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F2P profits

Four0SixFour0Six Missoula, MTPosts: 1,181Member Uncommon

I am wondering where the profits in F2P come from.

How is it that publishers can publish for "free" but make more money?

I think we as players need to take a serious look at what we are doing because I think we are getting fleeced.

I hear a few theories.

One, is that a "few whales" over spend and fund the game for us all. I just don't think this possible. There just isn't enough in the shop to generate the cash needed. Unless these whales are spending repeatedly on multiple items they don't need and can't use.

Two, is that "most players spend a few dollars, less than 5". This again makes no sense to me. How could it be, even in every playing player paid his or her 5, that is still less than if they had subbed.

So here is my hyperbole:

"We as players are blind to the reality. The reality is that most paying players, are now paying more than they would pay for a sub."-Me.

This happens because of clever marketing, and evil trickery.

First marketing. They offer convenience items. XP boost is the favored one. "Well that sure would help, I'll take 2." They offer vanity items, pets, clothes yadda yadda. They also continually add to the shop to foster the "I want the new" attitude.

Now some Evil Trickery. The first one I see is that they don't actually take money for a backpack. They take some made up company specific currency. That backpack is only 135 of these credits, but I can only buy them in sets of 1000. "But I don't want anything else, just the backpack.". This is quickly followed by "Hey, If I got the 1K credits, got my loot, but still have 83 credits left, but the cheapest item is 100.". This answers the "Why cant I just buy a backpack for $2.99?". The trickery also comes into play when charging for "services". This is not a charge to actually do the service, but a fine. When you pay for a server transfer, you activate a bit of code that moves your pixels to a different server. Unlike another service industry, food service, where the price of your hamburger pays the worker that actually made it. Sure I know some techie had to write that code, but I figure Blizz just handed out that codding assignment to an already salaried code writer. Not like he or she gets a dollar every time a server transfer happens. So, again these service fees are actually fines. Since you could reroll for free, but if you want to make Jack into Jill, or move to the next block of servers there is a fine. My personal favorite trickery is the cash shop items that last for X number of days. My, non gaming accountant wife, looked over my shoulder at a cash shop I was looking at, and asked, "If you have to buy a new one every month, isn't that a subscription?". Damn she is smart and I am lucky as hell to have found her.

Now I understand there is lots of play a player can get for "free". But, I wonder at the quality.

This morning I was checking out Rift again and I found that they are rewarding subscribers with a permanent mount speed increase. Interesting since a major selling point of SL was the increase in land mass. Now I'll pay a sub. But 10% mount speed isn't worth my 15 a month, and if you want to sell me something, I only pay with money, not Gems, Rex, Plex, LoopyLoos, seashells, any of it, just money. I suspect most wont agree with me that this is a deal breaker, but for me it is.

I do understand the F2P is here to stay, no not because Blizz is adopting a cash shop, but because I see the same pricing in air travel. Carriers are now charging for every little "convenience". From pillows to blankets even now the overhead compartment, comes with a fee. First it was the small no frills cheap-o flights that did this. Then the larger legacy carriers began adopting them. I am sure there are plenty of other examples as well.

I am a capitalist, I have my reasons. I don't fault companies for doing what ever they need to do to raise profits. I don't even fault that consumer that  fails to see the light and gets fleeced over and over again. Although I do think we would live in a different world, if more would ask, "Where does the money come from?".

 

Thanks for reading, Four0Six out.

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Comments

  • nariusseldonnariusseldon santa clara, CAPosts: 22,441Member
    Originally posted by Four0Six

    I am wondering where the profits in F2P come from.

    How is it that publishers can publish for "free" but make more money?

    I think we as players need to take a serious look at what we are doing because I think we are getting fleeced.

    I hear a few theories.

    One, is that a "few whales" over spend and fund the game for us all. I just don't think this possible. There just isn't enough in the shop to generate the cash needed. Unless these whales are spending repeatedly on multiple items they don't need and can't use.

    "you don't think it is possible"? That is your argument?

    How do you know? Have you seen any statistics?

    Have you heard of xp boost? That obviously needs to be purchased again and again.

    One thing i know for sure though .. where-ever F2P profits are from, they are not from me since the total amount I have spent, so far, is exactly zero.

  • ArclanArclan Chicago, ILPosts: 1,494Member Uncommon

    Excellent post OP. But, you posted this on a Saturday when everyone (else) was offline.


