A good post on Elder Game went up yesterday about subscription models, entitled “Don’t Throw Out the Subscription Model”. While I agreed with a few points, there are some opinions I want to dispute.
Let me put it another way. Everybody in the industry “knows” that microtransactions are the future… just like they “knew” that all successful MMOs had to require forced grouping like EQ did. That is, until WoW came out and proved them all dead wrong. As an industry, we’re really terrible at predicting trends. Sad but true.
There is a difference here between predicting trends in game mechanics and revenue models – and frankly, I think while the two share commonalities, there is a good deal of work on the latter that can’t be done by the design team. Grouping mechanisms are a different ball of wax that don’t require evaluating trends in what consumers are willing to pay for as an industry whole. The entire idea of purchasing tangible (and intangible) things by means of small incremental packages of value rather than obligatory fees is a greater theme that extends beyond the game industry. From “Pay-As-You-Go” cell phone plans, to purchasing individual mp3 tracks on iTunes, we see the concept of microtransactions spread further and further from the entertainment mediums every week. There are people (and I’m not talking about gaming marketing VP’s) who evaluate spending habits as a whole across entertainment and have a better vantage point to predict from – and I think we see their predictions every time a new service pops up allowing pay-as-you-go type models.
The new economy makes this model much scarier than it was a few years ago. Multiple mini-transactions are more susceptible to penny pinching. “Is this cool hat worth $5? No, clearly I can do without it.” vs. “Is playing this game worth $15 a month? Clearly yes!”
I am in complete disagreement about this. First of all – $5 is a high dollar amount for the sake of the argument. If a cool hat costs $5 in your MMO, you haven’t learned from what’s proven to work (unless of course it’s some fantasticly badass rare limited-time hat, but this is beside the point). Games with free trials see success – why? No money up front. Cell phone companies with no contract? Success because people don’t feel ‘trapped’. Why do you think Amazon doesn’t have a subscription fee for Kindle books? (The answer is probably twofold, one being because publishers demand $ per book, the other is because you want people to be able to buy as MANY books as they want to.) Being able to get started in a game, try it out, have a blast playing it before you even hand over $1 has amazing reach and appeal. When it’s time to start paying – it’s up to you what you pay. Signing up for a monthly subscription requires a decision on my part about my loyalty to that game. Do I really like this game? Will I like this game tomorrow? How about next week? $14.99 means that I should be playing the game enough to make my experience worth $15 bucks before the next payment is due again.
The $2 I spent on getting an awesome lizard costume for my character is a much easier spending decision. Why? It provides instant feedback. I see the effects of my purchase right away. I know exactly what my dollar is worth, and I know exactly what I’m getting for my money. It’s instant gratification, which goes a LONG way in designing an experience that makes people feel good and want to spend more money.
It’s true that a lot of the web-distributed games have used microtransactions. But that doesn’t mean they have to. As the number of web-distribution games gets larger, I think microtransaction-based games are going to get harder and harder to pull off successfully.
Here is where you need to look at WEB trends over gaming trends. The web is even more experienced with bringing products to a wide market than the massively multiplayer online gaming industry, so you’re on THEIR turf when you decide the web is your market. In the web world – microtransactions are ALSO on the rise. Add-ons, upsells, etc. have been done on the internet since 1996, there’s nothing new here. I think the points are reversed here. As the web gets bigger and there are more and more options, selling a subscription service is damn hard. Why would someone pay a monthly fee for your game, when they can play another for the cost they set for themselves? This space is indeed getting more crowded, and I think you’re going to see more and more people going with pay-as-you-go services in order to get people in the door and allow them to spend more.
On the web, I don’t think your goal should be to be “THE GAME” that people are going to play. I think you have to come in with a presumption that you are one of many, and price your product accordingly and competitively allowing for simulaneous adoption.
I do, however, agree with Eric’s game plans – we just take different viewpoints to get there. 
Tami Baribeau is the Associate Producer for Metaplace, Inc, currently working on Island Life. She is also the Lead Editor of feminist gaming blog The Border House, and the National Facebook Games Examiner for Examiner.com. She can be reached on Twitter or by email.
{ 10 comments… read them below or add one }
not to be contrary, but, i’m pretty sure i don’t agree with anything eric said. like — at all.
a couple points:
1) you are indeed correct. grouping and business models are completely and totally different. tho, i guess soloing and microtransactions do have something in common — scarcity. you solo because it’s “free”. meaning, there’s less friction between you and play. you don’t incur the overhead of finding a group — with a finite number of players in a game, that’s a scarce resource. soloing is not. microtransactions charge for scarcities while giving away for free things where the cost drives towards zero.
which brings me to:
2) scarcity in the mmo market. there are probably more mmos kicking and alive today than have ever been launched in the history of games. why? because it’s getting easier and more accessible to do. granted, it’s still not an everyman task (tho, we at metaplace are working on it), but, with things like multiverse and even flash games, it’s getting more accessible to more people. what happens when you make things easier and more accessible to do? they become less and less scarce. what happens when you decrease scarcity? price falls to zero.
so, yes. i guarantee with whipped cream and a cherry on top: free to play microtransaction games will be the only ones with a substantial audience. wow is the last of its kind — period. subscription-based mmos will be relegated to niche games — period.
oh, and feel free to quote me on that forever.
m3mnoch.
Why does it always have to be one or the other though? Why not both? Wizard101 does well with its choice of subscription or pay as you go, so why must the whole deal be cut into two pieces? There can be a coexistence.
Definitely, I agree with that Wiqd.
It all depends on what we mean by ‘well’. If we mean ‘enough to pay our staff and put out new content now and then’ or if we mean ‘take the world over with our brand in everyone’s face’ a la Nexon.
