Billing Models for MMO’s
Why Does it Have to be One Way?
Another Eye-Bleeding Post by Ryahl
In a previous post, I examined the western subscription model for MMO’s and discovered that the model peaked in 2004. There is unquestionably an upswell in favor of Free to Play (F2P) and a number of titles have gone Free to Play in recent years. Industry leaders are on the record stating that F2P is the future of MMO’s and at least one planned AAA MMO intended to launch F2P. However, the F2P model itself is greeted with some trepidation from fans of the subscription model who view it as either a money grab or a form of buy to win, neither of which is deemed palatable.
In this post, I want to review various billing options available to MMO’s and offer an assessment of strengths and weaknesses of each. From that, I will pull together something I refer to as the “box plus” model, which synthesizes the various billing options into a multifaceted subscriber model. In a future post I will use an existing MMO as an example in a hypothetical conversion to the Box+ model.
The Many Ways to Take My Money
There are a number of potential revenue models for game companies. However, no specific model is perfect, each comes with its own problems. Additionally, each model appeals to some gamers and turns off others. Not all of these revenue options have been tried by MMO’s and I won’t review all possible options (for instance, billing by the minute has been dead for over a decade and there is probably no reason to bring that one back).
- The Monthly Subscription – this is the tried and true model for the western MMO market. Developers like it for reasons I addressed in the last post. The downsides are that it appeals to a very small number of consumers. It does not appeal to eastern and younger players. Additionally, the very switching cost that used to be a strength of this model seems to work against initial buy-in. However, it appeals to some consumers and remains the staple premium buy in western model.
- Buy the box – this is the classic PC game model. You buy the box, you get the game. It is the approach used by Arena Net for Guild Wars and Guild Wars 2. It is also the approach used by Blizzard for Diablo 3 (not exactly an MMO) and by most cooperative and single player PC games. While these are not MMO titles, they increasingly offer persistent online multi-player options, they are converging into the MMO market. It appeals to a broader audience than the subscription model. Additionally, it remains the premier way in western markets to reach customers. Retailers, and increasingly digital outlets (like Steam or Amazon) provide ideal channels to reach new customers, assuming you keep a new box available. The downside is that the developer only sees a fraction of the revenue from box sales, box sales produce spikey revenue streams and demand for box sales tends to be measured in weeks (although Steam is improving this).
- Micro-Transactions – This is the model used in many eastern games and is increasingly a part of the western MMO market. It carries a natural appeal of a la carte transactions, you buy what you want and no more. It offers developers the ability to smooth out their revenue streams more than the box model, but is spikier than the subscription model. Western customers tend to be very antagonistic to models which appear to promote a “buy to win” model, leading to a western implementation primarily geared at cosmetic purchases. Additionally, this model tends to promote free riding, in which a handful of players subsidize the plurality of players. Further, these free riding accounts are disproportionately the province of gold farmers, botters and other parties generally disdained by both subscribers and developers. Finally, the lack of a purchase may lend itself to a player base that has little compulsion to “play nice.”
- Advertising – This is not heavily used in MMO’s. Funcom attempted to use this model with Anarchy Online, but that was an earlier era of online advertising. This model is heavily used by apps and is generally associated with free to play game models outside the MMO.
- Taxation of Real Money Transactions – This has rarely appeared in MMO’s, but has some history. Sony attempted to use this model as a supplemental revenue (on limited servers) with EQ2 and Blizzard is taking advantage of this model in Diablo 3. CCP has a form of this in place with EVE as well.
The reality is that these are not independent choices and developers mix and match some of these options already. Funcom was one of the first to pursue a form of Free to Play with their Froob model. This model is essentially a trial of the original box version of the game and was tied in with AO’s early experimentation with in-game advertising. Funcom has also turned their Age of Conan game into a F2P offering. Turbine largely reversed their fortunes, experiencing revenue upswings and revitalization with their F2P moves for Lord of the Rings and Dungeons and Dragons online games. Sony Online Entertainment has progressively migrated their MMO portfolio under the “free to play your way” tag line. Similar transitions have occurred with City of Heroes and Star Trek Online.
When Star Wars; the Old Republic completes their F2P transition later this year, it appears that only RIFT, the Secret World and industry behemoth World of Warcraft will be the only remaining purely subscription based game. While all three feature a form of free trial, none offer as of this posting a F2P hybrid plan and they have not indicated any intention of moving to one in the near term. Further, while they also all offer some form of micro-transaction, this is merely for cosmetic purposes and does not (as yet) provide access to the game itself.
