$5000 to Play for Free

Pyro Beanie: Team Fortress 2 makes its money by selling stupid hats.

Every year around this time I begin a deeper descent into the world of gaming. As Editor-at-Large of Games Magazine, and a writer for many others, I keep up with games year round, but in July and August, I co-edit the Games Magazine 100, an annual awards issue and buyer’s guide to the best of gaming, both cardboard (traditional board and card games) and silicon (video, computer, and mobile). I create a lot of lists and examine the entire panorama of electronic entertainment, then try to extrapolate some trends and pick some titles that stand above the rest.

The biggest trend, of course, is mobile and social gaming, and it shows no real sign of cresting. In fact, it appears to be warping the entire gaming industry, leading people to expect great, fun games for a couple of bucks. Conventional electronic games are in trouble, with some estimates placing the sales fall-off in excess 25%. That’s heavy-duty for a business that only a year ago was still being called “recession proof.”

Companies are scrambling to find some way to make up the revenue shortfall, and they’re hit upon a strangely magical and counterintuitive solution: giving away their games.  Epic’s Tim Sweeney says it’s the next big thing. After Crysis 3, Crytek is doing it exclusively. John Riccitiello and Peter Moore (EA), Yves Guillemot (Ubisoft), and American Magee are saying it has a bright future. The verdict is in, and “free to play” is the new black.

When Peter Moore gets excited about something, it’s time to make sure you have a good hold on your wallet, because it’s about to get picked. You want to know what has John Riccitiello pumped? The realization that some gamers are paying $5000 a month to pay the “free” FIFA Ultimate Team.

What the money men are looking at is something called ARPU, which is “average revenue per users,” and it’s much, much higher for freemium games. You ever look in the App Store for the most profitable iOS games? Ever notice something? They’re all “free.”

Gamers are paying more, on average, to play for free than they do for $60 skus. This is because the costs tend to be hidden and the expenses creep up on you. A buck here, five bucks there; a little horse armor here, a new character set there: each microtransaction feels fairly small, and thus lowers the consumer’s natural psychological resistance to spending large amounts of money. But each of those transactions adds up very quickly. People pay more per user on freemium than they do on premium because they’re being manipulated. Riccitiello calls this a “dirty little secret.” Dirty? Yes. Little and secret? Not so much.

Serious gamers have another name for “free to play.” We call it “pay to win.” Many “free” games are only free at their lowest levels. If you get into something and expect to be anything other than a greasy spot by the side of the virtual road, you need to pay. That is not a problem on its own. Id Software made their millions through the shareware model, in which a few levels were free as a demo, and then you had to pay to get the full game. It was, essentially, the drug dealer model: first taste is free! After that …

But shareware was an interactive demo with a trigger-point: you made a choice, committed to the purchase, and you were done. Publishers have discovered that if they don’t push people to make that larger financial commitment (say $30 to $60) all at once, their resistance threshold is much, much lower. Gamers get committed, and then rather than reaching a single tipping point and investing once in a game, they make repeated, impulsive choices to invest smaller amounts, often losing track of just how much they’ve spent. As Riccitiello observed to shareholders, “When you are six hours into playing Battlefield and you run out of ammo in your clip and we ask you for a dollar to reload, you’re really not that price sensitive at that point in time.”

Just stand back and soak in the crass manipulation of that statement, and then tell me with a straight face that this is ethical marketing.

About Thomas L. McDonald

Thomas L. McDonald writes about technology, theology, history, games, and shiny things. Details of his rather uneventful life as a professional writer and magazine editor can be found in the Biography tab.

  • Paul O.

    Right there with you. I think this has a deep tie-in to John Paul II’s philosophy of personalism (outlined in Love and Responsibility) and Nick Ye’s [ http://www.nickyee.com/ ] work regarding the influence of behavioral science on game design. I’d posit that both F2P and MMORPG gaming today are an epic case study on the battle between the inherent value of the human person vs. those who would treat the person as a tool for gain and profit.

