REAL reason game is going Free 2 Play...

Premiums aren't free. They have spent money on the game.

I think this bears some elaboration. The key word in the above, for me anyway, is hybrid. I'm told by a friend who sort of follows the ups and downs of MMOs in general that quite a number of other games have converted to a pure "free plus microtransactions" model and ended up going from About To Be Dismantled to Raking In More Than They Ever Dreamed Of With Subscriptions. This suggests that the non-subscriber (the microtransactions) side of the ledger is where the real money is, and that a "hybrid" model is kind of like a strange compromise designed to minimize revenue potential.

NCSoft may say they are hoping to use the hybrid model as a gateway drug to obtaining more subscribers, implying only a minor side benefit of additional revenue from subscribers due to microtransactions, but that seems to fly in the face of recent experiences elsewhere in the MMO industry that demonstrate the vast amounts of money to be made from the microtransactions alone (and the diabolical illusion that the game is "free" simply because there is no monthly subscription cost).

I really hate it when people just make stuff up and want to push the issue. Ok, here are some numbers. They are not the only numbers out there.

This is pretty easy: you barely even need a calculator or anything.

Subscribers were projected to earn 1.75x the baseline subscriber revenue pre-hybrid over their lifetime
Ala carte players were projected to earn 0.70x the baseline subscriber revenue pre-hybrid over their lifetime.

Therefore, for the subscription players to be generating more revenue than the ala carte players over the long haul, the game would have to acquire no more than 2.5 times the total number of ala carte players as subscribers.

That seems highly unlikely, particularly given the numbers given for new players acquired. Now, perhaps Turbine's projections are wrong. However, I picked these numbers specifically because this is not just a reflection of what is happening, but also what they *believe* is happening. And its what they believe will happen that represents the reasons behind their business decisions. Presumably they made their Hybrid model conversion based on these assumptions or something similar, so they did so specifically because they believed they could extract at least as much if not more revenue from ala carte players as its subscribers.

I'm not aware of any major MMO that has gone pure F2P + microtrans.

And no, the non-subscriber is not the big side of the equation.

Think of it this way - you're running an MMO - your customer base looks like this:

100,000 potential players that are willing to spend $10/month on your game
50,000 potential players that are willing to spend $20/month on your game
25,000 potential players that are willing to spend $50/month on your game
10,000 potential players that are willing to spend $200/month on your game

(Yes, these are completely fictitious numbers, but they are somewhat representative of the kind of distribution people have seen in the past).


A. Under a pure, $15/month subscription model -

The players willing to spend $10/month go elsewhere, everyone else subs. You have 85,000 subscribers and gross $1,275,000/month


B. Under a hybrid model -

You get all the money on the table, but 85,000 subscribe. You have a fairly stable income of $1,275,000/month and make $3,975,000/month in microtransactions.


C. Under a pure microtransaction model -

You make $5,250,000/month in microtransactions.



The difference between A and B/C is why so many companies are hopping on the hybrid model. The difference between B and C is that a company will prefer the pseudo-guaranteed monthly income under B as long as the totals are roughly similar.

Yes, the vast majority of the extra income is made from the microtransaction side, but it's made from subscribers - this is simple logic: the subscribers are the ones who were already willing to pay $15/month. If someone is willing to spend $200/month on the game, then they were almost certainly already subscribers. So the big microtransactions consumers are not going to be drawn in by F2P - they're already here.

I'm a bit confused about the part I highlighted - if the hypothetical game converts to "free plus microtransactions" - how are subscriptions involved? I would think that the definition of "free plus microtransactions" means that there are no subscriptions income to balance against when comparing to microtransactions income.

And I really don't understand what is meant by "strange compromise designed to minimize revenue potential. If you have subscribers who are paying a regular monthly sub PLUS paying for microtransactions, and you have other players paying for microtransactions even though they are not paying a monthly sub - how does that "minimize revenue potential". Addition of another potential source of income (non-sub-paying players who do microtransactions, but are apparently not willing to pay a monthly sub) does not seem likely to minimize revenue potential.

This is a theoretical discussion, BTW - I'm not trying to attack your position, I just don't understand the reasoning behind it.

EDIT: Brillig beat me to it!

Going f2p doesn't necessarily mean that the game is in trouble. A lot of games are going f2p, so the company is just adapting to the business trends to stay ahead of the competition. CoH is profitable, so why not make more?
Also, quite a few people are lazy and don't want to do math, so the f2p model tries to capitalize on that. It's like eating M&Ms. One plans to only eat a few, but before one knows it, half the bag is gone. It can be similar to f2p players, spend a bit here, and a bit there but not really keeping track of total purchases. One example is facebook games. These games are free, but have a cash shop to help the player get ahead. There are lazy folks who will buy stuff just to get to a certain level in the game.
So even if 1000 f2ps spend just $5 a month, that's equivalent to 330 vips at $15/mo.
The f2ps that do realize that they are spending more than a sub will eventually convert to vip.

