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Free-to-play shutdowns risk a consumer backlash in 2019 | Opinion

Aggressive closures of underperforming free-to-play games has resulted in more virtual “property” being destroyed -- a backlash is looming

As the gold rush mentality gripped the mobile games market in this first half of this decade, countless businesses rushed to plant their flags in this space. From brand new entrants to long-time stalwarts of the industry, everyone was keen to own a piece of this rapidly growing new market.

The result was the appearance of a vast array of free-to-play mobile titles in a pretty short space of time, and the market quickly picked winners and losers. For every Clash of Clans or Candy Crush that became a cultural phenomenon and grossed tens of millions in monthly revenue, there were a hundred failures; games that never found an audience at all, or couldn't keep (or monetise) the audience they did find.

Most of those failed games are already gone, long since shut down by their creators, or simply abandoned and neglected such that the march of progress on iOS and Android rendered them unusable and deprecated from the app stores. Having failed to garner a devoted audience, these games departed without fanfare; they avoided tricky questions over how to manage an audience through the shutdown of their game simply by dubious merit of not having much of an audience at all.

"How do consumers actually feel about the items they 'own' in the game, and how will they react to serious instances of those items disappearing?"

As such, they didn't ever have to ask the question that has quietly loomed in the background of the free-to-play model from the outset: how do consumers actually feel about the items they "own" in the game, and how will they react to serious instances of those items disappearing with the game itself?

This is not, to be clear, a legal question. In most jurisdictions the question of ownership of virtual items in game worlds is fairly settled and very much in favour of the game operator. Rather, it is a question of reputation and expectation management, both for individual companies and for the industry as a whole.

Game shutdowns are nothing new, of course. Every game that depends on the operation of servers will inevitably disappear when those servers go offline (unless of course the server source code is made public, which is rare). This is a problem for several reasons, not least of which is the cultural loss of important milestones in the gaming medium, but it's never really caused a problem in terms of consumers feeling like they'd lost their property in the shutdown. People may have accumulated all kinds of high-level items in an MMORPG, but the business model was clear; you were paying for time in the game, not for the items themselves.

Free-to-play games turn that on its head in a way that's proved to be very effective and clearly very attractive to some consumers, but which creates an attachment to in-game items that may yet transpire to be a double-edged sword. In-game spend on items and currency creates a virtuous circle for developers in some regards; players who spend money in the game are easier to retain as customers, because the items they've bought trigger a sunk-cost reaction and make it much more psychologically difficult to quit the game.

"Why raise this now? Because 2019 could well be the year when this issue starts to break the surface"

On the other hand, if you're the developer of an underperforming game that you want to close, you now have the challenge of an audience that feels like they own items, purchased for real money, in your game -- items which you're now proposing to unilaterally delete.

Why raise this now? Because 2019 could well be the year when this issue starts to break the surface. Underperforming free-to-play games have been shut down for many years without serious issue, but the industry's standards for what counts as "underperforming" are unquestionably getting higher. There's a whole middle ground in the mobile space between hit titles and hard flops, an area in which several tiers of free-to-play game have been getting on reasonably well -- never making headlines, but quietly and consistently making some money.

This week, Robot Entertainment announced the closure of Orcs Must Die! Unchained, Hero Academy, and Hero Academy 2

This week, Robot Entertainment announced the closure of Orcs Must Die! Unchained, Hero Academy, and Hero Academy 2

A few different types of game fall into this little-discussed zone; those with small but dedicated audiences, often based on a licensed property of some kind and thus attracting more than the usual share of high-paying customers; those with large but very casual player bases, which are popular but don't monetise well for various reasons (this includes a pretty decent segment of the kids free-to-play market, which is understandably more circumspect in its monetisation approach); and finally, the big hit titles of yesteryear, games that did very well for some amount of time and then, for various reasons, descended the download and revenue charts to end up rubbing shoulder with the mid-tier titles.

If you're a small company operating a few games like this, you can probably make a decent living out of it. You'll never have Supercell's billions or Niantic's headlines, but you can keep the lights on and the salaries paid. However, if you're a bigger player and you've got games like this, their days are numbered, and that's the situation that seems to be coming to a head.

