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Evolve or Die

Greg Tito | 14 Jul 2011 10:30
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"It was only after we went through a tumultuous time where we nearly closed the company - and we lost the 'baggage' of prior thinking - that we were able to reinvent ourselves in 2010," he said. "By mid-2010 we were convinced that free-to-play was incredibly profitable when done right, and that we had the chance to bring AAA quality to free-to-play games in a way that hasn't been done before, especially with shooters."

Now firmly in control of his destiny, Kern is ready to prove to the world that a well-designed free-to-play game can be just as profitable as World of Warcraft, if not more. And Firefall will have the advantage of being designed with that business model in mind from the onset, instead of tacked on as an afterthought when the subscription model fails.

"You're trying to say 'look, if you just pay me X dollars, I will let you see what you're missing.'

"I do think it is much better to design your game with free-to-play in mind rather than retro-fitting it to an existing game," he said. "Of course, there will be a stigma if you release a game with a monthly fee and then move to free-to-play. The only reason that is done is when the game is failing as a subscription based game. That's the only reason you do it, because it's a very expensive and time-consuming transition."

Not only is it expensive switching over after the game has launched, there are very real reasons why it makes good business sense to start the game's design with free-to-play as a goal. "[Switching] doesn't capture the momentum curve as much as it would have if it launched free-to-play to begin with. You miss the launch buzz and the strong referral effect, because there is a zero entry cost to have your friends try the game with you," said Kern. "With an older game that converts, it's already 'old news' in a sense. The word-of-mouth or organic growth effect isn't as strong. It's far better to design and release your game as free-to-play to begin with."

There are several ways for free-to-play MMOs to make money, but Kern believes that most publishers, even the ones that are currently seeing profits, are doing it wrong. "You see so many broken models out there. Publishers are charging download fees or whole package prices and then attempting to do item-based sales on top of that. Or they try what I call the 'velvet rope' model where they restrict content and what parts of the game you can play until you pay up," he said. "You're trying to say 'look, if you just pay me X dollars, I will let you see what you're missing.' The natural response is to say 'But if I don't see what I'm missing, how do I know it's worth paying for?' That limits your sales."

By compromising and trying to serve two masters by charging up front and having micro-transactions, publishers unwittingly curtail their own revenues. "These attempts really distort the model," said Kern. "They not only generate a lot of cynicism on the part of gamers who rightly feel nickel and dimed, but they also result in lower profits because they are not following a pure free-to-play model. Then publishers look at that and wrongly conclude that free-to-play is a marginal business only suited to B-grade or C-grade games."

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