Born Free

Published as part of our sister-site GamesIndustry.biz's widely-read weekly newsletter, the GamesIndustry.biz Editorial, is a weekly dissection of an issue weighing on the minds of the people at the top of the games business. It appears on Eurogamer after it goes out to GI.biz newsletter subscribers.

This week, Funcom's Age of Conan became the latest MMORPG to embrace the free-to-play, or freemium, business model. From this summer, the game's basic content - a fairly expansive experience in itself - will be available for free, with expanded content and various items purchasable for a price. The existing subscription model will also remain available, satisfying current users - but it's fairly clear where Funcom sees the game's future growth prospects.

In the massively multiplayer sphere, freemium - a horrible crime against the English language, but arguably a more accurate term than free-to-play - has emerged as the rival business model to subscription gaming. Originally adopted by Asian MMO operators, most notably those in South Korea, the model has more recently been embraced by several major western firms - to the extent that it's now being retrofitted to existing subscription-based titles, like Age of Conan.

There's an inevitable temptation, when a company makes a move like this, to interpret it as a sign of failure. Age of Conan is a game which has unquestionably underperformed expectations, its commercial prospects damaged immensely by an underwhelming and very buggy experience at launch which the company took far too long to repair. Dogged by the resulting negative perceptions and criticism, recovery has been slow and halting despite vast quality improvements in subsequent years. As such, the game's detractors will no doubt be quick to characterise the shift to freemium as a final, desperate throw of the dice.

Their argument is strengthened by a simple reality - if Age of Conan were doing very well from subscription revenue, this move wouldn't even be considered. The game's not in good company in this regard - the other high-profile freemium move that's ongoing right now is APB, the game whose disastrous commercial and critical failure sank developer RealTime Worlds.

Successful games don't make this kind of transition.There's no evidence of Blizzard moving World of Warcraft to a freemium model any time soon. When a goose is laying golden eggs, you certainly don't kill it, but you're also pretty unlikely to start feeding it something different or put it into a new shed - it might lay more eggs, but what if it stops entirely?

Yet even if the decision to shift an MMO from subscription to freemium is inarguably enabled by underperformance, that doesn't mean it's an act of desperation - and it certainly doesn't mean it's a mistake.

The experience of Lord of the Rings Online is a particularly interesting tale in this regard. LOTRO, unlike Age of Conan, enjoyed broad critical adulation from the outset and maintained a healthy subscriber base, even if it was never likely to give Blizzard any sleepless nights. Yet Turbine decided to turn the game over to a freemium model - and later reported that they'd trebled their revenues in the process.

LOTRO is hardly an isolated example, either. In fact, Funcom themselves have experience with this kind of transition - having done it before with Anarchy Online, way back in 2004. The move to freemium is credited with guaranteeing AO's long-term future, essentially taking a game which was widely perceived as commercially doomed and reinvigorating it to the point where it has now managed to become one of the longest-lived games in the genre.

Why does freemium work so effectively? Some of the benefits are very obvious. It breaks down barriers to entry, by allowing players to experience the game without making a financial commitment. Even offering a month's free play time doesn't have quite the same impact on players - those playing a free month are aware that a financial commitment is expected of them shortly, which makes them less likely to engage fully with the game and more likely to be hyper-critical of any failings. A free month is a test drive, a demo; a freemium game is something players can engage with in the knowledge that they can keep playing and won't be forced to pay at any point.

Freeing the player from financial commitment offers a number of other side benefits which make the game much more attractive. It means that cash-strapped players don't necessarily have to pay for the game each month - they can buy stuff in months when they're a little more flush, but can keep playing for free at other times. That's not just appealing to younger players, students and so on; it's also appealing to those who already have financial commitments to other game subscriptions, and don't want to increase that burden.

What that means is that a freemium game can survive, and even prosper, even in a market where there's already a huge, subscription-based game effectively monopolising the lion's share of the player base. It's no coincidence that that's exactly what the MMO market looks like right now. Subscription based games are essentially trying to wrestle players away from World of Warcraft (or other subscription rivals, but primarily WoW), or asking them to pay a second monthly subscription - which is pretty unlikely. Freemium games can coexist side by side even with an 800 pound gorilla like WoW, letting players engage casually at first and later invest as much, or as little, time and money as they'd like.

That leads on to the less obvious but perhaps even more powerful aspect of the freemium offering - the fact that it lets players decide how much they want to pay for the game based on how engaged they are with it. In a subscription game, players essentially pay the same amount of money regardless of whether they raid six nights a week with their guild and spend hours each day crafting or completing daily quests - or just log on for a couple of hours on a Sunday afternoon to meander through story quests on a months-long road to the top level.

Freemium games change this model to one where casual players generally don't pay anything, or make only small, occasional payments - but those who are deeply involved with the game pay for new content as it appears, and probably keep themselves topped up on premium items as well. It's tough to strike a balance, of course - you don't want a situation where people can basically pay their way to having a character that's better than everyone else - but the ability to cultivate "whales" among your audience, high-paying consumers who make up a decent percentage of your revenue base, is a major benefit.

Failures of that balancing act lead to the most common criticisms of freemium. It's tempting, from a business perspective, to make the premium items as powerful as possible so that more and more people will buy them - but if they actually make a huge impact on the game balance, casual players will be discouraged by the obvious imbalance, and more dedicated players will come to see such items as a resented tax rather than a welcome option.

Such balance problems are most likely to emerge, of course, if you're retrofitting the freemium business model onto a game that was never designed for it. That's arguably one of the things which many western MMO developers have failed to understand - that the business model and the game design aren't separate things, or at least, that they shouldn't be. They're tightly related to one another, and should be developed side by side. How a player pays for the game is a core part of his interaction with that game, and forms a major element of his thinking with regard to the game - an element that needs to be understood and respected in the game design from day one.

It's entirely possible to carry out a successful retrofit - LOTRO and Anarchy Online stand as good examples of cases where this has been carried out. Yet they both beg an essential question; if this is, as seems likely, the ultimate destiny of a great many MMOs, why don't developers grasp the nettle and build their games to a freemium business model from the outset? Why the reluctance to embrace this model, the determination to stick with the boxed game and monthly subscription business model which has worked wonderfully for World of Warcraft but crippled most other games that have followed in its footsteps?

Indeed, it's WoW's very success that should be driving other developers to recognise freemium as a sensible option for their games from the word go - and rather than simply accepting that success, it's also an interesting mental exercise to wonder how much money Blizzard could be making if they, too, used freemium. They won't; WoW has too much to lose, and Blizzard's willingness to take creative risks with the game is unlikely to be matched by an appetite for fundamental changes to the commercial structure behind its success. But considering the number of potential "whales" in the WoW playerbase, it's highly possible that WoW could be an even more profitable game if it left behind the subscription model.

Retrofits for games such as Age of Conan, LOTRO and perhaps even APB are a good idea, and if executed well, can turn around the fortunes of a game. In future, though, it would be nice to see less retrofits and a lot more thought being given to a long-term freemium future for MMOs, right from the outset of each new project.