RIP the venerable subscription model, or so countless articles, editorials and speeches would have you believe.
It’s said that the seemingly irrepressible freemium and microtransaction models have killed the subscription model. This month I want to explore whether gamers have really unsubscribed and find out how the subscription model has fared recently.
Firstly, let’s get some misunderstandings out of the way. The subscription model and freemium/free-to-play are not mutually exclusive; freemium subscription games are not only possible, but actually common and popular.
Secondly, the combination of subscriptions and microtransactions is also commonplace, and is actually becoming the standard model for high-end MMOs.
A NUMBERS GAME
Next let’s look at the data. GIC has been tracking the MMO and virtual world market at individual title level for over a decade now and our database currently comprises nearly 700 PC and console download and browser titles launched, and still operational, in the West.
Thirty-five per cent of these titles employ a subscription model or some variation of it. Seventy-seven per cent of these subscription games are freemium, offering an optional premium service typically charged monthly.
Just eight per cent of all titles have mandatory subscriptions, a subscription model subset that undoubtedly is heading for extinction in the face of such vast and growing levels of – typically,
free-to-play – competition. Yes, WoW still uses this model, but has already added a free tier and I would be truly shocked if Blizzard maintained a mandatory subscription model for Project Titan, its next MMO.
A deeper, longer look at the subscription game market reveals that publishers have been doing some really interesting things with the model. The introduction of tradable subscriptions, which provide players with a method of earning their monthly membership, has been adopted by several high-profile MMOs, such as Eve Online and EverQuest II.
Dozens of titles with hybrid subscription/microtransaction models have effectively married the two by using subscriptions to provide monthly virtual currency stipends, as well as other benefits to members.
Subscriptions are often cited as producing lower ARPPUs than microtransactions, but some have overcome this by offering tiered membership levels – with some offering subscription prices up to $50 per month, while others allow multiple subscription accounts. The result is players spending tens and even hundreds of dollars per month on subscriptions alone – ‘subscription whales’ if you will.
The future of subscriptions is undoubtedly free-to-play, but, far from being dead, in today’s market it is definitely thriving. The model remains the standard for kids’ virtual worlds, like Moshi Monsters, and is key to the ongoing success of many casual MMOs such as RuneScape. Its adoption within big budget download MMOs is also gathering pace.
THE BRASS BAND
I recently got to talk to senior brass at both Turbine and SOE, who were equally effusive in their praise for the freemium subscription model. It was widely reported that the adoption of a freemium model for Turbine’s LOTRO and DDO MMOs resulted in a sharp uptick in revenues. What is less known is that both games’ subscriber numbers actually increased following the transition; the result of increased player numbers and the strength of their subscription propositions.
Turbine is not alone. According to SOE, Everquest II’s transition to free also resulted in its subscription level actually increasing.
In fact, for both SOE and Turbine, the subscription model is still a mainstay of their MMO businesses. By positioning it as a cost-saving value proposition for core players, SOE has been able to attract a substantial subscriber base for Planetside 2, helping bolster its total monthly paying player conversion rates to a very respectable ten per cent.
So the pronouncements of the death of subscriptions is simply wrong. The subscription model has not died, it has simply been reborn for the free-to-play era, working alongside, but not being replaced by, freemium microtransactions.
For online games companies that are considering what model to adopt for their persistent world game, an optional subscription could be part, if not the core, of their model.
It’s an excellent way to garner a more predictable and regular revenue stream from your more devoted players, while simultaneously providing them with a range of game benefits that can be perceived as fantastic value deals. This undead model could yet make you a lot of money.