No one wants to be the redheaded step customer
Only Turbine stands out as treating micro-transactions and subscriptions as equal customers. However, Turbine’s model has only been deployed in MMO titles that no longer generate new box sales in retail channels. In the Turbine model, the free to play customer can unlock virtually every feature that a subscriber gets. The F2P simply micro-transactions their way, gradually unlocking bag-space, bank-space, skirmishes, zones, mission packs. etc. In the Turbine model, the F2P player is only limited by their purchase commitment.
Sadly, this has not been the case in every other F2P transition. Funcom treats F2P with AOC as a somewhat advanced Froob model. You have some micro-transaction unlocks, but generally F2P is a trial model, not a revenue model. The SOE “free to play your way” is only your way if you desire reduced gear, ability and advancement options. For example, while Vanguard: Saga of Heroes has some positive vibes around their dungeon design, a free to play player would be unable to equip dungeon gear dropped in said dungeons (or possibly progress through them lacking gear to complete them).
Other MMO developers follow similar patterns to SOE. City of Heroes restricts their Incarnate system to subscribers. Star Trek Online places caps on the maximum unlocks in their a la carte model, the full feature product is only available via subscription.
If your free to play option does not allow for full product access (via a la carte transactions), you don’t have a free to play option. You have a subscription teaser.
Effectively, F2P isn’t, of course. Obviously it’s not free, but it also doesn’t offer much “to play.” The F2P customer is a lesser customer in virtually every MMO system and the only way for them to become a full customer is to subscribe (thus losing nearly everything they sunk into micro-transactions). If F2P is to truly be the future of the MMO, then a fully vested F2P customer should have just as much product as a subscriber. The path to access should differ, the destination should not.
Introducing Box+, a Better Alternative to F2P
The idea developed in this section, Box +, cribs largely from the best elements of the different revenue models out there to date. Additionally, this approach seeks to maintain a reason to offer subscriptions and a reason for people to consider subscriptions. However, the under-pinning of this system is a fundamental change in the way the MMO is packaged. Ultimately it breaks down to distinguishing the product from the service (a difficult task at best for a product you ultimately rent). There are several assumptions that drive my thinking with Box+.
- Developers need to make money and they need to be profitable. Going broke is a good recipe for all of us to lose our favorite hobbies. If you like a game, you should plop down some dollars, euros or what have you.
- There is a convergence between traditional non-MMO games (which increasingly offer constant online match-making and game-play services at no or reduced costs), eastern MMO’s (which usually begin as F2P and become subscription imports when they arrive in the west), online social games (the myriad Facebook games and the like) and the classic subscription MMO.
- The sale of boxes (real or virtual) is a critical element in reaching new customers (at least in the west). In particular, the rise of STEAM makes it such that keeping a box presence should be a must in any MMO marketing plan. Additionally, buying the box SHOULD mean something to the customer.
- Western players eschew buy to win. However, western players are increasingly comfortable with downloadable content at a price. DLC need not be merely cosmetic, but anything with oomph needs to be balanced in its access.
- Truly free players may be good for generating word of mouth, but they also bring about a number of problems. Additionally, it behooves developers to find a way to make some money off of those who won’t pay (see point #1).
The staple of the Box+ model is the sale of the box. The box should be bundled with an amount of game play equitable to RPG’s. Additionally, the box should include free access to most of the game elements that players associate as free to play with comparable match-making services. The remainder of the game product should be bundled into micro-transactions. The micro-transaction package for the box should equate to roughly what a subscriber pays if they buy the box and subscribe for 6-8 months. A la carte players (the box only model) need to purchase mid-cycle content updates which should be priced as if they were DLC in a comparative format ($5 for minor DLC packs $15 or more for larger packs).
The Box+ model should feel familiar to traditional non-subscription based customers, subscription based customers and F2P consumers.
The subscriber gets everything with the box+ subscription. Additionally, as a subscriber, they receive the mid-cycle content updates as a part of their subscription. Finally, to sweeten the deal, developers should cater to subscribers by offering services for free, while charging box customers for the same service. As an example: faster queue times for server access, faster queue times for dungeon/raid finders, faster queuing for PVP match-making services, priority customer service (perhaps dedicated customer service reps), free access to a tablet app, free server transfers, free name changes, etc. These same services should be charged, a la carte, for non-subscribers.
