Three Worlds: Monetising the MMO

The Elder Scrolls Online, Wildstar and Rift - three different solutions to the same thorny problem

Monetisation. The rise of app stores and the emergence of new, low friction business models have made this divisive term one of the prevalent issues of recent times. Every game needs to make money, from the earthiest indie to the most high-falutin' blockbuster, but the concept of 'monetisation' has started to creep into the general discourse in unpleasant ways. It is now a staple of public-facing statements issued by executives and developers, a constant reminder of the ambiguous connotations of the term 'consumer'. A recent article on Gamasutra about coercive monetisation techniques was met with a polarised response, but its statements aren't too far removed from those released into the public arena week-in, week-out. If anything, it just hit a little too close to home.

For the industry, this is a painful Catch-22. The general trend towards business models that drip-feed revenue in small, relatively painless increments has been motivated by a number of factors; some of which are self-inflicted, but in general it has far more to do with the needs of the customer than corporate greed. And yet many in the core audience find the accoutrements of free-to-play and micro-transactions distasteful. They rail against the sense of being nickled and dimed, even when the factors that cause that feeling are ultimately saving them money. And yet the subscription model - far closer to the traditional ideal of paying a fixed price for a fixed product - has fallen dramatically and obviously from their favour.

"I don't think there's ever going to be a time when we think this is the way a free-to-play game should be made and has to be made or you're gonna fail"

Simon Ffinch, Trion Worlds

If there is a battleground for this conflict it is the MMO, where game after game has shifted from subscriptions to micro-transactions. One of the latest, though almost certainly not the last, is Trion Worlds' Rift, which was launched to general critical acclaim in March 2011. According to Simon Ffinch, design director at Trion, the decision to embrace free-to-play was not taken to avert commercial disaster, but to provide its "robust and loyal" fanbase with a better experience - a recognition that the "massively multiplayer" aspect of the MMO is vital to the genre's success.

"It was doing fine," Ffinch says. "There was no moment where we thought we had to go free-to-play or Rift was gonna die. That absolutely was not the case. We just wanted to open it up to more people, and this is just the way the market is going. We didn't want to be behind the curve, so to speak."

In fact, Trion pre-empted the move in February last year with the launch of Rift Lite, which made the game free up to level 20. "It worked great, but it's not the same as saying it's free," Ffinch says. "The word 'free' is, well, it's magic. That's what brings people in.

"I've seen a lot of games make the transition, and some have done it better than others. We wanted to make sure that all the content was always going to be free. The things we're going to sell are things that players want, but not things that are required in the game. MMOs are better when you have tons of people. We had tons of people already, but now we have tons times tons."

But if the transition has produced a positive outcome - for now, at least - it isn't because Trion has done anything particularly daring or original. When I ask Ffinch about the guiding principles behind Rift's more accessible model, he lists several ideas that are quickly becoming part of an orthodoxy of free-to-play: avoid pay-to-win, no egregious time-gating, monetise cosmetic and convenience items, and so on. If you have read coverage of any game making this kind of strategic shift in the last 12 months that list is likely to be immediately familiar, and it begs the question: after so much talking, are we finally reaching a point where a definitive framework of the 'right' way to handle free-to-play has started to take shape.

"We're getting closer to that," Ffinch replies, "but we're not yet at the point where we've established a way that it should be done. And you know what, the thing that's so amazing about the games industry is that when we think we've reached that point, somebody will do something that's completely different.

"I don't think there's ever going to be a time when we think this is the way a free-to-play game should be made and has to be made or you're gonna fail. But I think we'll reach a way that the majority of people do it."

"There's a reason why a lot of the free-to-play games aren't making money, and that's your costs don't go down a lot if you're free-to-play"

Jeremy Gaffney, NCsoft

However, with so many games following a broadly similar network of conventions, it could be argued that we're closer than Ffinch is willing to let on. It's not hard to understand why: the push-and-pull of games struggling with free-to-play is so frequently problemtaic that developers have obvious incentives to demonstrate that they don't have one hand on the mouse and the other in the consumer's back-pocket. Finding some kind of standardised harmony between business model and game design would serve that end, and is therefore desirable at the very least. However, according to Carbine Studios' Jeremy Gaffney, whose substantial experience with online games is difficult to rival, any such homogeneity is not something to be celebrated.

