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How much does a F2P micro-tran MMO bring in?
airhead
Member UncommonPosts: 718
Saw a good article where one of these f2p micro MMOs is sharing the numbers...
www.gamasutra.com/view/feature/4046/what_are_the_rewards_of_.php
For this one, 10% of the people playing were paying... 77% of their revenue coming from the microtrans (they kept a subscription model going as well... interesting)... but some numbers there to think about.
I do think the comments about opening up the market to capture people unwilling to pay 15/mo is interesting. Many are quick to say 15/mo is nothing... but if you are like me and an MMO means at least 4 accounts (myself and 3 sons), then 15*4=60/mo is something to think about. I don't know why 15/mo is such a holy number?
Anyway... forgive me if this has already been posted... I didn't see anywhere, so just threw up the link.
Comments
Micro transactions are not as profitable as subscription games, nowhere so, but they do provide access to a larger market.
I'm surprised subscription prices are as high as they are, I mean once you've paid back the development costs, you're looking at a good 80% profit on a subscription.
Not always true. Which do you think makes more money... MapleStory or any subscription game that isn't WoW?
Of course there are other factors and not just F2P vs. P2P, but on average I would venture to say that a F2P game offers more profit.
Okay, let me rephrase that...
Micro transaction games are not as profitable PER USER as subscription games.
If you make $1 revenue per user in a micro transaction game and $15 per user in a subscription game, and it costs $0.5 per user to run the game, then you have $0.5 profit per user for a micro transaction game and $14.5 profit per user for a subscription game.
Thus, subscription games are more profitable. Though only once you've paid back development costs, as development usually costs more on a subscription game than a micro transaction game.
Well, profiltability all depends on the numbers.... Using the numbers in the article as a guide:
Game has X players paying 15/mo (15X/mo). They switch to microtran and 10% pay average of 45/mo, that equates to 30% paying 15/mo. So if by going micro they can sign up around 3X players, they are break even. Anything over 3X and microtran becomes more profitable.
"access to larger market" is the key term there.
But obviously, that would really be guesswork and depends on the game etc. Risky I'm sure. But after seeing most of the recent large MMOs under-perform after years of development (vanguard, tabula-rasa, conan, warhammer, darkfall, etc)... maybe the better approach would be to TEST an IP as a micro-game, build a little fan base, and if it looks like the market is going for it, then come out with a huge subscription game later.
Another model I wish would be explored more is the 5 or 10 / mo. Grab families and kid-gangs... where the total bill is 20/mo and 3-4 RL friends/family get to play together (instant group) etc. Get that 'group' commitment thing happening, but for less than 60/mo, (which is a harder sell).
P2P games mostly have far more content than a F2P/RMT, so development costs will be higher.
Of more concern to me is how can our limited player base support an ever growing number of these F2P/RMT games? They keep churning them out like a never ending supply of McCrapbuggers. Have we not all got indigestion yet?
That conclusion, according to the article, is incorrect. If the presence of the non-paying populace is increasing retention of the paying playerbase, then it reduces marketing costs. But that aside, let'swork with the numbers we have:
As a subscription game, Puzzle Pirates brings in 70k. The microtransaction version of the same game brings in 230k.
230 > 70.
It looks like you were working off the assumption that the size of the audience would be the same. Contrary to what a lot of posters here insist, RMT is very popular and, in the example presented in the article, the RMT version attracts more players and is more profitable than the subscription version.
- RPG Quiz - can you get all 25 right?
- FPS Quiz - how well do you know your shooters?
in the case of Nexon in think thats prpfitable than most P2P companies.
March on! - Lets Invade Pekopon
Good God this is ridiculous.
It's like arguing a red car is faster than a blue car; a car on slicks is faster than a car on street radials all the while never mentioning the MODEL of the car.
- RPG Quiz - can you get all 25 right?
- FPS Quiz - how well do you know your shooters?
Good article, thanks for the heads up.
I totally believe that F2P will be the future of MMO's. The exactly model will vary, but I think it can work to everyone's benefit.
They can offer "Premium" accounts with benefits to those who pay, they can have microtransactions for trivial items, sever transfers, cosmetic enhancements, etc. And I'm even ok with an item shop if it's not taken to an extreme. As long as they're only selling the same things I can go out and farm, thus just saving me time without giving me a huge advantage, then I'm ok with that as well.
I'd like to actually see some numbers if anyone has some. Like how much in USD or Euros are we talking about with a F2P?
