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F2P is Future - Micro-Transactions are Not
Wayshuba
Member UncommonPosts: 72
I recently came from a business conference where online monetization models were discussed. The discussion focused on which models were 1.) sustainable, 2.) grew customers over a period of time, and 3.) provided high levels of customer satisfaction and value. It was about online monetization in general (not just the MMO industry), yet the MMO F2P cash shop model (i.e., micro-transactions) was discussed. Guess what - it was noted to be the WORST business model any company could adopt (The speaker, a well-known successful entrepreneur turned VC, says that the second they hear a monetiztion model involving miro-transactions they end the meeting because they know it is NOT a sustainable model).
The main reasons for this being the tremendous decline in customer satisfaction (i.e., it leaves people feeling exploited rather than getting value for their money). It was noted as worse than the cell phone providers (which are pretty bad) and cable companies (which are also bad). An example used was how EA was noted as the worst company because of this decline in customer satisfaction, yet it is known on a myriad of other factors there are worse companies than EA. The speaker made a joke about how the MMO industry lacked good business people as the whole industry was like sheep being lead to slaughter. Then he mentioned how Zynga saw early success with micro-transactions and that the business model went off a cliff. In other words, it was stated that micro-transactions are NOT a sustainable model.
As an aside, he also noted how they would love to invest in the space, but after four years of hearing pitches they have come to the conclusion that the industry has some of the most passionate developers of any industry ( a huge plus), yet is lead by the dumbest f***s for business people, who knew NOTHING about their customers, of any industry (a huge triple negative). He also noted that the people that lead these design teams, have bigger undeserved egos than all of Hollywood combined, and that most of these people are terrible at their jobs but think they are gods gift to the gaming world (which elicited quite a few laughs). He also noted that if there were any entreprenuers from OUTSIDE the industry that enjoyed gaming, it was a space RIPE for major disruption because it was too insular in it's thinking - just like other industries that have been disrupted.
Secondly, a stat I found interesting, that across many online industries, MMO gaming companies (followed closely by those that utilize heavy DLC) overall have the WORST reputations and suffer from long-term sustainablity in customer retention (nice place to be associated with). I found it funny that Turbine was used as the example as a company that once had a stellar reputation that in the space of two years, completely trashed that rep and has become known as a pariah. He noted how the effect of this was that, no matter the future product, the company has already put themselves "in the hole" with succeeding with any future endeavors.
Lastly, micro-transactions actually DECREASE customers over time on average. (Yes, there are a few examples the other way, but they are rare) and DECREASE the available customer base to companies as their reputations (like Zynga's) suffer and therefore future products fail to take-off (like EAs), and meet expectations.
The speaker concluded that "freemium" was the best model to meet the criteria noted above. The downside was that freemium actually requires a company to produce real value for customers (rather than "rip-them off", which were the words used in the conference when referring to micro-transactions) in order to get them to pay. He also concluded on how valuable BRAND reputation was in both adding value to a company as well as destroying it (again noting both EA and Zynga).
So, to the subject of the post, I think F2P is the future of the genre, but not micro-transactions which I believe is going to give the entire industry a very hard crash much like Zynga has suffered.
TL;DR F2P is future, but not in current iteration. Micro-transactions cash shops (especially with RNG) need to go. F2P needs to stay and companies need to focus on actually providing value for the money which, in the MMO game space, means game play not skins, cosmetics and RNG chests that can be nickel-and-dimed for.
Comments
nice post in this and the other thread.
i agree with the title. and micro-transactions do make feel like im being nickel and dimed.
Ill just post this from the other thread instead of writing it again.
"F2P is not the future. The reason recent sub games have failed is because they are either buggy or WoW clones. If GW2 was the messiah people would sub to it. If Swtor was truly amazing people wouldnt have a problem paying a sub. The model isnt the issue its the games.
Name me one extremely good F2P game that was F2P out of the gate. WoT? Grind fest and not really an mmo, Lol? Moba not an mmo, GW2? B2P, finally Path of Exile, can be argued that its an mmo but its really a coop action game. Thats right there isnt one. All those converted F2P games went that way to save it because of poor design choices. Warhammer was buggy and unfinished, AoC buggy and no endgame, VG buggy as all hell, AION grindy, SWTOR no endgame and the endgame it has was buggy. Then only ones left are RIft which trion themselves have said they are no where near close to f2p expecially after an extremely successful launch of SL, TSW which is on a prescipice atm, it has poor sub rates but a enthusiatic community and dev team which is pushing out new content every 1-2 months, and finally WoW which is IMO the BEST themepark mmo made so it doesnt need F2p. If people wanted to play a wow clone they would just play wow.
