The free-to-play gaming model has proved nothing short of revolutionary, moving within the span of only a few years from being perceived as the last-ditch model for desperately failing MMOGs to become a perfectly viable business model for all genres on all platforms. Yet despite its astounding success, F2P (to use the now-common shorthand) has not proved fully effective. Even today, the most successful games adopting the model have difficulty getting more than five per cent of their playerbases to pay for anything at all – and only one to three per cent of players pay in significant amounts. But that one to three per cent is capable of supporting a playerbase of millions. It’s a small subset of players known within the F2P industry as ’whales’.
“We expected to lose many of our subscribers because why would they pay when it was free?” says Adam Mirsky, executive director of communications at Lord Of The Rings Online studio Turbine, about switching the company’s games to a hybrid model of F2P and subscription charges. “But what we found is some people are subscribing and spending money in the store too. Some people are spending hundreds and thousands of dollars.”
“[Some players] can spend thousands of pounds a month on content – they just have to consume, they have to be number one,” says Mark Gerhard, CEO of Jagex Games Studio, developer of pioneering F2P title Runescape. “But at the same time it’s a very small percentage. This is single-digit at best, and that’s even fractional. Then you’ve got people who’ll almost violently never pay: ’I’m going to stick it to the man’. But you need them to balance the game, to get it to critical mass, for virality.”
Turbine's Lord Of The Rings Online
Many new upcoming PC games are adopting the F2P model, even if most are staying the course with pay to play [P2P]. On mobile platforms, however, the balance is closer to parity. The iOS App Store’s top 200 highest grossing apps are split almost evenly between free to play and pay to play (92 out of 200 are free to play). More significantly, taking three separate tallies across August and September 2011, ten out of the top 15 highest grossing apps were free to play.
The major question that developers should be asking themselves is what happens when western gamers become more comfortable with F2P and start to spend more. If even 15 per cent of the audience was a paying one, the knock-on effects throughout the game industry could be seismic.
“We believe that the three per cent is pretty standard,” says Peter Farago, VP of Flurry, an analytics firm which monitors the mobile applications industry. He notes, however, that some games – such as poker – can reach as high as five per cent, although “the traditional simulation games – such as farming, city-building, etc – tend to be closer to three per cent.”
“We don’t think this will change dramatically, since this percentage represents the proportion of massmarket consumers – who did not intend to pay for a game at the time of download – who change their minds,” Farago notes. “Many consumers downloading free-to-play games are looking for entertainment without the cost. Among those, some subset will get converted by how compelling the gameplay is.”
So who are these mythical three per cent, and why are they so ready to open their wallets? There are many variables that play into the statistics and psychology of selling virtual items in free games. In broad terms, men pay more than women, spending an average of 30 per cent more per transaction. And, as Farago says: “Generation X pays, Generation Y plays.” In other words, gamers aged 13 to 24 make up the biggest chunk of play time (55 per cent) but only make up 21 per cent of revenue, while gamers aged 25 to 34 represent half of all revenue (49 per cent) and comprise just 29 per cent of the total playtime.
Gender and age aren’t the only significant factors, though. The platform the game is played on also plays a huge role. Gamers using iPhones, it turns out, are the best-paying customers around. Kenshi Arasaki, co-founder of A Thinking Ape, runs the free-to-play PC and iPhone game Kingdoms At War, and tells us his company has found that iPhone players are the most common paying customers: “We definitely see higher monetisation from players on the iPhone.” And yet no one is entirely sure why this is the case. “One possibility is that Apple has built a seamless payment mechanism by allowing players to pay with their iTunes accounts,” Arasaki says.