I'm sure the $15/mo was decided based upon a number of factors like:
Server Maintenance
Salaries
Expansion development costs
Marketing Budget
Then they took into account the minimum number of subs they'd need in order to meet the minium income needed to preserve the game, calculated out a balanced player/incom ratio to ensure 'x' number of years of longetivity and TADAA!
youtube.com/gcidogmeat
I think it's more likely that $15/mo was decided based upon one factor:
How much can we get these suckers to pay?
Servers are cheap, easily covered by the $50 paid upfront for the game. Salaries for development are paid that way, so only a small amount is needed to cover ongoing costs. Development costs for expansions are covered when they charge for the expansion.
Look at Warhammer.. didn't they state that they only needed 250k-300k subscribers to turn a profit?
Be sure to read the article linked in the OP post... That's the point; some game (pirate something) just gave out some real numbers...
Meant to do this some time ago, but kept forgetting.
Quoting myself.
I haven't played a lot of F2P games, but I have played a few. There are two things I examine closely when I investigate one of these games. The first is the item shop: what is available for players. The other is what the players tend to sell. Every F2P game I've looked at has a way to convert RL money to in-game 'coin'.
The amount of RL money that gets fed into these games is staggering.
On Perfect World International, I've seen player shops selling hundreds of items that do nothing other than allow people to talk on the global chat channel. Every time someone says something on the global channel, one of these items has been used. Now, you can buy these items from other players (usually through player stores) but someone had to buy these things from the cash shop at one time or another. The cash shop price (if bought in 10 packs) is 9 cents each. Which doesn't seem like much until you see several shops with hundreds of them. These shops get refilled every few days, the number of "trumpets" available to players generally doesn't go down.
Sure, on PW you can spend some time and grind out mobs to earn enough coins to buy a cash shop item (either by purchasing 'gold' or the item directly from another player). But some one put real money into the game at some point. The version of Perfect World 'published' in the US has a conversion rate of (about) $1 = 100,000 coins. (Other franchises of PW have different conversion rates, of course, due to being in different economic markets.)
Meanwhile, the owners of the game are making money by the boatload just by people talking.
The other most popular cash shop items seen in player stores are fashion clothing, dyes (to change the color of fashion clothing), and the special items that one specific class needs to acquire a special combat pet (there's two such pets, and these pets are what make that class effective in PvP). The latter requires an average of $200 to be spent. When a new PvP server was opened, the first global announcement that one of these pets was acquired was seen within hours.
How many P2P players would even conceive of paying $200 for what is essentially a weapon? Heck, for most games, $200 is more than a year's subscription.
So, just looking at two items from this game, we're looking at hundreds of dollars from opposite ends of the spectrum. An item for chatting (amazingly, lots of people are willing to pay just to have a conversation that everyone else can listen to) and an item that is essentially a class-specific weapon.
Hundreds of dollars. Dollars on top of all the other gew-gaws and trinkets available in that cash shop.
The company that owns Perfect World is on the NYSE and according to their published financials for Q4 2009:
* Total revenues were RMB417.8 million (USD61.2 million), an increase of 9.4% from 3Q08 and 61.7% from 4Q07
* Gross profit was RMB368.5 million (USD54.0 million), an increase of 10.1% from 3Q08 and 67.7% from 4Q07
(source http://www.pwrd.com/html/en/ir_er_pr_list.html )
That's the kind of money that will entice game companies to move to a free2play model.
-w
Thanks for the link, interesting read. PPerhaps chief lobbyist Aihoshi should take a look. Especially at this part:
"But if it's free, you can practically throw anything up -- even if it's buggy, even if it's not feature-complete, even if it crashes sometimes -- and see how people react to it. If they like it, great. If they don't, you can either fix it and watch what your customers do -- or abandon it altogether. That's the great thing about the Web and about free-to-play."
The article shows clearly that there is only one winner in the whole F2P genre: The companies unwilling or unable to provide quality games or in other worlds, you can dumb whatever trash you produce to the people and there are most likely enough idiots paying for it anyway.
You're still missing the key point of what I said, profit per user.
Right, this is a very basic formula for working out how many players an MMO would need as a free game to generate the same revenue as a subscription game. There are obviously many more factors involved but should give you some idea of how it works..
( X / ( C / Y ) ) * B = A
So if you have 1000 subscribers at $15 and estimate that 10% of players will pay after going free and those 10% will pay on average $45 each, we get the following sum.
( 1000 / ( 45 / 15 ) ) * 10 = 3330
Therefore the MMO would need to triple the number of players it has to generate the same income that it had from subscriptions. Now from my experience it is about 1,500 subscriptions per world to hit breakeven, assuming it is a small operation, as the bigger the company the more fluff you have to pay for, like extra marketing bodies and artists and things.
So yes, if the game can attract the people, micro transaction will make the company more money, but it depends on the game, just won't work as free to play titles.