"Mid-tier mobile titles are about to run into the cold logic of major companies' opportunity cost calculations"

Consolidation is inevitable after any gold rush. Some degree of that has already happened, but there's likely to be an acceleration in 2019 as a lot of larger players (publishers and license holders alike) give the thumbs down to mid-tier titles that have thus far survived the chop by virtue of keeping their heads down and not filling balance sheets with red ink. Just like the fate faced by mid-tier console titles over a decade ago, mid-tier mobile titles are about to run into the cold logic of major companies' opportunity cost calculations. These games may not be losing money, but they'll also never make serious money, so the resources behind them could be better employed trying out new things that might actually be hits.

If this hypothesis is correct, and certainly it seems to be the way the wind is blowing, then it's going to have a powerful impact on the discussion, or lack of discussion, around players' perceived ownership of in-game items. Think about it in purely empirical terms; a larger, more popular game shutting down, even if it's still only a mid-tier title, will naturally result in the "destruction" of a vastly larger amount (both in terms of simple counting and in terms of dollar value) of virtual property than the shutting down of failed games ever would. While, as previously mentioned, there's no serious debate over the legality of that action, there's also little clarity over how consumers will react. Previous instances have all been on a much smaller scale and had no opportunity to boil over into a large-scale response.

The severity of that response could be one of the toughest tests the free-to-play model has yet faced, because if developers are forced to consider their responsibility for "looking after" the in-game items they sell, that changes the entire calculus around the business model itself. The problem is exacerbated by timing; the loot boxes controversy is far from over, and has drawn a huge amount of media, public and regulatory attention to how the industry sells virtual items and currencies to its customers.

While that baleful eye continues to sweep across the industry, it would be best not to incite further consumer outrage by drawing attention to what happens at the other end of the conveyor belt, where all those expensive items are summarily deleted by the game operator once the game overall is no longer sufficiently profitable. Legal and above board it may be, but this has never really been debated or discussed in public, instead being swept away in boilerplate legal disclaimers and click-through EULAs -- and the headlines practically write themselves.

How to better handle these situations is a tricky problem. No operator can be expected to keep running an unprofitable game just to maintain consumers' in-game items, after all. But in the absence of public acknowledgement and consent for that, the outcry over the destruction of virtual property is a new industry headache just waiting around the corner this year.

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Latest comments (13)

Nick Parker Consultant 10 months ago
Small developers need to adhere to strict business plans that are achievable and reflect the quality of games and realistic financial returns to maintain profitability. They do not need to reach for the stars but should balance control of staff and marketing costs with achievable sales; if that means a $100k budget to reach a net revenue opportunity of $250k and provide some cashflow to underpin further developments, so be it. Overly ambitious and unrealistic development plans have killed many a company.
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Stanislav Stankovic Game Designer, EA Mobile10 months ago
Well arguably most F2P games get shut down because they don't generate enough revenue. The game dos not generate enough revenue since players do not make enough purchases of whatever virtual items the game sells. If players are not purchasing very many things there cannot be very much sense of lost ownership. A lot of these purchases (not all) in a lot of F2P games anyway revolve around consumable virtual items.

Also individual players (even spenders) routinely abandon games after some time, regardless how much they had spent. In fact much of art of game design of F2P games is about retaining existing players (especially spenders), i.e. fighting just the opposite sentiment, where sense of ownership of already purchased items is not enough to keep players playing the game.

In fact number of churned players of any F2P game that is facing a shutdown is usually quite a bit bigger than the number of players that stick with it to the bitter end.

I am not saying that danger is not there, just that there are reasons why we don't really see it more often.
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Alex Game Designer & Developer 10 months ago
"it would be best not to incite further consumer outrage by drawing attention to what happens at the other end of the conveyor belt"

Yes, we wouldn't want to draw attention by writing articles on the matter now would we...

Consumers can point to this and feel entitled to these virtual items, so I feel you are in a sense creating the bedding for the "looming backlash around the corner" ala the streisand effect.

It's like going up the micorphone at E3 and saying to all the gamers "Don't think about the virtual items you purchased being destroyed this year". What do you think will come to mind?
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Show all comments (13)
Alex Game Designer & Developer 10 months ago
"it would be best not to incite further consumer outrage by drawing attention to what happens at the other end of the conveyor belt"

Yes, we wouldn't want to draw attention by writing articles on the matter now would we...

Consumers can point to this and feel entitled to these virtual items, so I feel you are in a sense creating the bedding for the "looming backlash around the corner" ala the streisand effect.