"There's an interesting phenomenon, which is not very many games actually make a ton of money, and with the ones that do you'd have to squint really hard to find two with the same business model," he says. "In the Western market, World of Warcraft is the subscription king, and EVE Online is a subscription model with modifications. World of Tanks is free-to-play, but the way they do it is different to Maple Story and the Asian games. You can't point to any one thing that's dominant in terms of revenue."

To put a finer point on the matter, it isn't that every single MMO or online game employs a radically different model, but that the developers imitating the success stories tend to make far less money - if they make money at all. This is where the pitfalls of emulating the approach of a competitor are found, particularly in games shifting from their original model to one based on micro-transactions. Gaffney believes that when a game is designed with a model integrated into its structure on the most fundamental level it can work to the benefit of all - step forward League of Legends - but MMOs are an expensive business, and more players doesn't always mean more profit.

"There's a reason why a lot of the free-to-play games aren't making money, and that's your costs don't go down a lot if you're free-to-play," he says. "Your users still use bandwidth and take up servers, and you'd better still be adding content into the game. Not many of your costs drop by going free-to-play, but your user count goes up dramatically. What that means is you get more revenue and less profit, often to the point of [making a loss]... But you've got to profit at the end of the day. It's what you're in business for."

Ultimately, Gaffney believes that the games business is driven by innovation, and in MMOs the business model is now a crucial point for original thinking. An MMO does not find an audience through the sort of flashy claims normally found on the back of a plastic box, but through getting "the meat and the potatoes" of the experience right. Increasingly, the meat and potatoes of an MMO involves the balance between playing and paying, and there are myriad ways that balance can be struck - and myriad ways to get it completely wrong.

"Boxed games are a horrible business to be in, because 9 out of every 10 fail. It's the same with MMOs, but the number of variables in boxed games is much higher"

Jeremy Gaffney, NCsoft

Carbibe's latest MMO, Wildstar, has taken a more idiosyncratic approach to monetisation than Rift - a combination of free-to-play and subscription that aims to avoid reliance on micro-transactions through a player-driven economy. It is the sort of risk that Gaffney believes must necessarily be taken in the ongoing search to find non-abrasive ways to monetise - the sort of risk that could propel Wildstar to the sort of success that so many recent MMOs have failed to attain. In that sense, Gaffney explains, Wildstar is an anomaly. It is increasingly difficult to find a publisher willing to entertain an MMO model that breaks from established approaches to subscriptions and free-to-play.

"Depending on who you talk to World of Warcraft had a $65 million budget, and budgets have only gone up since then," he says. "It's tough to go up to your boss and say, 'Hey, I'm gonna take $100 million and do something that's never been done before and, trust me, five years later you're gonna get something awesome out of it.' You get conservative when budgets start to get that high, but that's a mistake, because the second you stop trying to break new ground you get in trouble.

"Boxed games are a horrible business to be in, because 9 out of every 10 fail. It's the same with MMOs, but the number of variables in boxed games is much higher... With MMOs, at least [success] maps more or less 1-to-1 with game quality. There haven't been, I would argue, a lot of quality games that people have tried and were like, 'Nah, the hell with it' and stopped paying. Why would they? If you did a really good job of making levelling fun and making your elder games fun, why do people tail off? I mean they can - the invisible hand of Adam Smith tends to go and move the market around - but for the most part I like this market because it's so tied to good games."

And Gaffney is clear about one thing: a subscription model is the most effective way to realise certain notions of what an MMO should be. He knew that the economics of the modern industry demand that the player be given options, but he also wanted Wildstar to offer a sense of scale and balance that only consistent revenue and no strong reliance on micro-transactions can provide.

"Retention is where the money is at," he says. "In China, there's a billion MMOs and they're all fighting for space, and the ones that rose to the top used to update every three or four months," Gaffney says. "And then some innovator did that every two months, then once a month, then two weeks. Now, the biggest games over there update weekly. If you want retention, that's one of the ways you can do it. That's League of Legends - every three weeks, Bam, new champion. That's the stuff that separates the haves from the have nots."

