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Free Europe: The EU tackles F2P

F2P devs should welcome regulation - it'll prove that most of them are doing nothing wrong

Free to Play games continue to attract the attention of regulatory bodies around the world. Last year, Japan declared the "kompu gacha" system used by many F2P games to be illegal, leaving huge Japanese F2P publishers like GREE and DeNA scrambling to replace the lucrative mechanic in their games. Last month, the Office of Fair Trading in the UK issued a set of rules for F2P designed to improve transparency for consumers and prevent companies from targeting children. Now, the European Union has turned its attention to the sector, raising the possibility of strict regulation across one of the largest and most lucrative markets on the planet.

The EU's investigation into F2P is the most interesting and potentially important intervention in this market so far, not least because the EU has a pretty admirable track record of enacting consumer-friendly legislation and regulations which individual member states' authorities, fearful of losing political donations or of being portrayed as "anti-business", lack the spine or the teeth to tackle. Moreover, the sheer size of the market for which the EU legislates means that the world's largest companies have little choice but to fall in line with EU consumer rules. This means that the European supranational decisions on F2P have the potential to be more strict than any national rules thus far, and to have a more meaningful impact on the business as a whole.

As regular readers will know, I am in favour of free to play as a business model; it is not, of course, a panacea for the industry, nor is it universally applicable across all games, genres, or audiences, but it is a useful and versatile new tool in the game creator's toolbox. It unquestionably works well for some games and allows creators to reach audiences who would never be available to them in the old paid-for business model. Moreover, when it's applied correctly (which is to say, ethically, intelligently and generously), it turns out some genuinely fun games. If the fact that it's free-to-play completely ruins your ability to enjoy something like Puzzle & Dragons, Hay Day or CSR Racing, or perhaps even League of Legends, then I'd suggest that the problem lies with your ideology, not with the game design.

"If the fact that it's free-to-play completely ruins your ability to enjoy something like Puzzle & Dragons, then I'd suggest that the problem lies with your ideology, not with the game design"

Yet either in spite of, or because of, this positive outlook on F2P, I welcome developments like Japan's banning of kompu gacha, and the OFT's intervention in the UK. Why? Because this is a new field, which many developers are still trying to figure out, and I think it's healthy to establish some common sense ground rules. Kompu gacha was a horrible, abusive and deeply misleading approach to monetisation, one founded on the same principles of casino gambling - making the consumer feel like they can win relatively easily if they only spend a little more money, while in reality the mathematical odds are stacked incredibly heavily against them. The OFT's insistence on clear communication of costs and proper customer support systems, along with its prohibition on the targeting of children and one-click purchasing, equally deal with unpleasant, misleading abuses of F2P

Rules targeting such abuses are welcomed by the majority of F2P developers, and by the games business as a whole, because abusive games and practices undermine the whole sector. Abusive games become a stick with which the entire notion of F2P can be beaten; not just by core gamers or the specialist press, who are largely outside the target market anyway, but increasingly by the mainstream media, by consumer groups and perhaps most damagingly, through word of mouth in the very markets with which F2P titles wish to engage. Good, well-enforced regulations will help on two fronts. Firstly, they will eliminate the small number of egregious offenders, while forcing the tech giants who operate channels like the App Store and Google Play to act in a more responsible manner. Secondly, much to the disappointment of F2P's relentless critics, the regulations will also demonstrate how few serious offenders there actually are - and how many of the core gamers' bête noire, like King and Zynga, are already staying within the lines of these proposed regulations.

One point which has been raised - with concern by those serious about F2P, and with glee by the legions of those who view F2P as a threat to their hobby - is that the EU's statement specifically mentions the use of the word "free" as being potentially misleading. For many of the enthusiast publications covering the EU's enquiry, the take-away from this is that the EU is about to ban the entire term "free to play".

"Herein lies the second reason why "free to play" isn't going away, as a term - because, contrary to what many of its critics seem to believe, it's actually an accurate description"

This isn't going to happen. It's not going to happen for a number of reasons. Firstly, the word "free" is already in widespread usage across a whole range of industries to describe products or services which have no up-front cost but can be augmented with paid-for extras. If the EU were to decide that "free to play" was a misleading term, would Skype also have to stop describing its basic service as "free"? How about Flickr, or any number of other web services whose main offering is free but power-user features are behind subscription walls? Plenty of newspapers and magazines let you read a certain number of articles per month without payment, then charge a subscription fee to access more - would these no longer be "free"? How about World of Warcraft's free trial, which asks for payment beyond level 20? Is that no longer free? In the real world, would a car test drive no longer be "free" since you don't get to keep the car without payment? Would coffee shops near train stations have to stop offering free small coffees to commuters, as some do, on the basis that you can also pay to buy a doughnut or a sandwich? Would theatres have to stop saying they give "free" tickets to students, on the basis that they then sell ice cream and bottled water in the auditorium?