It's like going up the micorphone at E3 and saying to all the gamers "Don't think about the virtual items you purchased being destroyed this year". What do you think will come to mind?
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Hugo Trepanier Game Designer, Behaviour Interactive10 months ago
You will see bigger issues with companies unexpectedly shutting down and ending support for live games immediately and without warning.

For companies that can remain afloat a little longer, what you will typically see, and this is already what happens to many current and past mobile games, is a natural decline in spending player population. When a game loses that critical mass of players (paying or not) the developer will simply ramp down support for the game, which in turn will increase the game's natural decline, up to the point where it is left more or less "dormant" for some time.

In the end, few players will be left to be angry or bothered by the eventual shutdown. The graceful exit will imply the developer warns its loyal fan base about impending shutdown, giving them ample time to spend remaining credits and enjoy a few last rounds, before final closure.

The key here is deciding when to pull the plug and how to inform the audience. This can be done without concern of a massive player revolt, unless the developer (or publisher) handles this mercilessly.
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Eddie In Product Manager - Games, Mobile, Boss Fight Entertainment10 months ago
Korean publishers have a robust series of policies regarding refunds and end-of-service procedures. In general, the rule is that if you've used a purchased item, then you've gained the benefit from your purchase and not entitled to compensation when live service ends. When you process refunds for a Korean MMO, usage is deducted. For example, if 6 out of 14 days of a time limited item is used, the consumer would get 8 days back roughly. I'm inclined to think that if the rest of the world adopted similar measures that publishers have done "enough."

That aside, the article also touches on the idea that virtual items have value and that users have some ownership. See the Korean Supreme Court ruling that basically neutered NCSoft's EULA in favor of gold traders. This throws our current discourse regard loot boxes into interesting directions: 1) General legal position of publishers is that digital items have no monetary value, 2) If users have ownership over their items then the trading ecosystem surrounding Valve games isn't gambling (like the Netherlands commission suggests), it's e-commerce.

Last point, this argument can extend to iTunes collections, UltraViolet movies and other media as well. Granted, small scale games have a higher likelihood of going under than iTunes but the concept is still the same - what will Apple do about my iTunes collection?
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Bob Johnson Studying graphics design, Northern Arizona University10 months ago
I don't think anyone cares lol.

99% aren't paying for these games right? Or some huge percentage aren't contributing any money.

so the uproar isn't going to be big to start with.


Next these are throwaway games. I feel vast majority of the few plaeyrs putting money into these games are on to the next thing already as it is.

That leaves very very few have recently put money in a game that then ups and closes shop. And in those cases one can probably contact Apple, for example, and ask for a refund and have a decent chance of getting one.


Then I guess to me one knows that one is spending their money frivolously in the first place if they put money into these games. One knows the "high" is rather temporary or that you're really spending money for a short-term "high" and once done you are on to the next thing. And as someone said money spent is usually for upgrades of the moment like to shorten the grind or to get the item of the moment.

Edited 1 times. Last edit by Bob Johnson on 11th January 2019 6:13pm

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Alex Metzroth President, VGMarket10 months ago
@Bob Johnson:

This is an ill-informed opinion. You need to be careful about the way you frame opinions regarding the development of and consumption of games, F2P or otherwise, if you intend to enter the space as a graphics designer. You will generally not be responsible for Marketing and PR, thankfully, but you should still have some empathy for the customers keeping the lights on.

Regardless of how many players churn from a F2P title, whether it be on D1 or years in, the only way the title succeeds is through monetization. These days that is generally achieved through in-app purchases (IAP), rather than the ad-heavy models of the past. Even consumables can be argued to be "owned property" past their expiry, because they were purchased with the intent of progression and/or content completion. You can bet that the small percentage of mid-to-high spenders in these games (who account for the vast majority of revenues) will be upset when a game shutters on them with little or no warning.

It takes a lot from a developer to create a F2P game worth spending in. Critical mass is a huge part of this. The 95% of players who spend little or nothing in a F2P game still create the word of mouth marketing opportunity that is necessary for the spenders to participate. That means the game needs to be fun whether or not you pay, and fun enough that you would preference the title over others, spending time and/or money in it. This means a lot of money and time invested by the devs to get to a point of opportunity, which doesn't even guarantee any level of actual success. Here is where I plug contracting consumer research services as a mandatory part of the development and marketing pipeline, before you end up throwing good money after terrible.

