Will all video games be free in the near future?
If you have lurked on the internet over the past five years, you might have stumbled across a few news articles saying that more and more video games are turning to a “free-to-play”. But what does it actually mean for video games company? “They can’t be heading in this direction solely for more gamers out there to discover and enjoy their games, can they?”
Well, to that, the short answer would be yes. But as you can imagine, things start getting complicated from this point.
What are free-to-play games?
Free-to-play games, as their name suggests, are video games that everyone can play without spending a dime. They are often opposed to the classic form of game acquisition: “Pay-To-Play” where people traditionally pay to own a physical or digital copy of that game. Free-to-play games are still being financed in many different ways while players can enjoy the full game in the operating sense of the word.
This game business model has been made popular with the high adoption of the internet and changes in mentality where ownership is not defined by physical property anymore. Players no longer have to wait in line, hoping for a chance to get their hands on their future favorite game on release day. But rather, hope that their connection speed will allow them to play as soon as possible.
Internet adoption has also shaped a completely new form of game consumption: Online games. These games now make up most of the free-to-play model.
Free-to-play games have also seen their popularity increase with the growth of mobile gaming, especially in fertile markets such as China.
How are free-to-play games financed?
Free-to-play games can be financed with different sorts of income streams. What is particularly interesting for game developers is that sometimes these can be combined. Popular sources of income include:
Display or video advertising -this is especially true for mobile games-
- Some developers have become very innovative when it comes to integrating their ads into their games with In-Game ads allowing to unlock certain rewards, an extra life, or even extra levels.
Cosmetic add-ons
- This revenue stream is now massively adopted within game development and these cosmetics; often referred to as “skins”, have become a huge part of the success strategy of most recent games. Skins are increasingly popular as they can improve a game’s lifespan. Players also tend to identify with the character they play, as these characters often merge with their online identity, motivating them to customize them to their liking.
“Loot boxes”
- This highly controversial but popular strategy consists of selling random item packs at a fixed price. This way players are incentivized to keep buying these loot boxes to find a rare and valuable item.
What are the benefits of creating free-to-play games for developers?
“If developers all create free games, surely they won’t be able to make as much money as if they asked people to pay £70 for them?” Right?
Well, there are certain situations where using a free-to-play model becomes more profitable than actually going for the “standard” approach. It all depends on the type of games as some of them suit the model better than others.
“Free games allow considerably more people to access a game and enjoy it”
This benefit is pretty self-explanatory. Having a free game removes the entrance barrier that comes with a pay-to-play game, accounting for a more accessible game for all pockets. And because having more players drives others to join in (see: network effect), successful free-to-play games tend to have much larger player bases than traditionally-financed games. These players are then likely to purchase In-Game services, cosmetics, or other micro-transactions.
“Free-to-play games usually have a longer lifespan”
Due to their business model allowing for more smoothed and frequent incomes, developers can benefit from this flexibility to constantly improve their games and feed players with new content to keep them addicted to playing them. One of the most notable examples of a long lifecycle is League of Legends. Released in 2009 and still one of the most popular games to this day, the game is frequently updated and attracts many new players.
Owning a skin in a free-to-play game is also much more interesting for users as they will be able to enjoy it for longer. Items sold early in the game lifecycle can also become very rare and valuable if they are no longer resold, this attracts collectors of all sorts and helps maintain interest in the game.
What is certain is that in recent years, we have seen more and more major game franchises switching from pay-to-play to free-to-play. This has allowed some to resuscitate interest in their games — notably Rocket League and Counter-Strike: Global Offensive, which have seen their player numbers increase after this move.
Others, such as the Call of Duty franchise, have been developing two parallel game modes for a few years now, one free-to-play and the other with a classic iteration. We can see a strong shift away from the classic franchise towards its free-to-play counterpart, which is adopting the “battle royale” formula popularised by another game of the same model: Fortnite.
But what about the true financial benefit of the free-to-play model?
Well, the result is clear. In 2020, the 5 most profitable games were free-to-play, and many others outshine some of the most established game franchises in the industry. This trend questions the entire video game industry.
So, will all video games be free-to-play in the future?
While the answer is still uncertain, it is likely that the trend will continue to grow and could affect the vast majority of online video games. And we, gamers, will always be happy to enjoy countless gaming hours on interesting new games without having to spend anything.
About this article
This article has been written by a student on the Grenoble Ecole de Management’s Advanced Masters in Digital Strategy Management. As part of a content creation assignment, students are given the task of writing articles based on their digital interests and disseminate the articles online. Articles are marked but we make minimal changes to the content. Thanks for reading! James Barisic, Programme Director, MS DSM.