    I agree to much of what you said. But, I think F2P is a fad that will soon be identified for what it is: a deceptive business practice. For that matter, I think the government is about to step in to deal with deceptive business practices being experimented with by the airline industry.

    Luckily, i don't need you to like me to enjoy video games. -nariusseldon.
    In F2P I think it's more a case of the game's trying to play the player's. -laserit

  • GdemamiGdemami Beau VallonPosts: 7,865Member Uncommon

    "I do not understand how F2P works, therefore everyone else must be stupid."

    For real..?

  • DihoruDihoru ConstantaPosts: 2,731Member
    Originally posted by Arclan

    Excellent post OP. But, you posted this on a Saturday when everyone (else) was offline.


    I agree to much of what you said. But, I think F2P is a fad that will soon be identified for what it is: a deceptive business practice. For that matter, I think the government is about to step in to deal with deceptive business practices being experimented with by the airline industry.

    The normal US citizen still defends their health care system when it will readily leaves them to die and no one's really calling bullshit on that even after 20-30 years of it being common knowledge.

     

    Also F2P, real F2P the kind that offers quality of life and cosmetic items only, is here to stay , don't doubt that just hope we get to the better models faster (the ones where monetary investment in the game is optional and the only disadvantage you'd have is a larger requirement in time).

    image
  • whisperwyndwhisperwynd montreal, QCPosts: 1,479Member
    Originally posted by nariusseldon
    Originally posted by Four0Six

    I am wondering where the profits in F2P come from.

    How is it that publishers can publish for "free" but make more money?

    I think we as players need to take a serious look at what we are doing because I think we are getting fleeced.

    I hear a few theories.

    One, is that a "few whales" over spend and fund the game for us all. I just don't think this possible. There just isn't enough in the shop to generate the cash needed. Unless these whales are spending repeatedly on multiple items they don't need and can't use.

    "you don't think it is possible"? That is your argument?

    How do you know? Have you seen any statistics?

    Have you heard of xp boost? That obviously needs to be purchased again and again.

    One thing i know for sure though .. where-ever F2P profits are from, they are not from me since the total amount I have spent, so far, is exactly zero.

    You might also try these, far from being "theories":

    http://www.gamasutra.com/view/news/29076/Study_Social_Gaming_Whales_Spending_25_Per_Month_On_Virtual_Goods.php

    http://venturebeat.com/2010/06/22/social-game-whales-are-big-spenders-on-facebook-survey-says/

    http://www.businessinsider.com/super-whales-are-spending-over-10000-on-social-games-2010-6

     

    I doubt they simply 'came up' with this theory.

  • VengeSunsoarVengeSunsoar Posts: 5,316Member Uncommon
    Originally posted by Four0Six

     

    So here is my hyperbole:

     

    I agree.

    Quit worrying about other players in a game and just play.

  • DamonVileDamonVile Vancouver, BCPosts: 4,818Member

    I don't think you're wrong but I do think there are good and bad f2p models and what seems to happen more often than not is people who like f2p defend it by their experience in the good examples and people who dislike it try and use the bad ones to show why they're all bad.

    f2p isn't going anywhere but as people become more educated on what is and isn't a good model the bad ones will hopefully have a much harder time finding the suckers.

  • VengeSunsoarVengeSunsoar Posts: 5,316Member Uncommon
    Eventually the bad ones of anything leave, they may enjoy a flash in the pain success but only ones that have some redeeming features stick around.

    Quit worrying about other players in a game and just play.

  • laokokolaokoko TaipeiPosts: 2,003Member

    The reality is those f2p games with a subscription, a huge percent of people actually pay a subscription. 

    Another reality is some games do have "whales" paying for everyone.  Those games with inifnity gear tradmill have infinit spending possibility.  One of the game I played probably cost 50k to max out gear.  And even if you max out, new tier come out every few month.

  • VengeSunsoarVengeSunsoar Posts: 5,316Member Uncommon
    The only one I've heard of that specified how many subscribers vs free players was swtor. They said 500k subs and 2 million ftp. So sub was 20% of the population, anyone know if that is average?

    Quit worrying about other players in a game and just play.

  • uplink4242uplink4242 fx, MTPosts: 246Member
    With the sheer amount of f2p games available thesedays you're still doubting if they make a profit? While one thing does not necessarily imply another, it's very hard to argue otherwise.
  • MothanosMothanos ArnhemPosts: 1,860Member Uncommon

    What is even more disgusting is studio's still charging 15 euro a month for sub par mmo's and not releasing contend fast enough for their players who are paying a full sub each month.

