Moore’s Law: Is Freemium the Future of the Industry?
According to Wikipedia, “Freemium is a business model by which a product or service (typically a digital offering such as software, media, games or web services) is provided free of charge, but a premium is charged for advanced features, functionality, or virtual goods”. It is also, according to Peter Moore, the future of pretty much every game that will be released in ten years. In a recent interview with Kotaku, Moore, the chief operating officer of video game giant EA, expressed confidence that within a few years almost all video games will be free to play (F2P), with the only costs to players coming from optional DLC and microtransactions. What?
Before we go off looking for our torches and pitchforks let’s all take a step back. Yes, that includes you in the back, console gamers. Freemium isn’t a dark horse in the world of gaming business models; while a lot of people probably associate the term with Facebook games, mainstream games like League of Legends have used it to reach huge markets, with astonishing success. LoL is one example of freemium done right; all the elements of play are free, while players can use real money to buy things like champion skins which have no impact on actual gameplay, so every player is (more or less) on a level playing field. The same thing goes for Team Fortress 2; hats are great to look at, but they won’t give you a huge advantage over those who don’t have any at all (in any case, playing a Medic will get you all the love you need anyways). Freemium isn’t evil; on the contrary, it’s a very solid and viable model for certain types of games.
If he had horns, he’d probably be demanding your soul too
That’s all well and good for multiplayer, but what about single player games? How does freemium translate to something like Mass Effect? DLC is already a familiar component of many games these days, but making $60 games free to play is an entirely different ballgame. Believe it or not, that chunk of cash doesn’t go straight to pay for new Ferraris and pineapple martinis for top executives (well, not all of it anyways). The vast majority of people who play F2P games will never spend a single cent on those games, so how would that convert into returns for game publishers on triple-A titles? The simple answer: it doesn’t. That means nickeling and diming for every side quest, every character customization, every piece of galactic horse armor you want to slap on your trusty steed. Femshep? Cough up. Blue explosions instead of green in that ending cutscene? Empty out those pockets. Gay love scene? You had best be prepared to sell a kidney or two, friend, because without lining Peter Moore’s wallet, