The Free To Play Business Model

Recently Lord of the Rings Online announced that going free to play tripled its revenue. While this doesn't settle the debate of whether LotRO can be profitable it does demonstrate that in certain contexts free to play is a better business model than subscriptions.

For those not familiar with the concept, the phrase "free to play" is somewhat misleading. Games like LotRO are only free to play if you want to access the most basic features of the game. Free to play is like an unlimited trial period where you have access to on a handful of levels and a small amount of content. Two things  make free to play a viable business model. First, players get to experience content for free for an unlimited amount of time, but like I said this isn't much different than the trail period because the content is limited. What makes free to play such a great business model is that it allows players to pay what they want and it breaks purchases into small "affordable" chunks. What is 99 cents for some more bag space? This means that players who are willing to pay more than an average subscription do so, and players who would be unable to afford a subscription can still play and pay what they can afford. So the developer captures a larger group of players, and they get more money from players who are willing to pay more than a standard monthly subscription for content. In fact for these players developers can create temporary buffs to experience or items providing non-permanent features that can be monetized

This model really isn't that new if you think about it. Both Wizards of the Coast (Magic the Gathering) and Games Workshop (Warhammer) have done an excellent job at providing initial content for cheap and then offering additional content a la carte so that they can maximize the number of players and allow players to pay what they are willing.

We are already starting to see signs that this new business model is catching on, and Facebook games seem to be leading the way. As the barriers for purchasing digital items begin to breakdown (steam wallet, facebook credits) how long will it be until you have the option to pay 5 dollars to learn advanced riding instead of 2000 gold pieces?

The Free To Play Business Model by Travis Ross, unless otherwise expressly stated, is licensed under a Creative Commons Attribution-ShareAlike 3.0 Unported License.

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