The a la carte player might even be denied access to some of the services tied to the subscriber bundle, but both types of players should have equivalent potential access to the product. Additionally, in this system, the price of the subscription may need to rewind. It’s possible that the $10 or $12.50 point was an important psychological point for subscriptions, Note the market hasn’t grown (WoW has) since the industry settled on $15 for a sub.
Free to play should be an option. F2P players should have very limited access to core content. F2P players should be stored on separate instances from your box and subscription customers (without rare encounters and without rare itemization). Box and subscribers who have F2p friends should be able to send messages to F2P and F2P should be able to send messages to box and subscriber friends. Otherwise F2P should only communicate with F2P. F2P customers can ascend to box customers with a three or four gate purchase. At the completion of that set of purchases, the F2P player should have “bought the box” (in chunks) and thus become a Box a la carte customer.
As an example, the F2P player might receive the outdoor zones, basic classes and side quests as a free option. They could buy added classes (or a full skill set), adventuring zone quests and the primary story-line quests (with dungeons perhaps) as a three step gated purchase. Upon completion of these three purchases, the F2P transitions to a box-owner and relocates to the dimension/instances of your purchasing customers. They also now have all of the product features that come with the basic box (the third gated purchase should finish off all box features). From this point on, they can purchase a la carte upgrades exactly the same as someone who bought the box at a retail channel.
Developers should look at embedded advertising to F2P players. Loading screens, UI elements and the like should be considered. Google Ad Sense and a host of existing advertising packages are out there and they should be leveraged rather than trying to build your own advertising solutions. F2P players are increasingly familiar with this through tablet apps, embedded ads in their F2P MMO’s shouldn’t be a major obstacle. However, developers should clearly divide ad revenue F2P from box and subscription customers. I suspect the backlash would greatly exceed the revenue potential.
The In-Game Store
Developers should include an in-game store for cosmetic items. Apparel, hairstyles, body types, face changes, etc. This is an area that can be thoroughly developed. Once the game has been out nine or more months, developers should consider adding XP-potions to the mix. At this point in the game, the XP-potion is less “buy to win” than it is “buy to catch up.”
The in-game store should be available to all types of customers. For F2P customers, in-game purchases should be a separate aside to the gated box purchase described above. Additionally, subscribers should get a small monthly stipend to the in-game store. Rather than an open-ended wallet, consider capping the in-game credit to $5 (or equivalent). Any amount spent by a subscriber comes from their stipend first before tapping their real purchases. At the end of the month, the stipend resets to its base value of $5. The point here isn’t to convince susbcribers to make purchases with real dollars, the point is to (a) reward them for subscribing and (b) become walking billboards for whatever is new in the in-game store. Since the stipend resets each month, the onus for the subscriber will be to spend all or most of their credit each month.
Think in terms of Cycles
To make this work, developers need to find a way to sell a new box roughly every year. That’s your expansion path. Box players should buy the expansion, which should be assembled using the same logic as the initial box (the purchase gets you X, micro transactions or subscription get you Y). Subscribers also buy the box, but then get everything in the expansion box as an element of their expansion.
The update of the game each year becomes the major cyclical element refreshing your title in retail channels. Additionally, the box presence in retail channels can be stimulated mid-cycle using promotional pricing (something STEAM has turned into an art).
Developers should plan for mid-cycle updates (DLC). SOE attempted something like this with Adventure Packs in EQ2 offering Bloodline Chronicles, Splitpaw Saga and the Fallen Dynasty. These were $15 or so DLC packs with new content. The Adventure Pack idea failed at the time because subscribers were accustomed to receiving mid-cycle updates as a part of their expansion. To keep things palatable, SOE had to make Adventure Packs not “too powerful” to prevent them from seeming like something that had to be bought. Doing so made them undesirable for the most part and the idea was cancelled several years back.
Adventure Packs need to come back into the mix, the Box+ model is the perfect approach for this. They should range in size and desirability based on the designers goals, which should not be a problem in the Box+ model. Subscribers get Adventure Packs free, as they are accustomed. Box players buy them as DLC. Developers can bundle content updates into quarterly or monthly packages based on their budgets. Consumers benefit from getting bigger, more robust mid-cycle additions to their gaming. Subscribers get an added incentive to retain a sub (benefiting the developer in the process). Win, win is good business.