The other example Gaffney offers is World of Warcraft, and in doing so it becomes increasingly clear how Wildstar's business model took shape. Not every game will build an audience on the scale of WoW, or see as much return on letting people play for free as League of Legends, but a balance between these two poles might provide the most benefit for all parties. As Gaffney rightly points out, "Nobody loves a business model, but everybody hates at least one."

But which one do people hate the most? It would be easy, and very possibly correct, to point to free-to-play and intrusive micro-transactions, but it should also be clear by now that there is an equally widespread - though not nearly as vocal - public distaste for subscriptions. With The Elder Scrolls Online, ZeniMax is making a strident bet against that being the case. The reasoning goes something like this: people loved Oblivion and Skyrim, buying them by the million at $60 a time, so an Oblivion or Skyrim that lasts forever would offer enough value to persuade millions to part with a monthly subscription.

"With an IP like this, it comes with certain expectations," says Matt Firor, the head of ZeniMax Online Studios. "It's an Elder Scrolls game. This is the way you play it. With other models, you have to change the way its played or the rules to facilitate new forms of monetisation. I'm not doing that with this game. I can't. No Elder Scrolls player would ever accept that.

"We really did look at all of the alternatives, but we were building it to be an Elder Scrolls game... If we'd started out with another business model in mind, it would not have turned out that way."

"we were building it to be an Elder Scrolls game. If we'd started out with another business model in mind, it would not have turned out that way

Matt Firor, ZeniMax Online

In a sense, The Elder Scrolls Online's choice of business model was informed by the same factors that guided Gaffney on Wildstar. Firor understands that a lot of people regard the IP as a solitary experience, one defined by the exploration and discovery of a completely open landscape. While there will be multiplayer content and options, it is imperative that the game accurately evokes the experience of playing Oblivion or Skyrim. That means there should always be something new quests and locations to find, and that those quests and locations should be worth finding. That requires time and money, and that's harder to guarantee with free-to-play.

"This isn't a referendum on revenue models for other games," Firor says. "For this game, it's the right decision, mostly because of the expectations that come with the IP. When you're playing the game, you're playing the game - you're not worrying about pay gates or whether you have access to some content. We really feel that paying once a month and not worrying about all of the other monetisation things, that's what will appeal most to the Elder Scrolls fans."

Is this asking too much of the modern gamer? Even for the Skyrim crowd, there is surely an expectation that MMOs now generally cost nothing to play at first. Once someone starts to give a product away for free, it becomes far harder for a competitor to charge for the same basic thing. Wildstar at least gives its players an option, but Firor is confident that the strength of the Edler Scrolls IP - and the fact that the beta has seen more than 3 million registrations - will be enough to make its single-minded approach work. "It's a big deal," he says. "Free-to-play is out of the window with that."

Of course, the last MMO on this scale with so much confidence in subscriptions was Bioware's The Old Republic, and the Star Wars IP is no lame duck. But the announcement is now made, the wheels have been set inexorably in motion, and all that remains now is the all-important launch. Firor claims that ZeniMax is ready as it is possible to be for the "massive IT exercise" of releasing a persistent online game - a challenge that has defeated companies the size of Blizzard and EA - but he admits that guarantees are impossible to make.

For Gaffney, that's a huge risk, regardless of any rigorous supporting calculations. If there's a way for people to play for free, there are more ways to bounce back. If there isn't, you need a strong start. The entire game need to be in place and fully functioning at the moment of release.

""It's not like [subscriptions are] dead, but there's a barrier: you only have a month to make your case. When games come out and try to fit in the end game stuff after launch... Nope, you got a month, and guess what? You're gonna be running like a monkey on meth amphetamine for the course of that month, so you won't have the time to cram it in. You'll be running around and fixing whatever thing went horrible wrong at launch.

"And something always goes horribly wrong at launch."