  • victor

    It’s not ethical at all when the IAP/paid content is essential to getting ahead in the game. When it’s dorky extras like hats and new skins, I have less of a problem with it. Even on the “pay to win” side of things, one app I really like is “Outwitters”. It’s a free app and that free download will get you access to one team, but if you purchase a one-time IAP of $3, you can unlock two additional teams. All of the teams are fairly well-balanced so this doesn’t really give you an edge. The way I look at it is this: I would pay $3 for a great game (heck, on the 3DS I’d pay $40 for a medicore game), so this is my way of encouraging the developers to put more of their time and resources into developing the product.

    For another (though far less articulate) take on when Freemium content works and when it doesn’t, IGN actually had a pretty good article on the subject last week.

  • http://www.godandthemachine.com Thomas L. McDonald

    I agree with that. I find the same thing with Hero Academy as with Outwitters. You can play fine without the armies, but they make it more fun. The hats/armies/skins thing doesn’t bother me at all. The $10 for Tribes Ascend also isn’t bad. But the “$1 to reload” thing is a nightmare scenario for design. I told my son about it and his first reaction was, “There go the support classes.” Exactly.

    I’ll check out the IGN thing. I wrote for them back in the Stone Age.

  • victor

    NO WAY! You wrote for IGN? I’ll have to look it up and see if any of your stuff is still on the site. Most of their writers now are illiterate but some are actually pretty good (like Lucas M. Thomas, their resident retro gamer).

    You should post your GameCenter ID sometime and challenge your readers in Hero Academy or Ticket to Ride… but not today. Today, I’ll be downloading and playing the Spy Vs. Spy update/remake. I spent easily 300 hours playing that game when I was a kid (and I have the carpal tunnel to prove it — that Epyx 500XJ “ergonomic” joystick was responsible for more than a few repetitive stress injuries, I think).

  • http://www.godandthemachine.com Thomas L. McDonald

    I wrote for everybody in the old days: Gamespot, Cnet, Ziff, etc. IGN started out as the website for what is now Future Publishing, but was then called Imagine. (IGN=Imagine Games Network.) We used to mirror our PC Gamer and boot/Max PC content there. I think when it was sold off, they had remove all our stuff, but I’m not ure. My old timey byline was “T. Liam McDonald.”

    Love love love T2R and like Hero Academy. Going to check out SvS when I get the chance.

  • Ben

    I have found F2P games to be hit or miss. League of Legends, Hero Academy, and DoTA 2 are examples of games where I feel like they aren’t pay to win, they are pay to customize. Will have to see if that trend continues.

  • http://www.godandthemachine.com Thomas L. McDonald

    Sure, and Valve is saying Dota 2 will be the same way: no locked heroes, nothing like that. I’m fine with that. I hate hats, but I’m even fine with that, since it works for Valve. EA’s “$1 to reload” plans, however, are bad news, and the bigger questions we need to ask are : why this, why now? And the answer is because it’s more profitable. And that’s fine. But we need to be aware that it’s more profitable because a certain amount of marketing manipulation is going on. Game companies are counting revenue growth as their due, not as an anomaly in an industry that cycles through feast and famine.

  • http://etc.victorlams.com victor

    I’d stay away from Spy Vs. Spy unless you’re a big fan of the original and have VERY fond memories of it (as I do). The game hasn’t aged all that well. Autumn Dynasty is good as is Starbase Orion (as long as you don’t mind getting 3 hours into a game only to find the computer player has somehow built a vast armada that your puny six ships can’t defend against).

  • http://www.godandthemachine.com Thomas L. McDonald

    I got SvS. I’m really not feeling the love.

  • victor

    Yeah, it really hasn’t aged as well as I remembered. Sorry about that. But, hey! Neuroshima Hex is on sale!

  • http://www.godandthemachine.com Thomas L. McDonald

    Already own Neuroshima Hex.

    And you owe me 99 cents.

  • victor

    Yeah, I was about to say that I owe you a buck. I’ll give you a comp copy of my new EP of Sci-Fi television songs, whenever I finish it :)

  • Pingback: A look at the state of computer games, video games, and mobile games.