    There are good and bad free to play games.
    The worse one's are pay to win and the more expensive games.
    The good one's are cash shops with only visual / armor skins / extra exp boost like items.

    There is also buy to play games and GW2 has done that implementation perfectly.
    I can trade my gold for item shop currency if i want and vice versa.

    Even the mighty WoW is going to change this or next year as subscription fee's are not realy worth it anymore.
    That doesnt mean its a good change, some mmo's are realy worth it for some people.
    For example Eve Online i have no problem paying a sub for that one :)

    But most mmo's just dont deliver the contend for what you pay for it.

  • craftseekercraftseeker kynetonPosts: 845Member Uncommon
    Originally posted by DamonVile

    I don't think you're wrong but I do think there are good and bad f2p models and what seems to happen more often than not is people who like f2p defend it by their experience in the good examples and people who dislike it try and use the bad ones to show why they're all bad.

    f2p isn't going anywhere but as people become more educated on what is and isn't a good model the bad ones will hopefully have a much harder time finding the suckers.

    With one proviso: If the company is not making more money each month they did with the subscription model they will tinker with it until they do.  Once they work out how their audience can be induced, on average, to pay more than the subscription model they will ratchet it up for whatever the market will bear.

  • nariusseldonnariusseldon santa clara, CAPosts: 22,441Member
    Originally posted by whisperwynd
    Originally posted by nariusseldon
    Originally posted by Four0Six

    I am wondering where the profits in F2P come from.

    How is it that publishers can publish for "free" but make more money?

    I think we as players need to take a serious look at what we are doing because I think we are getting fleeced.

    I hear a few theories.

    One, is that a "few whales" over spend and fund the game for us all. I just don't think this possible. There just isn't enough in the shop to generate the cash needed. Unless these whales are spending repeatedly on multiple items they don't need and can't use.

    "you don't think it is possible"? That is your argument?

    How do you know? Have you seen any statistics?

    Have you heard of xp boost? That obviously needs to be purchased again and again.

    One thing i know for sure though .. where-ever F2P profits are from, they are not from me since the total amount I have spent, so far, is exactly zero.

    You might also try these, far from being "theories":

    http://www.gamasutra.com/view/news/29076/Study_Social_Gaming_Whales_Spending_25_Per_Month_On_Virtual_Goods.php

    http://venturebeat.com/2010/06/22/social-game-whales-are-big-spenders-on-facebook-survey-says/

    http://www.businessinsider.com/super-whales-are-spending-over-10000-on-social-games-2010-6

     

    I doubt they simply 'came up' with this theory.

    Yeh .. hunting whales is not exactly a new thing by now. They have literally perfect it to a science.

     

  • greenreengreenreen Punchoo, AKPosts: 2,101Member Uncommon

    Well here are some ideas on information that could be sold about free players. That could turn a profit privately and not be subject to discussion unless someone got mad at a company wanting to "rat" on them. Now, I have no proof of these things but my imagination can come up with them.

    Selling records of email addresses or names of people that did buy things if they associate themselves with a payment system in the games they play instead of using anonymous cards. Could be used to target or screen those players for beta entry into a new game created. Makes sense, casinos know the names of their whales (the originator of the term) and greet them around the world as such. In turn, they also know the people that have been caught cheating too. If you consider cheating not paying - you could be categorized that way. If I made many games, I would want a list of people who have spent money in other games and invite them into mine too.

    Along with identifying the spenders, a list could be created and sold that identifies the people who have never paid. If retailers got together and the players who didn't contribute were identified, they could put together a potential blacklist for future games released. Not something that they talk about but something more sly. Ever see the person on the forums that says they were banned because of something they didn't do or they were accused of being a bot etc. Perhaps they just ended up on a blacklist of players who have never spent in any game they played. I wouldn't think it unreasonable for them to be purged if the population was otherwise fine, they are deadweight in the eyes of profit anyway thinking from a business perspective. Say you find 2 players exploiting, one pays and one doesn't - who would be better to ban, things like that.

    Same sort of lists could be used to monitor any sort of behavior, does the person PVP, do they work in groups or solo, are they interested in the economies and trade a lot.

    I think that if you had lists of all these data points about players you could not only invite people into the game you were making that would make their screams about it's greatness bolder but you could systematically chop out the players that don't fit your market or have a history of being bad seeds in other ways.

    You know what they say - when something is free - you are what is being sold.