No one seems very anxious, at least in the west, to abandon subscriptions. Subscription players tend to be longer term, more stable players, and they also represent one end of the value proposition that mixed ala carte play can contain. The hybrid models that most western MMOs are executing tend to have the same three basic tiers that City of Heroes Freedom has: completely free players, ala carte players, and subscription players (with ala carte options). It seems to be a psychological necessity in the west as opposed to Asian MMOs to have the subscription offering because it presents the picture that the ala carte option is not simply a way to charge more for the same content. With the subscription option in place, the subscription bundle acts as a psychological anchor for the rest of the game to be valued.

In other words, to put it simply the MMO culture in the west is such that committed players tend to want a fixed price for the base game and do not want to pay ala carte for everything. Less committed casual players tend to want the opposite: pay as you go, walk away at any time. The hybrid model does two things: it addresses both types of players, and it allows one type to switch gracefully to the other type and back without completely leaving the game.

You tend to get more money per player from the subscribers, but generally speaking you tend to get a lot more casual ala carte players which can significantly boost the revenue from them. Even Turbine sees two different things from their two different games: one seems to get more revenue from their ala carte players than their subscribers overall, while the other seems to get more revenue from their subscriber base than their ala carte players overall. It can be difficult to predict which way the ratio will go in different games, although there are generally hints which relate to the way the tiers preserve or dilute subscriber value.

Okay, but what would happen to subscribers (in the West) faced with playing purely ala cart from now on? If they love the game play, I would expect them to keep playing, paying only for those features they really care about. Would the lack of a fixed-price "bundle" really be so psychologically devastating that former subscribers would just leave the game en masse? It's a little hard for me to believe.

I think that if there was no VIP tier, and that the Premium tier, as currently conceived, was changed in one small way: unlocking all previously available characters (rather than available slots being calculated based on previous playing time), that a cleverly priced ala cart menu would keep most previous subscribers around.

I google searched for an article I could link to, but I actually saw the original presentation. Checking between the two, there is a small ambiguity in the way the numbers are presented in the article as opposed to the original presentation. The original presentation had this chart which I think is more unambiguous what they were trying to express:



Keep in mind those are *lifetime* revenue estimates, not *monthly* estimates. What they are saying is if you take the average amount of money earned per customer over their lifetime before they went hybrid - which would be about the monthly sub times the average number of months a player subscribed - and call that the baseline, they were projecting that over the lifetime of the player being engaged in playing the game an ala carte MTX player would generate 70% of that revenue, while a subscriber would, after the conversion, generate about 175% of that revenue.

Speaking specifically about the subscribers, that increase is due to both the subscriber buying things from the MTX store *and* from them sticking around longer - presumably because the new game offered a better value proposition or a more engaging game or both.

Why they looked at the numbers this way seems to be that in their analysis, they looked at players sort of like annuities: it cost a certain amount of money to acquire the player in terms of marketing expenses and other things, and then once they acquired the player the player would generate a certain amount of revenue over time. The financial analysis compared total revenue generated over the lifetime of the player vs the cost to acquire the player as a key metric. So lifetime revenue potential is a key factor for this kind of viewpoint.

Note that it *doesn't* mean subscribers were paying their subscriptions and on top of that spending 75% more money per month buying things. It could mean that if subscriber retention remained exactly the same. On the other hand, it could equally mean subscribers tended to stick around 75% longer and never bought anything in the store. Of course, the truth is that its some combination of the two.

The really interesting thing is the MTX number. If they really are sticking around less than subscribers as the chart suggests but nevertheless are spending up to 70% of the total amount of money original subscribers were spending over their entire lifetime of subscription, that suggests MTX non-subscribers are actually a very large source of revenue per player per month in their model: higher than even I might have suspected without these numbers (which date from 2010).

When you factor in other things, like the total number of new players joined and the increase in total subscriptions (said to be about double the pre-launch numbers) a reasonable extrapolation of the numbers is that at the time of the presentation this particular game was getting roughly half its revenue from subscribers and half from its non-subscribers per month. The error bars in that estimate are rather large, but a roughly 50/50 split is about dead center in the acceptable range of possible values.

Presumably their own market research, beta testing, and the early numbers from that particular game's transition to the hybrid model which at the time of the presentation was about six months after launch.

Its important to note that the numbers aren't being offered to state with certainty what the revenue split is today for that game or what its likely to be for any other game. Its noted for its value in illustrating what one particular MMO developer *believes* about where the revenue opportunities exist and are being tapped. Turbine in particular and in many public presentations related to monetization in the industry has consistently stated the position that the opportunities for this type of model are multifaceted, and its not just about squeezing more money out of subscribers. In fact, they even specifically mention that Dollars/CCU went down in the new model, but that was more than compensated for by the fact that CCU increased by a factor of over five. In other words, the amount of money they earned per player actually playing the game (as represented by ConCurrent Users per month value) dropped, but the total amount of players playing rose by far more. Less money per player on average, but a ton more players total.


