Develop analyses the key data and asks the business model’s biggest advocates about the future of free on desktops

PC free-to-play’s billions

Free-to-play has become the defacto standard in both the East and West on mobile, it’s adopters topping the iOS and Android charts and spawning billion-dollar businesses.

Though not nearly as pre-eminent on PC, as you can see in the 2013 revenues handed to Develop by SuperData (See table below), F2P is still big business on desktops.

Data provided by SupderData

By itself, Dungeon Fighter Online brought in over $1bn for publishing giant Nexon last year, and it’s a game that was first released in South Korea in August 2005, eventually landing in North America in 2010 and still proving popular today.

And it’s not Nexon’s only game in the top ten of revenue generators; its other titles MapleStory, Counter-Strike Online, Sudden Attack, KartRider and Mabinogi have all breached the top ten, all generating a
multi-billion dollar business for the company.

Others such as Riot Games’ League of Legends, SmileGate’s CrossFire, Wargaming’s World of Tanks and Valve’s Team Fortress 2 are also all raking in well over $100m a year, with SmileGate’s shooter near the $1bn mark.

Even on Steam, where you’d think premium rules, Valve’s Dota 2 and Team Fortress 2 are far and away the most played games on the store.

But what does it take to break into the free-to-play PC market, particularly when premium is still in abundance, and create a top hit? Nexon CEO Owen Mahoney tells Develop F2P games must be fun first and foremost.

“Like any other online game, to retain players over a period of years you have to keep building on the original experience with new content and new ways to enjoy the title,” explains Mahoney.

“Monetisation and marketing are of course important, but the core thing to remember is: if the game isn’t fun, you have no customers, and therefore no monetisation and no reason to market the game.

“For some reason, the games industry keeps forgetting this, especially in the last few years, and wants to focus on everything but making a fun game. We found that when we made that mistake, we fail. I would suspect that the rest of the industry has found that to be true as well.”

Go West

The model has a bad reputation in the West in particular, with key examples such as the infamous Dungeon Keeper further fuelling its critics, not to mention the introduction of the UK Office of Fair Trading’s guidelines on how F2P should be governed. Eyes around the world are pinned on how developers creep into people’s pockets.

And Mahoney says Nexon has witnessed reistance in Western countries, but blames large developers and publishers for creating such a negative reputation.

“Yes we are [noticing opposition in the West], mostly because so much of the free-to-play you see in the market – including the games from the big guys – has been done badly,” he states.

“Doing F2P well, which means you retain users year after year, is actually really hard to do. As an example, game balance in an online world is very different in free-to-play than in a package or subscription game and needs to be managed differently. Until Western developers learn how to do that better, you won’t see so many strong F2P games in the West.”

But the model is slowly becoming a hit with core gamers on PC in the West, with games such as World of Tanks developed in Europe and League of Legends built in the US. Proof of its growing popularity can be found in the revenues for these titles, which between them made $1.2bn in 2013.

Long in the tail

One of the first things you may instantly notice from the data is the age of the games generating the most revenues. Unlike in premium, where most of a title’s money is made during the release period, free-to-play titles hit their peak years, not just months, after release, making a long-term strategy crucial for titles in all genres, not just MMOs.

Wargaming EMEA and NA MD Frederic Menou explains that this is why servicing free games with new content for years after release is crucial for the model’s success, as it gradually builds up a snowball of advocates spreading the word to their friends and keeps players engaged with new experiences.

“When you buy premium games, you know these are products with a high price and with content which will not evolve, or maybe only with the help of some DLC,” he states.

“F2P games are another concept. When you play F2P titles you know the content will be updated regularly, from the day of release, and that the game won’t be the same after a couple months. It’s constantly changing. The community will also grow with time and will help the game to stay around. This is even more true if the game has some eSport potential.“

SmileGate business strategy team manager Soogon Kim agrees that creating a close relationship with players is crucial, and explains another important factor to ensure users are enticed to play a game.

“Of the most critical success factors is definitely localisation strategy and understanding the target market and local users. This has helped us achieve market dominance in China on PC,” says Kim.

“In addition, continuous communication between game users and publishers, prompt game maintenance, updates, patches and fun are all core factors that have led to CrossFire’s success globally.”

The data shows success of free-to-play titles cannot be accurately judged in the short-term – although obviously some of the examples shown are looked after by big publishers and able to move around their userbases – but not all of them.

Breaking free

One of the concerns these stats do show is the difficulties of breaking into the sector in the first place. SuperData CEO Joost van Dreunen says the lack of new breakout titles in the space is down to the social nature of most PC games using the model.

“In a solo-play game experience, brand is everything. In multiplayer, it’s all about the social environment,” he explains.

“A tonne of small-scale, free-to-play titles exist out there with only a modest userbase that are sustainable. People like to play with their friends, and game quality or top-of-the-line graphics play a secondary part. This makes people resistant to move on to newer games, even if they look prettier. “

Menou puts the lack of new titles down to the long tail, which suggests in a few years games that are new now will finally break in to the upper echelons of revenue generation.

“You need a certain amount of time before the monetisation, which is the key of any F2P business, reaches a 100 per cent efficiency. This is related with the F2P concept,” he says.

“The game enriches itself with content, month after month, which gives more and more opportunities to have microtransactions which ensures monetisation. So you have to give time to F2P games to enter and stay in this chart. But you also have to be careful not to consider the player as a milk cow. You should never force players to pay to enjoy your game.”

Slowing growth

One thing is clear for now however, the F2P PC market is starting to mature, at least in the East. As van Dreunen says: “the free-to-play market is huge, but not infinite”.

2014 is set to be a slow year in terms of growth for free-to-play on PC, but it’s still rising by $400m, picking up again in 2015 to reach an estimated $9.3bn.

Developers and publishers that we spoke to who are championing the business model said they were confident of continued strong growth in future, and Menou believes it will eventually become the standard on PC.

“The more time passes, the more I am convinced standalone games, as we know them today, will disappear. It’s just a question of time,” he states.

“Today players can have access to a game anytime, anywhere, thanks to mobile games, downloads, digital platforms and soon streaming. With F2P games they can play a game and test it without paying.

He adds: “And from a company perspective, it’s healthier to have regular revenues rather than have a peak in the year with a premium release which has to sell very well in a couple weeks to make the company profitable.”

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