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Some Insight on F2P
Boognishe
Member Posts: 83
Read this on the ESO subreddit this morning. I thought it was very interesting.
I am not the author of this post:
So I was reading through a lot of comments on ESO being Pay to Play instead of the (surprisingly) popular free to play model. First things first, I work in the free to play business as a "product optimization manager" which can be translated to "monetization maximizer".
Yes f2p games are basically free to play, but let's be honest, if the companies behind them wouldn't make money the model would simply not exist.
The problem I have with f2p games is that I know the drive behind developing patches and content for one. You are no longer concerned with what your users actually want or what would be cool to add to the game, you are only concerned with how to get their money by pretending to give them what they want.
All f2p games strive to maximize their ARPU which is the average revenue per user. Whether you earn money with a free to play game or not is a simple equotation:
If your ARPU is Higher than your CPL you have basically won. CPL means cost per lead, it's the cost of acquiring a new user for your game with marketing, cooperations or other "user generating activities"
For MMOs the calculation is a bit trickier, because you have higher running costs on the serverside and for support as, for example, a Clash of Clans or Candy Crush Saga. So you have to get the ARPU even higher to become profitable.
That's when the so called ARPPU maximization comes in. ARPPU means, some might have guessed it, average revenue per paying user. This is how much a paying user spends in your game over a certain period of time. And you can increase this by adding stuff like those hated boxes in tera, mounts, vanity- and status-items. Stuff that (from a normal gamers' perspective) nobody even needs. If working in the field has told me one thing it is that if you just get enough people in your game, one person will buy that 1000$ Item.
It's not just that I don't like being thought of as a random number in a product optimizers' eyes (ironical I know), I also don't like the stuff f2p companies do to maximize their revenue.
They run ab tests, they will basically tweak the game for everybody who is not paying and try to make them pay. A lot of work during patch-cycles goes just into that, thinking of ways to make more people play. Fun becomes what I call a "secondary KPI", KPI meaning "key performance indicator".
Of course some of you might raise their voices and point out that companies like Wargaming, Riot, even the much hated EA are running free to play games and they are not pay to win.
But their games were either directly made to be f2p or, as in swtors' case, had to go f2p in order to earn their production cost back to a certain degree. Had SWTOR and LOTR not cost what they did, the companies behind them might just have shut them down, instead of reworking them into f2p.
And even if you think LoL is not pay 2 win, consider the casual players. Riot doesn't make their money off core gamers, they earn most on the casual. The guy who can't just grind all those points.
But enough hating on the business model that pays my bills...
If you think about the pay 2 play model ESO is employing and the megaserver the are using there are some interesting insights to be gained:
- they can scale one server (yes technically it's not just one server, but for simplicities sake let's just say it is)
- because they have paying customers they don't have to care about stuff like ARPPU and ARPU and can focus all their effort on the actual game
- The suits will be silent. Believe me, nothing makes people in suits more uncomfortable than unsteady income. Just one bad day of payments in a f2p game can drag down whole developement teams.
- They have to be closer to us, the community. Yes they will still use metrics, but in f2p games I often find players saying one thing, while the numbers (which in f2p are the holy grail) are saying something completely different.
- because of this the feedbackloop between the players and developers is much much faster. And we, the players, have a much higher influence (whether we use it or not is up to us)
Finally I would like to break down, what ZO has to earn back per user: Lets assume ESO cost 150million up to now, which in my opinion is a nice estimate. The 200+ that were mentioned in this one post might also be possible and maybe even likely if you consider this game has been worked on for over five years now.
First: I never worked in the US and am not familiar with their business plans, or how they do their accounting. This are mostly guesses and estimates I think can add up to realistic numbers
Yes we will pay 75$ or something around that just for getting the game. Now for an MMO sales are something really, really funny. ZO will maybe get 20$ of those 75$ after tax, box production cost, shipping and distribution.
So let's assume 4 million people buy the game on launch-day. Yes Skyrim sold 7 million, and a healthy 20 million across all platforms. Zenimax online would make a whooping 120million with that. But
- production cost usually doesn't cover marketing spending. A medium sized marketing campaign for an AAA-game in the US can easily cost 10million nowadays.