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Latest comments (10)

Klaus Preisinger Freelance Writing 8 years ago
There is a fourth way, the Guild Wars 2 way. Just sell the damn game and do some microtransactions that don't alienate players. Look no further than NCSOFT quarterly reports to see that is worked rather well in the first year since releasse with 3.5M players and lifetime revenues approaching $200 million.

Edited 1 times. Last edit by Klaus Preisinger on 5th September 2013 9:13am

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allow customers to choose, why not allow them to pick what model works for them?

Offer a traditional box and sub rate for people, those people will have access to everything in the game, all content, and everything in the stores are free to them. SO they pay and then no nickel and diming

others can choose (F2P) pay to play, where access is free, but cosmetic and convenience items in store can be purchased etc

Why limit the way to pay .

Edited 1 times. Last edit by Todd Weidner on 5th September 2013 4:50pm

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Mixing a micro transaction model with a subscription model is a curious business. If sub is $15, and that gives you access to everything, then you are lowering the cap on a good % of your f2p offerings; why would you spend more than $15 in virtual goods if you can simply spend the $15 and get more for less.

If you segment certain offerings that are only sold as virtual goods, then you are now alienating the subscription buyer.

The way I see it, these 2 shouldn't be put to bed together unless each reigns a completely separate game system. For example, the game world, lets call it the PvE world could operate as free to play, but you offer a subscription for access to battle grounds, or a mobile app for managing guilds, with chat, etc (just an example). This sub would have to be smaller, like $5-7 bucks. It taps into recurring revenue and it also helps you combat churn.

Otherwise, yes, I would say Guild Wars 2 found a way to do it, which WoW also does to a lesser extent. Sell the game and frost it with micros. Honestly, if a game isn't a strong IP such as Guild Wars or Skyrim, I would bet it wouldn't work as well, because micros in a sub model feel to me as a player like double dipping. So sure, someone will probably buy, but does it outway the value lost from a potentially walking away for the same reason? I know I walked away from Guild Wars 2 for this reason. Sure they still make a lot of money, but how do you know if it was the best possible business model. You can't and you don't, and that is why business is so damn fun; there's always the possibility for more, for better.
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Show all comments (10)
Tim Ogul Illustrator 8 years ago
Calling Wildstar's system in any was "Free to play" is a bit disingenuous. Someone is always paying, you just might be able to have your own subscription get paid by becoming a privateer gold farmer for Carbine. They're trying to corner the gold farmer market by weaponizing their own players, which is an interesting way to do it, but it's definitely not "free."

I had a thought when reading about how Zenimax thought that they couldn't "monetize" the Elder Scrolls universe. I thought to myself, what if certain types of ingame benefits required you to use extra-planar matter to access it, like the Daedric stuff. Then I thought, have there ever been a F2P MMO in which they've actually worked the cash shop into the lore? Like in any good fantasy game, the player is a "hero" someone with traits that put him above the mortal rabble.

Could you make an MMO in which the player's defining heroic trait, his "superpower" is that he has access to some powerful extra-planar resource that NPC mortals lack? Imagine if mana really existed, as a power source in some other universe, and only you could draw it into this one, which would allow you to do all sorts of fantastic things. What if that mana, in that other universe, was called "US dollars?" What if the game were designed so that you could play it for free, but doing so you would be a fairly mundane character, but if you spent some money, you could use that money to fuel all sorts of fancy superpowers within the game.

Sure, there'd be a pay to win element involved, but it would be an integral part of the game's lore. I think it might be possible to balance it in such a way that players wouldn't be too put off at the idea.
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Abraham Tatester Producer 8 years ago
Honestly, if a game isn't a strong IP such as Guild Wars or Skyrim, I would bet it wouldn't work as well, because micros in a sub model feel to me as a player like double dipping.
But Michael, GW2 doesn't have a subscription. Surely, if you "walked away from" it (which suggests you played it), you would know this.

At the same time, I tend to agree. Unless all the cash-shop items they sell are cosmetic (and not gameplay content or pay-to-win boosts) combining a microtransaction monetization strategy with a subscription fee seems...dangerous. Even for a big-name IP.