@ bobfish... "Therefore the MMO would need to triple the number of players it has to generate the same income that it had from subscriptions.".... that's exactly what I said above.
However, there may be some other things to consider as well...
1. there could be costs that are a function of the number of the players, i.e. servers, bandwidth, etc. So maybe more than 3X is needed... maybe 3.5X or even 4X.
2. And yet, a FREE game (in name at least) can get away with less responsive customer support... perhaps?
3. And finally, there is competition. As more and more F2P microtran MMOs roll out the door, a vast majority of players will just move from one to another, enjoying the new IP and graphics, never paying a dime. So I would guess that the percentages paying and the amounts they are giving will just decrease over time. (Like iphone apps... now there are so many that even $1 is too much, with tons of free apps just flowing in).
Tough time to be an MMO developer... lol. Unless you can con VCs to fund your 4 year dev party, (with promises that you can steal some of those 10 million wow subscribers), then you are looking at shrinking profit margins, changing landscape, increasing demand from customers (no AH? wtf? wow has an AH, etc), and on and on. Tough business.
Profit per user is not the point. Profit is.
Based on that, I would say that F2P has a larger profit margin then P2P. Here is my reasoning:
F2P usually have lower developement costs. The game worlds are usually a lot smaller, there are less classes and in most cases, less custumizing options. There are even a lot of games where your sex is solely based on what class you choose. So less development, less costs.
F2P appeals more to the casual gamers. Sure, most of us here are die hard gamers, but that is not the reality of the world out there. Most people do not spend the equivalent hours of a part time or full time mob playing video games. Even those who were die hard gamers (myself included) get older and have to face up to real world responsabilities and simply cannot afford to play like we did when were in high-school on summer vacation.
Not only that, you are not making a financial comitement. You don't have to shell out 15 or so bucks a month, regardless if you played or not that month. In households with several accounts, that in itself could be a big factor.
By large, F2P do not have problems with RMTs like subscription MMOs have. Why would anyone in their right mind go to some site offering "cheap gold" that is not affiliated with the developer and risk having their credit card information highjacked? If you want to buy money (which is used to get items) you simply go to their online store and spend till your hearts content.
There is also what I like to call the "dollar store factor". Basically it states that if things are cheap enough, people go on and spend more on impulse then they would if things were a bit more expensive. How many of you ever walked into a dollar store and came out without spending at least 5 bucks? Even if you went in for one thing? The same is true with F2P, they nickel and dime you and you end up spending more without noticing
Sure there are a lot of people who don't spend a single dime on the game. But to balance things out, there are people who spend increadable amounts of money per month on these games. Perfect example is Perfect World. Not too long ago they had a promotion for the Neinbeast mount. This mount would only be available for one weekend. The cost $50!
I have lost count of how many Nainbeast I have seen since then, and now they have another such promotion for a mount, which people with more money then good sense won't bat an eye to get in on. And don't even get me started of people in Entropia Online literally spending thousands of dollars on one single item.
So, to make a long story short, F2P potentially make more money then P2P. Sure, they may not have the features and polish P2P games have right now, but that is no surprise. It's a new business model, and those are hardly ever top of the line when it comes to development. Anyone remember how awful Everquest graphics were compared to any boxed RPG that was released that same year?
But blocky graphics or not, Everquest proved that their business model was viable, paving the way for games that had substantially more development and polish as the years went on. I beleive the same will happen with F2P. The minute that American game developers realize just how profitable this business model can truly be, we will be seeing more cames that will easily be compared and even be superior then any current P2P game.
There's a lot wrong here.
First you have to consider scale. Smaller teams, short development times, pure digital distribution, word of mouth marketing and only a handful of servers means that the overhead is much lower than a AAA title. It also means that it will take less time to make back your initial investment. Therefore, a AAA MMO won't be profitable for a year or more while a F2P game can be making money within three to six months.
In short, a F2P game is always making more than a subscription game because it doesn't have the same level of overhead that most P2P games have. Plus, it's way easier to get a million people to pay you a dollar than it is to get a hundred thousand people to give you ten dollars.
"how much does a F2P micro-tran MMO bring in?"
Apparently more then a subscription based model evidenced by just about everyone in their brother jumping into the F2P bandwagon.
The issue with subscriptions isn't the 15 bucks a month, it's the fact that it is recurring that holds the subscriber base down in most cases.
My .02
IMHO, F2P is basically for a product that is not quite top of the line. These are essentially sub-par games that would NOT be supported by a player base of P2P accounts at any supportable amount.
DDO is a prime example.