- some running costs don't count into this as well. Those guys who handle their twitter and facebook page don't work for free
- servers for MMOs are fucking expensive
- a good support team costs a fortune
So let's say Zenimax has earned 80 million back with the sales, some more sales coming in over the next couple of months. Of those 4 million players maybe, just maybe, 3 million will stay and continue playing. That's another 45 million $ the next month, right? Wrong:
- taxes: 15-30% (depening on how we pay them, also dependent on the country) = -6.75 million to -11.25 million
- salaries: (let's say they have 150 people working, 50 on social media, the forums and support, 20 in marketing and the rest in development, each earns just about 8k a month) = -1.2 million
- rent: Let's just say office space can be expensive. But I doubt it's more than one million. = -0.5 million
- marketing: Marketing is expensive, but everybody does it, right? = -10 million (one medium campaign, not the shit GTAV pulled off)
- servers: if they are good each user will cost between 0.1$ and 0.5$ = -0.3 million to 1.5 million (this is my biggest guesstimate here, I don't have numbers to back this up)
So of those 45 million there are, worst case, only 8.45 million left. Do the math, that's why EA decided to rework SWTOR. The problem with MMOs is the work only starts on release day. And it never ends.
TL;DR:I like p2p more than f2p and 15$ a month is nothing compared to going to the cinema or ordering food.
So let the hate-rain begin XD
Edits: because I suck at grammar and not seeing typos... Edit 2: salary dimension was not fitting thanks u/r4gzz
Comments
Currently playing: Eldevin Online as a Deadly Assassin
"You are no longer concerned with what your users actually want or what would be cool to add to the game, you are only concerned with how to get their money by pretending to give them what they want."
For me this is the crux of it. But not simply with F2P games, the P2P games also seem to want you to feel that you got value for the monthly feed by pretending to give you what you want. I think it is assumed it far easier to pretend to give you what you want then actually giving you what you want. I don't think that has to be the case but there is alot of factors involved.
There is no way to come to grips with any game because only the developer knows the expenditures and income coming in.
One dev might try to keep the game going strong so invests with more employees and content,while another might downgrade to a team of 15 and do nothing but GM work and minimal support.
Then you look at a giant like EA,they have a LOT of big shots to pay salaries,those guys do almost nothing for the game development,they are simply CEO and President's and ViceP and marketing ect ect.This means that AVERAGE costs or profits don't mean squat to us,it would change from developer to developer.
The only thing that matters to the gamer's is the people actually working on the game engine and the game,the people making new scenarios,maps,quests,items ect ect,all that overhead is what leeches from games and EA has a lot of overhead.
Point being developer A might be able to operate really well with a profit of 3 million a month,while EA might need to see 200 million a month.That could spell disaster for any game that is not making enough profit to satisfy the developer.
F2P is not a business model far i am concerned,it is a GIMMICK to entice players to a game that nobody would play if it was selling with a subscription.Their goal is to preach FREE then slowly grind money out of your pocket.There is NOTHING on the up n up with cash shop gaming.
IMO cash shop gaming is a REAL bad business,i would only go that route ifi had no choice and as i stated,i feel those games have no choice.A SMART business operation wants to know exactly what they are working with for expenditures and income,at least as close as possible and cash shops give absolutely ZERO insight to what is coming next for revenue.
Never forget 3 mile Island and never trust a government official or company spokesman.
If you cannot make something they want to buy, how do you get their money?
Here is the problem; if your game has a million players, it has a million "yous" each of whom has different wants. The companies job is not to pick a specific "you" and try to give him/her a perfect experience, it's to figure out how best to invest resources to keep as many "yous" spending money on the game as possible. Often, that means content that doesn't make any particular you extremely excited, but manages to keep most of the people playing and paying in some form, which is the goal.
This is all true whether your pay system is purely sub, all cash shop, or a hybrid. Cash shop and hybrid just mean a wider variety of options for the developer on how to make people want to stay.
Peace is a lie, there is only passion.
Through passion, I gain strength.
