldnt cost huge amounts of money. Sure thats cheaper than having to make a seperate striped down Wii version where you cant use the same engine amd have to make new assets.

Edited 4 times. Last edit by Private on 13th March 2012 8:18pm

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Bryan Robertson Gameplay Programmer, Ubisoft Toronto10 years ago
Asking consumers to pay more for content already on the disc is nuts
Personally I'd disagree, I think that under certain circumstances, it's acceptable to charge for DLC on disk.

If the DLC was budgeted for separately, then the developer still has to make that money back. It's not uncommon for a game's release date to ship, such that what was originally planned to be post-release DLC can feasibly be put on the disk. The fact that the DLC can now be put on disk doesn't change the fact that the DLC's development has to be paid for. On the other hand, arbitrarily keeping it off the disk, so that end users have to download the whole thing is just silly. I'm willing to bet that this is exactly what happened with Gears of War 3's DLC.

It's also possible that a subset of the data for a DLC pack is ready at ship time, i.e. it's not likely to change between ship and DLC release, in which case, it's common sense to put it on the disk to save players' the download. e.g. A DLC pack has a new character, the character model is at ship quality and isn't likely to change between ship and DLC release, the rest of the DLC is not ready. It makes complete sense in that case, to ship parts of the DLC on disk.
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Morville O'Driscoll Blogger & Critic 10 years ago
@ Bryan

That's a fair enough way to look at it. But then, it needs some incredibly strong communication and developer loyalty to ensure the consumer is not upset by it. And, well... Communication isn't the industry's strong-point (Valve and CDProjektRed excluded).
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Tim Carter Designer - Writer - Producer 10 years ago
It's the gamers - not the business people - who will decide when the $60 game's time is up.
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Tim Carter Designer - Writer - Producer 10 years ago
More importantly than the lack of money reaching the developer (which is, after all, just another corporation)...

The lack of money reaching the core talent itself.
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Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.10 years ago
Bryan, I still don't agree with that. A game can get delayed requiring an increase in the original budget yet the game MSRP doesn't increase because of it. You also have the fact that people see your studio is working on the DLC before the game is even complete and then you want to charge extra for that...and it's already on the disc? The average consumer would be livid. I, and most in the industry, understand working on both simultaneously is simply an efficient use of man hours and resources but that should be budgeted into the original costs and offered for free a few months after launch instead of the current method (don't budget it and expect to make it back via DLC fees).

Like Morville said, you can't use the current DLC method of non-budgeting development, make it up with DLC fees and publish the content on the physical disc and expect consumers to be happy about it.

A lot of people flock towards mobile games because they don't feel like the developer is ripping them off. These are the people that are angry at tactics like paying extra for content already on the disc.
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Private Industry 10 years ago
The systen ate my comment.

What strikes me is the comment of costly transition to the Wii U. Except Nintendo other devs already have 5+ years experience of HD game development. They got their engines running and they got the experienced people. So I fail to see what would be so costly, it cant be more expensive to just port to another system compared to making a scaled down Wii version where you cant use the engine and need to create new assets.
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Jonathan O'Connor10 years ago
Guys whose business is based around f2p sees f2p as the way forward shocker
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