    I wouldn't put it beneath gaming companies to sell lists because other companies have done it, what makes them so profoundly special, they still want profit. If they can't make profit from you buying something, they might as well sell you. It's the reason you get junk mail. I talked to someone about insurance once and denied their plans then for months I got mail from different insurance companies that they sold my name to as a "hot lead". They intended on getting paid - by premiums or reselling my information - mattered not the source.

    Again, I have no proof but I know marketing and slurping up pieces of data is a hallmark of it - free players would drop pieces of data just like paying players when you can send any keystroke back to a program that you created.

    That white was killing my eyes - hello pink.

     

  • reeereeereeereee Posts: 1,203Member Uncommon
    Originally posted by Four0Six

    One, is that a "few whales" over spend and fund the game for us all. I just don't think this possible. There just isn't enough in the shop to generate the cash needed. Unless these whales are spending repeatedly on multiple items they don't need and can't use.

    What f2p game are you playing where this is true? 

     

    You clearly underestimate the value of whales for most/all f2p games.  One idiot dropping $10k in the cash shop is equivalent to 56 people paying a full years worth of $15 a month, and the sad truth is some people will spend ridiculous amounts of money even on bad games.  PWI had guilds where most of their members spent over a thousand dollars in the cash shop and several into the tens of thousands.

  • Trudge34Trudge34 Stevens Point, WIPosts: 392Member Uncommon
    Originally posted by reeereee
    Originally posted by Four0Six

    One, is that a "few whales" over spend and fund the game for us all. I just don't think this possible. There just isn't enough in the shop to generate the cash needed. Unless these whales are spending repeatedly on multiple items they don't need and can't use.

    What f2p game are you playing where this is true? 

     

    You clearly underestimate the value of whales for most/all f2p games.  One idiot dropping $10k in the cash shop is equivalent to 56 people paying a full years worth of $15 a month, and the sad truth is some people will spend ridiculous amounts of money even on bad games.  PWI had guilds where most of their members spent over a thousand dollars in the cash shop and several into the tens of thousands.

    My boss plays SWTOR. A few of his guildies spend a few hundred-thousand each month trying to get the latest speeder skin or whatever other cosmetic thing they put in with those lockbox type items. That's how F2P survives. Companies rave about the free to play model, not because it's good for the consumer, it's good for business. 

    Played: EQ1 (10 Years), Guild Wars, Rift, TERA
    Tried: EQ2, Vanguard, Lord of the Rings Online, Dungeons and Dragons Online, Runes of Magic and countless others...
    Currently Playing: GW2

    Nytlok Sylas
    80 Sylvari Ranger

  • Superman0XSuperman0X San Jose, CAPosts: 1,599Member Uncommon

    In the western markets, the most common form of monitization for F2P games is subscriptions. So, you are probrobly asking, 'Why go F2P, when you are going to make money on a sub?" Well, by making your game free, you get a huge boost in the number of players. Most of these players are not going to pay... but F2P makes marketting cheap enough, and effective enough that you can double the amount of active subscribers, by converting from P2P to F2P.

     

    Now, it is also very common for games to tack on micro(and macro) transactions in the form of virtual item sales, new content (expansions), and services. This not only increases the amount that an individual can spend in a month, but allows those that do not want to pay the monthly fee, to buy as they go. This further increases the amount of paying customers.

     

    So, is this good for the players? Actually, yes. The vast majority of the players are not paying anything (awesome deal here). The next big group is those paying the subs, and they are getting the same deal that they were before. Then there is the pay as you go... which is where there are extreme ranges. Some pay very little, some pay a whole lot. All these things considered, this is a better deal for almost everyone, with a few that pay more.

     

    Is this good for the game? Well, yes. F2P brings in a lot more players. Sure, most of them will never pay for anything, and may play for years, for free. However, this activity is what brings in new players, and convinces them to pay. Overall, F2P makes more money for the simple reason that it reaches more players. The only people that could be considered 'losers' here are the whales, but only because other players dont see the same value that they do.

  • Squeak69Squeak69 Colorado Springs, COPosts: 956Member
    Originally posted by Dihoru
    Originally posted by Arclan

    Excellent post OP. But, you posted this on a Saturday when everyone (else) was offline.


    I agree to much of what you said. But, I think F2P is a fad that will soon be identified for what it is: a deceptive business practice. For that matter, I think the government is about to step in to deal with deceptive business practices being experimented with by the airline industry.

    The normal US citizen still defends their health care system when it will readily leaves them to die and no one's really calling bullshit on that even after 20-30 years of it being common knowledge.

