‘WOW’ will cause more free-to-play MMO’S

“World of Warcraft,” the game that we all play or love to hate, has dominated the massively multiplayer gaming space since its launch over five years ago. With its active player community of over eleven million people, it can affect the overall industry with its expansion packs and updates. These come in spurts with at least one major retail release, which tops the PC sales charts, once a year. To compete with this juggernaut, companies are coming up with more creative ways to grow their own community for their own games. The most popular tactic that developers are using is the free to play business model. This model has become the hottest way of building new MMOs because of the super popular (and lasting) appeal of “World of Warcraft.”

That’s not to say releasing free MMOs is a big gamble. The free-to-play model has seen a great amount of success in markets other than the United States. For example, Japan, China and Korea are the new hot beds for these MMOs because there are a greater number of people and even more developers concentrating on the MMO space. These hubs of MMO games have also turned to the free-to-play model because players are less apt to pay for a game before trying it, and the simple nature of them. That price barrier to entry can be eliminated in the free-to play-model, and if the player likes the game, they can purchase the “premium” content. Along with the premium content, developers can make money through other means which could include micro-transactions. Due to “WoW’s” immense popularity and recognition, many players are hesitant to put money down on a non-“WoW” MMORPG, so these free-to-play games with optional paid content are enticing, as players can experience them, compared them to “WoW,” and then decide if they want to drop any money.

Where does the MMO space go from here? I am not sure. I hope we see even more experimentation with business models. One of these examples would definitely be the highly anticipated free to play FPS/MMO “Battlefield Heroes” from EA and DICE. They can’t charge for weapons, so they are only charging for apparel that makes your character unique (micro-transactions). Is this the answer? Charging for purely optional content that doesn’t even help you in the game? I don’t think so, but what I can say is that the traditional fifteen dollar a month pricing strategy is being destroyed by the popularity of “World of Warcaft.”

What options are there other than micro-transactions? I believe that the newest way to help decrease the operating costs in the MMO space is in-game advertising.

I am not oblivious to the inappropriate nature of ads in some MMOs, but for games like “Anarchy Online” and other futuristic games, these ads could add to the immersion. Many companies have invested in this new source of revenue (Sony Online Entertainment, ID Software and others) because it can bring further life to growing games or help a dying game survive a new “World of Warcraft” expansion. According to MarketingVOX, in-game ads will bring almost a billion dollars to the gaming industry by 2011. Almost a billion dollars is a lot of money for these small games, but a small amount compared to the revenue generated by “World of Warcraft.” Like I said before, some games should not have in-game ads, but it won’t stop developers and publishers from putting them in their games somehow.

As “World of Warcraft” continues to grow, developers besides Blizzard Entertainment are going to experiment in strange and surprising ways (to them) to obtain new revenue streams. Free-to-play is the standard for those games trying to jockey for the over saturated MMO market for now, but will it stay that way in the coming years? Will the next generation of consoles try to steal away the PC MMO players? All of these answers will come soon, but no one truly knows what they will be until they arrive; we can only predict. I for one hope that we can download games that are 100% free-to-play and are supported by in-game advertising, because both sides win. This scenario is way too Utopian, but one can hope that it will become the standard for at least a few titles over the course of the next five years.

Posted by Geoff Hathaway

May 1st, 2009

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Published by Reinout te Brake

Reinout is a games investor and strategic business consultant specializing in the games industry. Reinout established his credentials through his own successful investments, start-ups, consulting and (advisory) board positions that led through time to strong bonds with key stakeholders in this fast paced industry. He is known for his outstanding results in the gaming industry. He has worked with many game studios around the globe and is therefore well known in the international gaming industry. Check out his games podcast; https://www.game-consultant.com

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