Monday, September 19, 2011

Which business model is better?

Syl yesterday asked an interesting question on the post about monthly subscription and Free2Play business models: "The really interesting question though is what's better for the player? - or rather, which model is/was better for whom and why." Now many people will instinctively answer that the monthly subscription business model is better, and point out the many rather bad Free2Play games as proof. Which of course is a fallacy, based on the inability of people to distinguish between the quality of a game and the quality of its business model. There have been many cases where a game switched from monthly subscription to Free2Play, and obviously that doesn't change the quality of the gameplay. And there are some rather horrible monthly subscription games too. No, to check what is better for the players we can't just compare the most popular monthly subscription game with some cheap Free2Play game. We need to look at the business model separately from other aspects like gameplay, which aren't strictly related.

Which business model is better for any given player depends on how much he has to pay and what he gets out of that money. Thus "free" isn't always best, because if for a small payment you could get a lot more fun, that would probably be the better option. It helps to consider how other hobbies work: How much does collecting stamps cost? Simple question, but obviously it doesn't have a simple answer. If one thinks how stamp collecting works, and where the cost come from, it slowly crystallizes that the cost of stamp collecting is related to how committed you are to your collection. A beginner or somebody not striving for anything like a complete collection can have a lot of fun for next to no money with kiloware stamps. But once you travel to stamp conventions and pay for the stamps missing in your collection, the cost goes up. The more important your collection becomes to you, the more money you're going to spend. And that is pretty much the essence of how Free2Play games work as well.

That does have both advantages and disadvantages. One obvious advantage of Free2Play games is that you are always given the opportunity to start playing for free. If you don't like the game, you haven't incurred any cost to find out. Of course that advantage isn't exclusive to Free2Play games, many monthly subscription games have free trials now. But unless you count betas, free trials usually aren't available in the early days of a subscription MMORPG. Where the advantage becomes unique is in the case of people slightly more committed than the free players, but spending very little. Or, in a related case, with people playing a game on and off, with low intensity. As your spending on a Free2Play game depends on how intensely you are playing it, you don't pay anything when you are on holiday or taking a break from the game. That is a lot more difficult with subscription games, subscription game companies make millions from players who stopped playing but fail to unsubscribe for some time.

The obvious disadvantage of that model is that if you are very committed to your game, you might end up spending quite a lot on it. And that where the monthly subscription games become better: Because everybody pays the same price, regardless of how much they play, the people playing the most obviously get the best deal.

St. Thomas Aquinas believed in the notion of a just price, the notion that there is something like a true value of a good, at which it should be sold, based on the cost of production. Neither of the two business models discussed here achieves that, both are in some way "unfair", with some players subsidizing others. In a monthly subscription game, the people playing very little subsidize those who play a lot, because the cost of providing the game has components like server load and bandwidth which go up proportionally to play time, plus other costs like running forums or providing customer service, which also tend to get used more by people who play more. In a Free2Play game a minority (industry rule of thumb is 5%) of players pays for everybody else, with a very few people with too much money spending rather outrageous sums. If you would want to design a business model which is closest to fair, to a just price, you would have to charge by the hour, like World of Warcraft does in China.

So ultimately which business model is better for the player depends on what kind of player he is. People who tend to stick to one game and play it very intensively do better with the monthly subscription model. Players who like to flit from game to game and never commit to one game for a long time do better with the Free2Play model. Conflict arises from the fact that the group who is subsidizing the other players in each of these models would be better off playing a game of the other business model. Thus some people feel the need to disparage the business model that is less advantageous to them, so as not to lose their sponsors. If everybody would play only games with the business model that was the most advantageous to them, game companies would make a lot less money, and would have to raise prices or put more paywalls into their games. Maybe one day everybody figures this out, the two business models crash simultaneously, and we'll see pay-per-hour games rising from the ashes.

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