     

    Also F2P, real F2P the kind that offers quality of life and cosmetic items only, is here to stay , don't doubt that just hope we get to the better models faster (the ones where monetary investment in the game is optional and the only disadvantage you'd have is a larger requirement in time).

    I don't disagree with your firt statement but what dose that have to do with F2P

    and as for your second statement, can you name a F2P that has nothing but cosmetic items in it, and is of decent quality.

    F2P may be the way of the future, but ya know they dont make them like they used toimage
    Proper Grammer & spelling are extra, corrections will be LOL at.

  • AxehiltAxehilt San Francisco, CAPosts: 8,744Member Uncommon

    F2P games survive on ~1% (most games) to over 30% (TF2) payer conversion (meaning 30% of players pay.)

    A good rule of thumb when I know little about a topic is that I spend more time listening than speaking.  The 10+ minutes it took you to post the OP would have uncovered a lot of information on F2P revenue, buyer conversion, and related info, if you had spent it googling the topic instead. 

    "Joe stated his case logically and passionately, but his perceived effeminate voice only drew big gales of stupid laughter..." -Idiocracy
    "There is only one good, knowledge, and one evil, ignorance." -Socrates

  • evilastroevilastro EdinburghPosts: 4,270Member
    The profits come from a few so called 'whales' who have more disposable income than others and are happy to throw down far more than the standard $15 per month on games they enjoy. In the old system, they would get $15 per person, no matter how much that person was willing to spend. In F2P models, sure you will get some moochers, but most are happy to throw in a few bucks, and some are happy to throw in quite a bit more.  Also without the barrier to entry that P2P has, people can jump in and see if its what they like at any time.
  • Sorien88Sorien88 , ALPosts: 15Member
    Path of Exile.
  • maplestonemaplestone Ottawa, ONPosts: 3,099Member
    Originally posted by Axehilt

    F2P games survive on ~1% (most games) to over 30% (TF2) payer conversion (meaning 30% of players pay.)

    Does that stat come from MMOs or mobile apps?  Are they actually similar?

  • AxehiltAxehilt San Francisco, CAPosts: 8,744Member Uncommon
    Originally posted by maplestone

    Does that stat come from MMOs or mobile apps?  Are they actually similar?

    That's the spread of the entire industry, from mobile to TF2.  (Although I simplified the less-than-1%-conversion numbers to 1%.  Some games survive on less than 1%.)

    I would guess F2P MMORPGs are in the 1-5% conversion range, but this comes only from having worked on several F2P titles (none of which were MMORPGs, so it's still just a guess.)

    TF2 having 30% conversion is actually ridiculously unusual for a F2P game (and might simply be misleading stats from their P2P to F2P switch.  Games like SWTOR could have ridiculously high conversions if the stats are calculated that way, since they started with millions of payers from when the game was P2P, then their player acquisition slowed, so by the time they went F2P they weren't actually getting many new customers -- leaving the lifetime payer-to-customer ratio (buyer conversion) extremely high.  But the real number that people should care about is the true conversion at any given moment (that is, how many new SWTORs convert to payer in the current game.))

    "Joe stated his case logically and passionately, but his perceived effeminate voice only drew big gales of stupid laughter..." -Idiocracy
    "There is only one good, knowledge, and one evil, ignorance." -Socrates

  • GeezerGamerGeezerGamer ChairPosts: 5,590Member Uncommon
    Originally posted by Mothanos

    What is even more disgusting is studio's still charging 15 euro a month for sub par mmo's and not releasing contend fast enough for their players who are paying a full sub each month.

    There are good and bad free to play games.
    The worse one's are pay to win and the more expensive games.
    The good one's are cash shops with only visual / armor skins / extra exp boost like items.

    There is also buy to play games and GW2 has done that implementation perfectly.
    I can trade my gold for item shop currency if i want and vice versa.

    Even the mighty WoW is going to change this or next year as subscription fee's are not realy worth it anymore.
    That doesnt mean its a good change, some mmo's are realy worth it for some people.
    For example Eve Online i have no problem paying a sub for that one :)

    But most mmo's just dont deliver the contend for what you pay for it.

    What ever the side of the fence you sit on, This statement right here is the most profound statement out there when it comes to the F2P vs P2P argument.

    Seriously, You can argue all day long there is no room for a subscription model anymore. But I disagree. All we have are shitty games that you burn through in a week or 2. How's that worth a subscription?  But what if there was one worth playing long term? You mean to tell me you won't subscribe if the game is worth playing for months and moths?

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