As long as the subscription fee doesn’t GATE being able to spend more money on microtransactions perks, it’s fine.
speaking of the free stuff: http://www.freemmo.com/
lookit all those free to play mmos!
and, heck no, it doesn’t have to be one or the other. subscription only is the one that’s going to the back of the bus. free to play is forever here to stay. combinations? all over the place. and they’ll be crazy successful.
the ideal mix, in my personal opinion is:
1) free to play the basic game.
2) dip your toes in microtransactions
3) premium services for the cool kids who wanna subscribe.
you know — like flickr. or travian. or club penguin. or duels. or any of a thousand other successful free service/content stuff out there. there’s an option for you regardless of your desired engagement level.
m3mnoch.
Quoth Cuppy: “First of all – $5 is a high dollar amount for the sake of the argument. If a cool hat costs $5 in your MMO, you haven’t learned from what’s proven to work (unless of course it’s some fantasticly badass rare limited-time hat, but this is beside the point).”
The most expensive RMT item in Wizard101 costs $20-30 (the exact exchange rate depends on whether you’re willing to pay a whopping $80 at a time for a 50% increase in Crowns, the game’s RMT currency) – this in-game RMT store is on top of an access fee (either monthly or unlocking 30-odd subzones beyond the newbie areas one a a time for $2.40 each). Runes of Magic charges about $20 for a mount and RENTS players additional bags for about $11 per year. SOE is happy to pocket $10 for a cosmetic EQ2 outfit (that is technically an entire outfit, rather than just the cool hat, but it doesn’t offer any gameplay benefits like the W101 items do).
The unfortunate point being, the most high profile RMT shops out there at the moment appear to have concluded that the economies of scale favor scratching the “micro” from the transactions.
Agreed. $20-30 isn’t a microtransaction. That’s an expansion pack with the wrong name attached to it. =P
I actually run a bunch of websites, and my wife and I make a good deal of our money from the internet. So I’m flabbergasted by your examples, because any website mogul worth his salt knows how valuable subscription websites are.
Having spent way too much time on this topic, I can you that the safest way to make easy money on the internet is this: create a content-based website about a narrow niche, garner an audience for your content, and then charge subscriptions for your content. When you buy a “make money on the internet” seminar or other scam, this is what you will learn.
These sites range from digital photography to videogame fansites to software sites to porn. They sure as hell don’t use microtransactions.
And it’s not because microtransactions wouldn’t work, it’s because we don’t yet have the technology to do microtransactions well. There’s no way to have a single button-click on your website that lets users pay $.10 without a second thought. People always have to get their credit card out (or sign into something, or whatever), every time they go to a new website (or game). If they’ve got to get the credit card out anyway, then subscriptions will net more money from a lot of people. That’s just a technological and socialogical aspect of how we work.
It’s true that a new payment company with broad reach could be the “killer app” that changes all that. But there doesn’t seem to be anybody lining up to do that. When they do, that will change things dramatically. In the end — a decade from now — it seems inevitable that subscriptions will be largely superceded by microtransactions. But making plans on that today is really stupid. Unless you’re planning to develop your game for a decade…
Okay so here’s a really important part of my argument which I didn’t make clear enough. Ready? *Do not confuse popularity with monetary success.* Please don’t do it. Don’t even CORRELATE it in your head.
Let’s use the easy examples: you’ve probably heard of Second Life. It’s got a ton of press and amazing name recognition, but it loses money every single month it runs. Have you ever heard of Jupiter Images? They sell subscriptions to clip art libraries. They make a shit-ton of money. They don’t care that you haven’t heard of them, because the people who want their services have.
The big winners in the next few years will be people who are willing to embrace a niche, charge for their services, and really fulfill users’ needs in that niche. They will not be the big headliner games. However, they will be really financially successful in relation to the effort and money they risk.
Will there also be successful micropayment games? Of course! There already are! My point was just this: don’t assume that means subscriptions are dead.
PS – the most expensive items in Iron Realms games (a wildly successful free-to-play text MUD) cost over $500. And yes, people buy them, and yes they like it.
Please keep in mind that different audiences are willing to spend different amounts in different ways. Assuming everybody will be happiest spending their money in $.50 increments or whatever is just taking the easy road and lumping every audience together. That’s exactly the thing that I was trying to rail against.
not to be contrary, but, i'm pretty sure i don't agree with anything eric said. like — at all.
a couple points:
1) you are indeed correct. grouping and business models are completely and totally different. tho, i guess soloing and microtransactions do have something in common — scarcity. you solo because it's “free”. meaning, there's less friction between you and play. you don't incur the overhead of finding a group — with a finite number of players in a game, that's a scarce resource. soloing is not. microtransactions charge for scarcities while giving away for free things where the cost drives towards zero.
which brings me to:
2) scarcity in the mmo market. there are probably more mmos kicking and alive today than have ever been launched in the history of games. why? because it's getting easier and more accessible to do. granted, it's still not an everyman task (tho, we at metaplace are working on it), but, with things like multiverse and even flash games, it's getting more accessible to more people. what happens when you make things easier and more accessible to do? they become less and less scarce. what happens when you decrease scarcity? price falls to zero.
so, yes. i guarantee with whipped cream and a cherry on top: free to play microtransaction games will be the only ones with a substantial audience. wow is the last of its kind — period. subscription-based mmos will be relegated to niche games — period.
oh, and feel free to quote me on that forever.
m3mnoch.
I think with the current economy, people will prefer smaller purchases over big ones, and this should apply to Micro transactions as well. When I walk into Dunkin Donuts, I see people STILL buying coffee. Even people I know that lost their jobs, still make small purchases, like coffee. I don't see people 'giving up' their games, and A lot of items in these free to play games with microtransactions are a lot less than $5. $5 or $10 can get you pretty far if you spent it frugally in the free mmo market.