Incidentally, one other thing this company states in its presentations is that the shift to the hybrid model tended to shift its player demographics more "casual." That's an elusive thing to strictly define, but here it meant players tended to play less hours per week and tended to prefer less overtly challenging play. A non-monetary side effect of going to the hybrid model? Introducing difficulty sliders. Given how casual-dominated City of Heroes already is, I have wondered what impact that effect might have on us, if any.

Heh, i think i actually got more questions rise up from that screenshot than from the blog excerpt i quoted before.

Did they define what the lifetime of a subscription and engagement are?

I swear i'm not trying to be dense or i might be tired but i'm interpreting that graph a bit differently. Expected lifetime revenue as based prior to f2p would be sort of the monthly fee times the average time an account is continually subscribed (uninterrupted) and engagement is time spent in-game.

If that's the case, that graph is showing the f2p crowd shows less time in-game (casual) than someone with a monthly financial commitment (subscriber) which is what i would expect them to be. And customers that spend more time in game tend to spend more (with f2p than without)

The vertical axis shows expected lifetime revenue not expected lifetime duration so i don't really see (from the graph at least) that they're saying players who spend more money stay subscribed longer. It could just mean they're spending more over a typical lifetime of a sub.

If the average lifetime of a sub is say a year*, within that year the ones spending more would be subscribers who spend more time logged in. (*Note: that's just an example and i take it the average sub lifetime is for one game and not an industry average)

From that point of view it seems to jive with the blog excerpt.

Or maybe i just really need to see the original presentation preferably with speaker notes to be on the same page as you. If you can find it would be appreciated.

I don't think that is the case, for the simple reason that the adjective "longest" doesn't really make sense in that context. If you were comparing total time logged in, you'd describe that number as being "higher" and "lower" not "shorter" and "longer."


It does mean they are spending more over the lifetime of the sub, but the question is whether the sub duration is longer. I contend the x-axis implies it does. Moreover, if we assume that the average sub duration was approximately the same, that would mean the *average* player was paying 75% more than their subscription amount per month, every month, buying points. In other words, translated into City of Heroes terms, that would mean the average subscriber would be buying more than $8 of points per month, every month of their subscription. That seems awfully high.


The file name of the copy I have is Paiz_Fernando_TheFutureOfMMOMonetization_SOGS.pdf. However, a google search on that name turns up only one download link consistently: cmpmedia.vo.llnwd.net/o1/vault/gdc10/slides/Paiz_Fernando_TheFutureOfMMOMonetization_SOGS.pdf (I removed the "http://" from the link because the forum kept hyperlink converting it and I wanted the entire link to be visible to read). And that site seems to be very slow or not working when I test it. But give it a try.

I agree, but would point out that I know a few non-MMO style games that are not hybrid. If there are any still about and kicking that implies that the model itself isn't without merit. It may, or may not translate well to MMOs. It may or may not have even been tried, but I wouldn't discount such an animal as a Unicorm..

I don't know, "long" has been used to describe play time before.

I think i found that presentation but it doesn't explicitly define lifetime of a sub though it could be inferred.


In slide 34 in this link it says:

(Though can still be interpreted either way)

In slide 15 has:
Eh, wish people would put definition footnotes on their terminology in presentations dang it. Heh

And now i do find i am tired...i'll keep looking for a more definitive one tomorrow (if it exists)...if i don't sleep through the day.

NCsoft has had partial interest (we've never been privy to how much) in City since it launched in 2004. NCsoft purchased Cryptic's half of City in Nov 2007.

I have no idea what your definition of "not that long ago" is, but in the MMO world, but four years is longer than most MMOs last.

Originally Posted by Dispari I don't know why Dink thinks she's not as sexy as Jay was. In 5 posts she's already upstaged his entire career.

Actually your figure for how long MMOs last has been changing quite rapidly.

As far as my definition of "Not that long ago". Yeah, I guess you have no idea.

Well as you didnt state what "not that long ago" meant, it is actually hard to qualify...

I mean, NCsoft actually tried the hybrid style of transactions with one other game, and it closed "not that long ago" (granted coming up to 21 months now)...

Hell, World of Warcraft launched "not that long ago" in the grand scheme of "graphical online roleplaying games" (evidence stretching back all the way to 1985 with LucasArts "Habitat" title), but it is still a 7 year old title.

But saying that NCsoft picked up CoX "not that long ago"... when it covers over half the life of the game... is more than a little misleading i would imagine.