Ill say it again if for example SWTOR was the best mmo ever made and was truly revolutionary then you would see sub numbers in the millions. The model isnt the problem its the games.
And as it stands the only true F2P game is Aion which gives the whole game to you and allows you to buy cosmetic and xp boosts in its shop. F2P right now is nothing more then a glorified trial trying to bait you into subbing or spending MORE then 15$ in the cash shop. "
Just because some businesses think its the only viable model doesnt make it the future.
Playing: FFXIV, DnL, and World of Warships
Waiting on: Ashes of Creation
There isn't a "right" or "wrong" way to play, if you want to use a screwdriver to put nails into wood, have at it, simply don't complain when the guy next to you with the hammer is doing it much better and easier. - Allein
"Graphics are often supplied by Engines that (some) MMORPG's are built in" - Spuffyre
The conference was put on by an well-financed incubator in the mid-west US (it was a private conference with a few hundred attendees) and the speaker I will not note his name because it is not my place to do so since it was his material and, if he wants to make it public (there was a lot more to the presentation on other business models, I just extracted the parts relevant to the MMO space) that is his choice.
I thought the topic important, especially to the subject matter, and the timing (this was the week before Thanksgiving) given all the discussions around it lately.
Playing: FFXIV, DnL, and World of Warships
Waiting on: Ashes of Creation
Another point, the business model is important because it DRIVES the application of the product and value. This is true in any business, not just the MMO industry.
With the current micro-transactions, much is about releases to drive players to the shop or hindering game play to introduce fixes into the cash shop (which is a sucky approach because it means the company controls both the creation of the problem and the cash shop induced solution).
With a freemium model, companies would be required to produce value in the game play itself to entice customers to spend regularly. This requires more resource (and actual thinking) than micro-transactions. Freemium helps to attract a LOT of customers, but only value converts them to paying customers, and that is what is lacking in the industry right now - the value for customer's money.
In summary, current cash shop micro-transactions are part of the blame for the poor and repeatable cookie-cutter designs of a lot of MMOs nor is the sub from start model viable anymore as the industry has too much competition and is already saturated on the previous model (thus why WoW continues to hold the sub slot dominance).
I disagree, the Sub from start model is still viable. At its roots the problem is with the GAME not the model. Wow holds sub dominance because its the PRIME casual game out there and in a world filled with wow clones if people wanted to play a game like wow they will just play wow. You also gotta remember Wows numbers are extremely bloated, in the east they dont sub mothnly but buy hours of gameplay. So you can effectively strike 5mil subs of that 10mil mark, possibly even more. Ill say it again if a MMO was truly the greatest mmo ever made, was extremely innovative, and was the messiah. And had a sub you would see sub numbers close to what wow has.
Playing: FFXIV, DnL, and World of Warships
Waiting on: Ashes of Creation
So you wont actually identify the conference, nor will you identify the speaker.
You do realize that by speaking at a conference, he made his opinion public and as long as you site him, you are welcome to post his opinion without it being regarded as "idea theft."
Godz of War I call Thee
I agree completely. Perhaps a little elaboration. The freemium model is just that, a sub-based model (the premium pay levels) with a free level to try the product (with some value there).
I don't know the perfect way to apply it, but allow a level of free (customers are rather jaded in this industry) and PROVE you have something worth paying for (paraphrased as you state "the next big thing") and you will in fact gain the subs. But, the change is to PROVE you have something worth paying for first then customers will sub.
I think we are saying similar things and in agreement (I personally prefer subs, when value is given for it) but you cannot ignore the fierce competition in the space currently which didn't exist when WoW was new.
Thats why games have free trials. Its a taste of the game. Many games have marketing betas aswell.
Playing: FFXIV, DnL, and World of Warships
Waiting on: Ashes of Creation
Why would you find it hard to believe?
In short, the industry is NOT as insular as the industry sometimes like to believe. I noted in the OP other micro-transaction models were also discussed (particularly with the cell phone industry and the rise in smartphones) and they had the same effect - higher customer dissatisfaction than other industries (Verizons recent plan changes were noted in this batch as well).
Well, since there's no way to research the subject material or the speaker, then it's entirely possible half of what you said is misunderstood or out of context. Shame. Would have been an interesting discussion to have but who knows what was actually said or presented, or even it the speaker was anyone of note at all.