Through strength, I gain power.
Through power, I gain victory.
Through victory, my chains are broken.
The Force shall free me.
One way is to make promises you really can't deliver on, delay and stall and/or provide something based on those promises that satisifys most but really isn't what you promised.
Certainly, it is not to the point where I am individually marketed to so the wants are not specific to me but the customers as a group. Are you saying that they don't pretend it's just something that isn't marketed to me? That really hasn't been my experience more promise of something that leads to the delivery of something less or nothing at all.
I agree that the payment method is not the deciding factor that was my main point.
It's weird calling some games F2P, because many of them actually have an option sub.
Take SWTOR for example. They actually have 500k subs somewhere in time after they switch to F2P(Freemium).
But assuming the data from superdataresearch is correct. SWTOR makes more money from micro-transaction than their freemium subs.
I think the truth is being as greedy as possible is the best pricing model. Many games dont' choose to go freemium. They just think they have to go F2P to drive in more people.
That's the thing though, "the customers as a group" don't have a consistent set of wants. Anything they put in for a specific sub-audience is going to cause other sub-audiences that didn't get something to cry. Devote your resources to making Raiders happy, the PvP crowd cries and/or leaves, devote your resources to making PvPers happy, the Raiders cry and/or leave. No matter what you do (if you stick with a sub only model) the casuals eventually leave, because they don't care about endgame.
The point of my ramble is that trying to keep a MMO player base happy is about as easy as herding cats. Sometimes when devs promise something and then deliver less or nothing, it's not because of any dishonesty or malice, it's because at some point after the promise was made somebody crunched the numbers and realized that not enough of the game's players were likely to be interested in the particular feature or piece of content to justify the cost it would take to implement it.
Peace is a lie, there is only passion.
Through passion, I gain strength.
Through strength, I gain power.
Through power, I gain victory.
Through victory, my chains are broken.
The Force shall free me.
Monetization is much more complex than selling the user something he wants.
There is a lot of psychology involved, and a lot of tricks to be exploited.
Just as random example:
Even something trivial like those game or dev specific virtual currencies in the shops (gems, coins, whatever else they use) are basically just vehicles to make users spend more without realizing it.
They separate real money from your actual item purchases (layering), this makes the decision to buy items much easier. The brain is easily tricked and doesn't think/ponder more than it has to, omitting unimportant things.. like that you are actually spending real money
Special bonus points to the dev if you can spend those virtual coins ingame, without being reminded that you are spending real money in a store at all.
Also, item prices and coin purchase bundles are carefully finetuned to maximize spendings even more. (ever bought something and had 0 coins left? Didn't think so. Those left over coins.. mmmhhh... come on brain, we can't let them go to waste!)
Not to mention those bulk coin offers make your brain feel "smart".. you are buying at a discount after all! Good brain! Goood. Buy!. Thank you. Now sit!
There is actually a lot more we could add just to this one little piece of the system.
And we didn't even get started on any of the really "fun" monetization methods yet.
Read up on monetization tricks and methods, it is a very interesting subject and there are some articles out there that are a good read.
There have been studies on this sort of thing and gamespot did a couple of videos summing them up that I psoted before but were pretty much ignored but what the hell.
Part 1
https://www.youtube.com/watch?v=px74uw4ExN4
Part 2
https://www.youtube.com/watch?v=QV0IALUrllY
Agreed. Thanks for sharing, Boognishe.
Also, I think this article will have many of the "F2P" crusaders on this site searching for words and scratching their heads. That's what happens when you get information like this from a source like that. The truth of "F2P" isn't pretty like many around here would have you believe.
"Mr. Rothstein, your people never will understand... the way it works out here. You're all just our guests. But you act like you're at home. Let me tell you something, partner. You ain't home. But that's where we're gonna send you if it harelips the governor." - Pat Webb
It doesn't need to be pretty to be profitable, and that is why companies exist, to generate profit. If you want companies to behave differently, you first need to get customers to behave differently, not blame companies for responding appropriately to customer behavior.
Peace is a lie, there is only passion.
Through passion, I gain strength.
Through strength, I gain power.