Some of those examples may seem ridiculous, but the underlying principle is the same - if those are ridiculous, then so is the idea that a game you download and play for free isn't actually "free" because it has optional purchases. Herein lies the second reason why "free to play" isn't going away, as a term - because, contrary to what many of its critics seem to believe, it's actually an accurate description. The vast, vast majority of successful F2P games are actually free to play. Candy Crush Saga, criticised constantly for being some kind of psychologically manipulative money-printing machine that preys upon the weak of mind, extracts money from less than 30% of the players who finish the game. Over 70% of those who make it to the end do so for free. I've played plenty of F2P games in recent years, some of them for several weeks or even months, and only Puzzle & Dragons and Hay Day ever got me to pay up. I personally wouldn't want F2P games to be the mainstay of my gaming diet, but in terms of entertainment time to price paid, the value on offer is undeniable. If you can finish a game or (in the case of games which don't end, as such) play it for weeks without handing over a penny, I don't see how that's not "free to play". The costs are optional - most games make this perfectly clear. Puzzle & Dragons, the most successful F2P game on earth, actually reminds you every time you start the game that it's possible to play forever without paying.

Casting aside the notion that "free" is a misleading term, as I expect the consultation will, much of the rest of what the EU proposes is common sense and broadly in line with the OFT's rules. What I think is of particular interest is that the EU is focusing its attention on the right places. It doesn't seem interested in putting pressure on developers and game creators, but rather believes that Apple, Google and the other platform operators are ultimately responsible for consumer protection on their platforms. Indeed, my primary criticism of the OFT's regulations would be that some of the things they demand from app and game creators are actually outside their control for the most part - for example, the prohibition of one-click purchases made without the cardholder being present is a problem which needs to be solved within iOS and Android, not at the level of individual pieces of software.

"I'd like to see the EU forcing the App Store, Google Play et al into even more consumer-friendly behaviour than they are currently suggesting"

If anything, I'd like to see the EU forcing the App Store, Google Play et al into even more consumer-friendly behaviour than they are currently suggesting. I'd like to see compulsory implementation of locked accounts for children on devices, with attached "pre-pay" wallets that can be charged by parents - giving children freedom to spend, and parents absolute peace of mind regarding spending limits. I'd like to see running monthly totals showing how much I've spent in a certain billing period when I make an in-app purchase, and the ability to create alerts that trigger when monthly or weekly spending exceeds certain levels. While I think the idea of a ban on the word "free" is ludicrous, I'd certainly like to see guidelines which insist that "free means free"; that in-app purchases must be optional, not compulsory for progress.

The principle on which many developers defend F2P is that it is absolutely right and fair to allow fully informed adults to make whatever buying decisions they wish. This principle is often abused, especially by self-styled neo-liberals, who think that it means the marketplace must be a free-for-all where any business practice is justified because those participating are adults. The key term to bear in mind here is "fully informed adult"; notions of market equilibrium, price discovery and the "invisible hand" of the markets break down when the provision of information is too asymmetric, meaning that one party (usually the consumer) doesn't know the same things that the other party (usually the provider or retailer) knows. This is why kompu gacha was a nasty business practice; it gave consumers an impression which was completely misleading, hiding the mathematical reality of its enormously high odds behind cutesy exhortations to spend. Businesspeople who truly believe in markets should also believe in making information as symmetric as possible, so that those markets can function effectively. Making consumers more aware of what they're spending, when they're spending it, and of the value of the things they're purchasing (in terms of whether they're required or optional for progress in the game, for example), is how you make markets healthier and more sustainable.

Opponents of free-to-play who are revelling in the ill-conceived hope that the EU is about to deal a severe blow to the industry might be surprised to find that F2P's proponents are equally hopeful about the outcome of this latest regulatory effort - and will largely be welcoming of its results. It all comes down to a simple reality; free to play, for the most part, isn't doing anything wrong or anything underhanded. Legislators and regulators carefully considering the industry will recognise that with ease, even if core gamers' visceral reactions blind them to such conclusions. A reasonable regulatory framework for F2P games will change surprisingly little, but will be good for customers and developers alike.

Rob Fahey avatar

Rob Fahey

Contributing Editor

Rob Fahey is a former editor of GamesIndustry.biz who spent several years living in Japan and probably still has a mint condition Dreamcast Samba de Amigo set.