I hope you see that there are deep investments of time, money, and emotions, on both sides of the game. Whether or not you agree with my opinions, please be mindful and avoid sharing false stats and half-baked theories in the future. The "uproar" will certainly be big, even if the population is small.

Edited 1 times. Last edit by Alex Metzroth on 11th January 2019 7:28pm

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Ian Griffiths Product Owner, Hutch10 months ago
I feel like this website is becoming really anti f2p and I'm really not sure why.

It's really sad when studios have to close, no one goes into business or running a live ops game with that in mind. Cases where a studio closes a game rather than being forced to close are generally required to refund purchases within a time limit and/or allow for a minimum amount of usage if they don't want to refund any purchases. I don't know the specifics because I'm not a lawyer.

When I think of my digital purchases, be that game items, movies or music, lots of them I never actually come back to. For most of my digital purchases I got the enjoyment out of them, I don't want to go back to them irrespective of whether the service remains active. The value of meaningful items isn't in their presence, it's in their usage. I think that as long as developers are upfront and give players enough time with the game before a closure, combined with an awesome send off, like they did with the Matrix Online, then players can generally leave with a sense of fulfillment and closure.
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Bob Johnson Studying graphics design, Northern Arizona University10 months ago
@Alex Metzroth:

Nonsense.

Did I argue there isn't money and time and work and thought invested in making successful F2P games? No. So dump the strawmans. Get off the soapbox.

I just said people don't care that much about how long their F2P items last. They really don't.

The most successful F2P games are also the least likely to close without warning. Another reason that the lifespan of digital items is not a big concern.

And most F2P purchases are rather temporary. You pay to reduce a grind. You pay to get a skin. You pay to get some assignments to work on. For all these types purchases, the value is extracted almost immediately. As someone pointed out, other countries consider the value of your purchase to be extracted once you use the digital trinket.



Does this mean it is wise for a company to close shop on their F2P game without warning? No. It isn't good business.

The companies trying to build a name for themselves or that have a name to protect will want to try and be as fair as possible because doing so keeps their brand intact.

But obviously some games are not successful and even if they give the person a 30 day notice, the customers are still going to lose their digital items. That's just the nature of the beast.
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David Cornelius Software Engineer, Dire Wolf Digital, LLC10 months ago
@Bob Johnson: Have to say I strongly agree with Alex here. He didn't take your words out of context or construct a strawman from your statements. Most of your post's assertions are emotional statements and project your own feelings onto incredibly vast and culturally diverse player-bases. The fact that you call F2P titles "throwaway" reflects your negative views on the genre. I would encourage you to spend some time to read the actual responses of players invested (emotionally and financially) in a discontinued F2P title, rather than applying your own values.
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Bob Johnson Studying graphics design, Northern Arizona University10 months ago
@David Cornelius:

EVerytime someone gives me some vague lecture on the intenets about something it's them that are doing the very thing they accuse me of lol. In this case, it's your post that is purely emotional. There is no reasoning in it. IT's you lecturing from your soapbox as if someone appointed you the authority on these matters and absolved you of having to show reason.
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David Cornelius Software Engineer, Dire Wolf Digital, LLC10 months ago
@Bob Johnson: If you feel lectured by my post I am sorry to hear that. I think it was fair to say you are applying your own assessment of the situation to all F2P game players, as shown directly here:
" I just said people don't care that much about how long their F2P items last. They really don't."
While you may not care about the ephemeral nature of your F2P purchases, I can assure you if you were to read some of the reactions widely available online (Reddit, Twitter, etc.) around when a F2P title is shut down, you are going to find a lot of different reactions. "Eh, I didn't really care about how long my investment lasted in this anyway" is definitely one possibility, but far from the majority. I've observed the shutdown of many F2P games, both out of an intellectual curiosity of how players would react to this new paradigm, and sometimes as a player of the title. Marvel Heroes, Paragon, Wildstar, Hero Academy 2, etc. It may seem surprising that people would be angry for losing their emotional and financial investment in a product that was never meant to exist forever, but let it never be discounted the ability of the human psyche to acknowledge an inescapable outcome (that a F2P title is going to shut down eventually and any purchases made should be treated as temporary) while being completely surprised when it occurs (when the game closes).
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