Edited 3 times. Last edit by Abraham Tatester on 6th September 2013 6:03am

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This is an interesting article. We've been working at Games Analytics to define good practice for Free 2 Play. There is good and bad ways of doing this and if done well you get a committed user base. Games have always about monetisation (ie making money), the difference now is we can better understand why some games work and some don't.
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Brian Lewis Operations Manager, PlayNext8 years ago
I believe the article is fair, as it is based on the statements made by the parties involved. However, that doesnt make anything that they have said true. If you have talked to Rift at launch, they would have given the clear ' We are never going F2P' speech. The same could be said of SWTOR. These are but two examples of how companies had very clear, and firm belief's in what what was right for their product, and what would work best.... and were clearly wrong.

Rift is going F2P because the gaming envoirnment has changed, and they need to change with it. There is no shame in adapting to these changes. However, the public statements show that they didnt understand the market when they launched the game, and only conceded to change after trial and error.

I believe that The Elder Scrolls Online is making the same mistake. They are just making a choice that they believe is right, because they dont really know what they are doing. The only question is how much time/money/players will it cost them.

Wildstar is being a bit more shrewd, and hedging their bets. They are going to be in a good place to convert to F2P if needed, and will be able to maximize the revenue from both models (P2P initially, F2P in the long haul).

There is another game that is launching, that has taken the classic P2P model, Final Fantasy XIV. They look to be trying to build a game that will be sustainable via a monthly sub. They are clearly willing to spend time/resources to make this a good match, and I hope that they succeed. The market needs to have variety, and a dedicated developer should be able to make a game that is sustainable with either business model... if they are willing to put in the effort.
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Tim Ogul Illustrator 8 years ago
I'm a bit more cynical than that about any game going subscription in 2014. I think that they know the sub model is doomed, but that it works as a good short term cash grab. I don't think the calculation is that they can genuinely run as a subscription game for the long run, but rather that they can get a small number of subs for at least six months or so, and then go F2P, and the number of players they lose through this that won't come back when they do go F2P will be offset by the money they make over the short term near launch. I think that's a more reasonable expectation than to believe that they can genuinely ask a subscription fee of a significant player population. The latter would require either a great deal of foolishness or a great deal of hubris.
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Justin Trautmann Studying Digital Media & Multimedia Technology, Hillsborough Community College8 years ago
Yeah, I'm really confused that any conversation these days about MMOs can be made without including Guild Wars 2. That should be any companies benchmark on how to do business - unless of course there is some hidden agenda or crazy conspiracy out there I am unaware of.

If so, please make an article about it. I need to know if I have to reinforce my tin-foil cap or not.
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Daniel Stahl Executive Producer, Cryptic Studios8 years ago
Star Trek Online has enjoyed life as a subscription-only game as well as a F2P hybrid. While this article is astute to say that there is no perfect model, I can say that STO performs much better as a Hybrid. Even subscribers are interested in MTs.

I'd argue that there is no such thing as a "pure" subscription model anymore. It seems that all subscription MMOs sell some additional product whether it is DLC, Expansions, Starter Packs, Services, or any other thing that doesn't come with the subscription. I think it remains to be seen what the benefit of *not* having a subscription provides MMOs. It will be interesting to see how Neverwinter compares to STO in the long run as Neverwinter is our first MMO without any subscription at all.

To say that you only have one month to get it right is not always true. We're closing in on our 4th year anniversary and we continue to see growth and opportunity as we learn and tweak. The best advice I'd offer to new MMOs is to be nimble and have great reporting tools setup. The thing you think will be a big success may not be the big thing. Analyze and find ways to adapt constantly. That is what keeps STO growing year after year.

Reinvesting in the game and growing it with expansions and larger updates is another form of retention that appears overlooked in this article. Not every game is looking to downsize or squeeze profit. Sometimes it is healthier to pour the money back into the game and make it better with every update. This helps you look at the game as a long-term play rather than a short term profit.

If however you are borrowing tens of millions of dollars to make an MMO and are stuck with a massive repayment schedule, you have my sympathy. For some games it is ok to start small and grow over time. STO has enjoyed great financial success and we started small and have grown bigger. You don't have to be a $100M MMO out of the gate.
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