Through power, I gain victory.
Through victory, my chains are broken.
The Force shall free me.
Check the quote. They are giving them something they percieve they want (or feel they "need") to buy but not neccesarly something the users would actualy find fun/entertaining. The human psyche is an odd thing and it can be manipulated in very unwholesome ways.
Many Casino's or Off-Track Betting facilities heck even the lottery often operate under similar premises.
If you walk into many Casino's or just about any Off-Track Betting facility, you'll notice that a good percentage of the people there aren't having fun, in fact some are downright miserable. However, they keep playing because they are obsessed with the idea of "winning" or of making back what they already "invested", it's not that they are actualy getting what they want, it's the promise that if they just keep spending they MIGHT in FUTURE obtain what they want even though they hardly ever do.
Facilities (and sometimes software Developers) can play upon the psychology of vulnerable individuals to promote such behavior.
Now, I'm not saying that EVERY F2P Developer or every Casino's, etc goes off the deep end with such manipulation but some most certainly do.
Let me try to get this straight; you are saying that because some customers behave irresponsibly, no company should offer any product which might happen to appeal to an irresponsible person, even if there are responsible people it would appeal to as well?
Peace is a lie, there is only passion.
Through passion, I gain strength.
Through strength, I gain power.
Through power, I gain victory.
Through victory, my chains are broken.
The Force shall free me.
It's also why governments enacted by the people exist to put limitations on the way companies can behave to generate proffit with such things as lemon laws and truth in advertisement and sale of addictive substances or gambling by minors.
Not saying that I think F2P games should be regulated (aside from the normal truth in advertising laws that apply to any business) but a business is not allowed to simply do EVERYTHING it wants to generate proffit.....and I'm pretty darn libertarion .... but there do need to be some safeguards in place that consumers can rely on.
I'm not saying that, within some very basic limitations (e.g. false advertising, selling alcohol to minors, etc) companies should be allowed to offer products that can be used responsibly even if some portion of the population can't handle it. However, many of the posters on these boards have gone a step further to promote how awesome F2P games are for the consumer and how they are all sunshine and rainbows, etc. They aren't. I think it's important to point out that there is a dark, seedy side to them that is really a terrible deal for many consumers and gamers. I'm a consumer and a gamer....not a shill for the F2P industry so I'll point out thier flaws and the dirty little tricks they use to manipulate people...so everyone can be fully aware of what they are walking into with those games.
Just as I'm happy if you have an awesome time at a Casino and think they should be around for people who enjoy them. At the same time that I'll point out that most don't have windows or clocks on the gambling floor so that players can lose track of time and that they'll serve discounted or comp'd drinks to help impair gamblers judgement, etc.
I agree that there need to be health and safety regulations in place. Neither of those things applies to a game company. It's not the government's responsibility to make sure individuals spend their money wisely, and it's not companies responsibility. It is 100% on the individual.
Being a cheerleader for any business model is a little silly if you aren't being paid. But I don't see that many F2P cheerleaders, I see more of people responding to irrational rants about how F2P is *Bwahahah EVIL!!!* or all F2P games suck by pointing out the twin truths that not all games which offer a free option are bad games, and companies go with the model because it works and they have a responsibility to make a profit.
Peace is a lie, there is only passion.
Through passion, I gain strength.
Through strength, I gain power.
Through power, I gain victory.
Through victory, my chains are broken.
The Force shall free me.
Practice doesn't make perfect, practice makes permanent.
"At one point technology meant making tech that could get to the moon, now it means making tech that could get you a taxi."
Oh the irony.
Who is doing that? Isn't the issue of whales raised again and again. In fact, I seldom not talk about whales in the context of f2p games.
Sure there is a dark side. So far the dark side does not impact me .. just like if i go to a casino to eat their subsidized buffet, without losing a single dollar.
Many people actually play F2P free.
I remember playing Atlantica online. Half of the people never pay a dime, while the other half pay upto an extrodinary amount.
I personally paid like 100+$ every month. One guy paid so much money it is enough to buy a Lexus car.
Yes .. i am one of those free players, but i am totally aware of the whales.