The subscriber base has dwindle to a point where they are in fear of closing shop. Fewer players means the PAYING player base will start to bleed out as well due to lack of other players to group with. Lack of PAYING players means the developement costs are being consumed by the support costs. No new developement = static content = more loss of players.
They are hoping that by allowing the general populace to essentially play a trial version or limited play of the game for free. Giving them the option to purchase various features if they see fit to do so.
Some of the other F2P games of note SOE Free Realms, Disney's CARS, and Cartoon Network's Fusion Fall, are looked at as minimum developement cost ( some java based ) and in the case of CARS and Fusion Fall can also pull in some money from the Companies Marketing departments as they are promoting shows or other items.
I do not think the F2P market is a bad thing, nor do I feel it will go away. These games are great for what they are. A Social Network Game ( think Facebook competition ) that does not cost anything and are ( in some cases ) about as good as some of the old console games that are out there.
The newer American versions of the F2P games are also marketing their wares to families with content that is more Family Friendly and less violent.
However, I think the masses of MMO players that are out there find these games to be less than Prime Games and will always look for a better product. These better products will require a P2P system to stay that way. I have not seen ( not to say it is not out there ) a game that was F2P that was better at being an MMO than ANY game that has a P2P structure currently in place.
Say hello, To the things you've left behind. They are more a part of your life now that you can't touch them.
Sure. But it does NOT cost $0.5 per user to run the game. It is extremely cheap to run a game per user. It is mostly FIXED costs and very little variable costs (bandwidth cost per user is trivial).
It is a lot better to attract 1M players who on average spend $5, then 20k players who spend $15. It is NOT always true that micro transaction is diong worse. In fac, there are real world examples. Maple story is definitely making more return on investment than say DDO. So it depends on the numbers, the design, and so on.
There is not a lot wrong here, I just simplified it so everyone would understand it.
It is the basic formula for working out comparitive revenue between subscriptions and micro transactions. Emphasis on the word BASIC. It also has variables, cause not every free to play game has an ARPPU of $45, nor do they all have 10% of their players paying, in fact both those figures are pretty optimistic, Perfect Worlds for example has an ARPPU of $25, which obviously changes the results of the formula quite a lot.
Though as EVERY MMO out there hides their costs pretty damn well (with the exception of a few public Asian companies), we can't really apply the true formula to them, but you can make some good assumptions using the basic one. For example, we know that Tabula Rasa cost $20 million, and that the average number of subscriptions an MMO requires is 150,000 subscriptions over three years, (including box sales), to make a return on the investment of $10 million. Therefore Tabula Rasa needed to have 300,000 subscriptions for three years to break even, which it failed to do.
If Tabula Rasa had gone free to play from the start at the same development cost of $20 million, we're probably looking at them needing an average active player base per month for three years of just under 1 million people. Now I don't care what anyone says, free to play or not, Tabula Rasa was not good enough to get that many people playing it.
So sure, there is great potential with micro transactions, but at the end of the day, if the game is shit it doesn't matter what you do with it, it won't make a profit.
You also have to consider market saturation, why would I play Knight Online for three years and then jump to your free to play MMO which does everything Knight Online does but with a shiny new layer of graphics? It is the same reason people who love WoW don't quit it to play LOTRO or WAR.
And you may not care about the Korea market, but the top 4 most played MMORPGs (Note RPG) are all subscription based games (Aion, WoW, Lineage & Lineage 2). The other MMO titles in the top 10 most played games in Korea are MMOFPS and MMORTS, no free to play MMORPG makes it into the top 10 there. So being free doesn't automatically mean you get more players.
EDIT:
Originally posted by nariusseldon
Sure. But it does NOT cost $0.5 per user to run the game. It is extremely cheap to run a game per user. It is mostly FIXED costs and very little variable costs (bandwidth cost per user is trivial).
It is a lot better to attract 1M players who on average spend $5, then 20k players who spend $15. It is NOT always true that micro transaction is diong worse. In fac, there are real world examples. Maple story is definitely making more return on investment than say DDO. So it depends on the numbers, the design, and so on.
.....
This is true, the move toward micro transactions is mainly because it opens up a much larger market. The bigger the market the less impact the competition will have on your own product and the safer the return will be.
But, I really can't stress this enough, going free to play isn't a substitute for producing a quality product.
Also micro transactions are very unpredictable, where as a subscription is a somewhat garunteed income, which is why many companies are exploring a hybrid model, using the subscription to provide a regular income and the micro transaction and initial free to play status to provide spike revenue and additional players respectively.
I have to say, it is nice to have something of an intellectual discussion on these forums for a change.
I just wish the publisher I worked for would actually invest in an MMO, we've done so much market research on the damn subject but other than some simple distribution never actually gotten involved ourselves in the development of one.