A note on MMORPGs business models

First, remember that MOST people can only see what happened after it happened. Whereas other people learn enough to have a vision of what is going to happen. In a similar way, there are games created for an existing market and audience, and games that deliberately create a market that wasn’t there before, and that suddenly becomes canon and that everything else has to conform to from that point onward. A vision can open new paths, and these new paths become the foundation on which everything else is built.

That said, there’s this widespread myth that free to play has to “replace” subscription models, that it is some unavoidable destination. This discussion is conditioned by the idea of a new model replacing an obsolete one, instead of discussing the game’s own merits. So a game can fail or succeed because of its business model.

The truth of free to play versus subscription models is fairly simple and slightly different from the debates I usually see. The point is that a subscription model is more directly competitive, and so risky. But it is not a case of “new” versus “old”, or a model that is now obsolete. The rise of free to play is motivated by the fact that the market is so competitive no one would survive in a subscription model. Free to play is a way to virtually enlarge the pie. Understood?

The reason is also simple. Players out there can and will buy different games, they can shift their focus from one to the other. Whereas a subscription model leads to a situation where a player will decide on what game to play. It’s very unlikely that a player will maintain multiple subscriptions. So the result is that subscription-based games are much more directly competitive between each other, and only the “King of the Hill” will survive and do well under these conditions. Every other title will fall short and struggle, which is the very simple reason why World of Warcraft dominated all these years. Or the reason why Elder Scrolls Online has to move to a subscription-free model not because subscriptions are a “bad business model”, but merely because the title isn’t valid enough to face the competition of a subscription model. It’s like a two-tiered market where a couple of games can compete at the top and do well with a subscription model, while lesser competitors have to find a way to co-exist with less belligerent business models.

Again, subscription model are still “ideally” the more appropriate business model for a long-term MMORPG that wants to grow as a virtual world, but for the practical needs of a market, and a market where you want to survive, the free to play model offers a way to squeeze more space out of that highly competitive, merciless market.

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