There isn't a "right" or "wrong" way to play, if you want to use a screwdriver to put nails into wood, have at it, simply don't complain when the guy next to you with the hammer is doing it much better and easier. - Allein
"Graphics are often supplied by Engines that (some) MMORPG's are built in" - Spuffyre
The reverse is true as well. If a game is well crafted, people will happily spend money in the cash shops as long as they think they are getting value for money.
The problem that we are experiencing at the moment is that crap games are converting from failed P2P to failed F2P. P2P to F2P converts are just treading water for as long as they can.
Only games like GW2 which are designed from the ground up to be B2P or F2P are going to be viable. It will be interesting to see how the first round of truely F2P AAA games fare once they start rolling out.
"Secondly, a stat I found interesting, that across many online industries, MMO gaming companies (followed closely by those that utilize heavy DLC) overall have the WORST reputations and suffer from long-term sustainablity in customer retention (nice place to be associated with)."
Compared to what...? Not saying it is wrong just curious what was the basis for that data....
"I found it funny that Turbine was used as the example as a company that once had a stellar reputation that in the space of two years, completely trashed that rep and has become known as a pariah."
I do kind of find that funny to seeing as most people feel that Turbine did a farily good job with their F2P conversion... EA i can agree to have a sense for micro-transactions thet can best be described as "bleeding dry" especially with games like NFS:W that have a clear P2W style and is in essence bottomless due to constantly releaseing new and better cars. But Turbine, again i'd like the source on that.
"The speaker concluded that "freemium" was the best model to meet the criteria noted above. The downside was that freemium actually requires a company to produce real value for customers"
Either the speaker use freemium in a different way then the MMO's market or he was primarly speaking about facebook games, because freemium here is a word for a game that have a subscription and still chrages for micro-transacrions or a former subscription game going F2P. And as i said i do not really think the speaker had a clear imga eof what the MMO market is (oor you make him sound a lot more stupid then he actually was) because it sounds to me that what he means when he speak of F2P games are stuff like zynga and facebook games because most "real" MMO's that have a F2P option have actually produced tons of content for the customers to digest (Turbine beinga good example here.) sure you have to pay for it but that is something you have to do with regular MMO expansions too.
This have been a good conversation
If he ever posts or links it, I will be happy to provide the link. However, I will look into getting the links for the research provided and then see about posting that here (since most of the research was from outside sources).
I agree with most of the post, just quoting a bit of it. The "crash" of so many games which were announced as "revolutionary" (had great IP's, a huge fanbase, popular and financially strong dev/publisher etc.) just turned gaming companies into thinking short term. So we get (and probably it'll be like that for a while) shallow games, designed with 3 months of gameplay in mind ("players, they'll get bored and move away anyway"), aiming for a profit from box sales, sub money being just something "extra". Usually investors like to have examples to hang to ("who else did that?" "how did it turn out for them?"). The only really successful model is WoW so i doubt we'll see something truly different and revolutionary in the immediate future. Maybe some company which already has a strong MMO going, like CCP, Blizzard, Trion can afford to innovate.
From the "big titles" released lately i can see only two with some "staying power": Rift and TSW. Rift is strong because the company really understands gamers and the devs can see if a new feature is good or bad when someone comes with an idea. TSW has potential because it has a different approach and it'll always have its fanbase. I'm still dreaming about how TOR could've been if they would have invested the money from the annoying cinematics into the actual gameplay, developing better game systems etc.
"Its not an MMO"? That's not a good enough excuse to dismiss an example! Not to mention you attach a lot of your own bias there. If you really want to understand the market you have to look at the market as a whole. MMOs do not exist as a separate entity, they are online games just like any other and they need to be regarded as such. People who put them on a pedestial or, in their minds, keep them seperated from the rest are already taking a step in the wrong direction.
I skate to where the puck is going to be, not where it has been -Wayne Gretzky
What's a micro-transaction?
World of tanks is not an mmo. Its closer to a MOBA or a game like bloodline champions. Im sorry but this is MMORPG.com and more specifically the pub section where we discuss MMOS not the whole market of gaming. Im talking about mmos not shooters, not rts, not rpgs, not sports games, ect ect.
Playing: FFXIV, DnL, and World of Warships
Waiting on: Ashes of Creation
Think cash shop. Buying boosts and costumes in a ingame shop.
Playing: FFXIV, DnL, and World of Warships
Waiting on: Ashes of Creation
Then you are choosing to look at the world to a keyhole. It doesn't matter if its not an MMO. They affect the market no matter what you think.
"This can't affect MMOs, because it is not an MMO"
This line of thinking is wrong.
I skate to where the puck is going to be, not where it has been -Wayne Gretzky