A Look at MMO Business Models

09Jun09

It’s heartening to see more non-subscription business models being tried in the current generation of MMOs at a time when innovation elsewhere is sorely lacking. For too long, it’s been the common opinion that a subscription is necessary to develop a quality product; Anything advertised as ‘free’ must surely be of lower quality.

Will subscription MMOs continue to dominate the market?

That rather unfair preconception is now beginning to shift, but are they looking far enough outside the box?

There are now quite a few MMO studios banking on the fact that free2play can be viable in the mainstream market, and some are showing signs of success. That thick black line between cost and quality is developing some patches of grey:

Runes of Magic doesn’t seem afraid to advertise itself as a ’subscription free World of Warcraft’. Their general message is focused on disparaging the negative image of the free to play market, and it seems to be working. They help cover maintenance and further development costs with a real-money trade (RMT) system for buying in-game items.

Runes of Magic

Guild Wars may have been the first game to really throw the F2P stereotype out of the window, releasing a AAA MMO without subscriptions. To cover their costs, they opted to release a series of full priced ‘chapters’, which were each stand alone games and could also tie together as expansions (excluding Eye of The North, which is purely an expansion).

Guild Wars

Hellgate: London attempted to use in-game advertising (in the form of posters) to subsidize their optional subscription model. Unfortunately they didn’t retain enough subscribers to keep the game afloat. Not a successful example, but worth mentioning just for their different approach.

Hellgate: London

The most popular F2P model is the RMT service, by a long shot. The only cost to the developer is generating the virtual content to sell (ex: weapons, armor sets, luxury items, etc.), and is attractive due to the micro-transaction nature. Simply, lots of small purchases means the customer never feels like their wallet is taking a big hit, even if they are a frequent buyer.

However, RMT has one major flaw. Games which ’sell power’ usually provoke a strong negative reaction from the western market. If real world money can trump time spent in-game or skillful play, it’s considered a pretty lame situation. This limits developers to selling ‘convenience’ items, or items with a strictly cosmetic appeal. As much as it is necessary to make that compromise, it does mean there is no ultimate need for the consumer to pay a penny over the box price. It’s like banning steroids but allowing protein shakes in professional athletics; Protein shakes are relatively trivial, whilst steroids turn sports into a drug arms race.

It’s at this point where innovation in the F2P market seems to have stalled, which is disappointing. There are potential opportunities for greater customer satisfaction, not to mention better funding for developers.

One such option has been playing on my mind recently, inspired by the many times I’ve seen out-of-touch management drive games into the ground. I began imagining a system in which more control of the game could be put into the hands of the community…

Before I get jumped: Yes, the obvious danger with a system like this is giving too much control to the mob; The classic problem of only 10% of any player base visiting the forum, yet thinking they call all the shots. This system isn’t about who screams the loudest or who can get his buddies to bump a thread.

It’s about the community putting its money where its mouth is.

Premise:

In your average studio, post-release content development works something like this:

Designer Content:
You have a pile of content that was intended for release, but never made it there. You have additions and fixes necessary to polish the game, some of which may have only become apparent post-launch. You have ongoing content updates to keep the players happy, some of which may have been specified 6 months ago.

Community Content:
You have a list of issues that the hardcore players have been whining about since beta, and you have an even longer list of additions and changes the community has requested since launch.

Obviously, the trick is to pick things according to urgency whilst staying on budget and on point with what is best for your community as a whole.

First up is picking the things that are just necessary, period. That’s all urgent/critical bugs, anything seriously harshing the community mellow, and any content that was promised for release that slipped. At this point, you are working off revenue from box sales and aiming to get into a more comfortable post-release groove.

When you get over the initial turbulence and start looking at the less critical issues, you should be leaning more on the community for feedback. This is where the alternative business model comes in.

My number one criteria is improving the ability of a studio to meet the community’s needs, and secondarily improving the community’s ability to communicate those needs (not just talking forum community here). I also want to incorporate the benefits of micro-transactions (attractive and flexible), whilst offering something truly marketable (actual game content).

One last thing to keep in mind: Much like the first introductions of RMT to the western market, it would take a credible developer with a trusting fan base to get the ball rolling. It’s a new and unusual method of dealing with money, and consumers are naturally going to shy away from that without a brand backing it up.

How it works:

- Go through your design documents for optional content in upcoming updates, and find the priority items that have been refined enough to be presented to the community.

- Comb through community feedback for popular suggestions, finding those good enough to be planned and specified properly by a designer.

- Combine those two categories, and price each item based on man-power and tools required, plus a percentage to cover general maintenance and running costs.

- In your online game store, you advertise each of these individual ‘game content’ items separately, including the total development cost that you have decided upon for each. A player can then log in to the store and pay any amount of money they want (up to a limit) towards the ideas they like the most, though they wont get billed until that item is actually produced and released as downloadable content.

- Once an idea has been fully funded through the store it goes into development. Once released, those who ‘paid’ will now actually get billed for however much they committed, be it $2 or $20, and that content would then be available to everyone.

The end result is a system in which the players define where their money goes, within the constraints of what the developer offers. For example, if PvP is their thing they can put money into the PvP options that appeal to them, and ignore anything else. Larger additions that players might consider very attractive, but may be beyond a usual developers budget, can be funded and made possible.

Incentives:

Anyone who commits over $10 in a month (equaling a standard subscription) would be granted special status on the forum for a period of time, beta group access, and in-game recognition. Those who commit significantly over a period of time would get discounted expansions, invitations to fan meets, and maybe even be credited officially as third party fund raisers.

There will inevitably be those who don’t contribute, reaping the rewards of those who do, but that isn’t a game breaker in this scenario. The community will evolve to respect those who participate, and the prospect of pitching in a few dollars here and there shouldn’t rub anyone up the wrong way when they aren’t forced to pay a subscription.

The best thing about the system is how flexible it is. It works for anything from funding the development of a small weapons pack, helping collect money for a cash prize competition, to paying for new community features for the website.

Summary:

It’s essentially content updates on a micro-transaction level. It funds development directly and gives players both a choice and a way to feel like they are really contributing. It builds attachment to the title, yet still leaves players with the ability to put it down for a while and pick it back up later. On the same note it wont hold new players back, as they wont have to retroactively pay for content.

Madness? Perhaps, but I see it as a possible next step in a video game genre where the worlds are massive and the amount of content involved is staggering. The effort to incorporate the community in design decisions isn’t going to get easier, neither is it going to become less important.

I certainly don’t think that the current trend of RMT systems selling superficial upgrades is the future of MMO business models. Neither do I think subscription models will always dominate the market.

Filed under: Game Design, Industry   |  3 Comments
Tags: Guild Wars, MMO, Subscriptions, Business Model, Runes of Magic, Hellgate, RMT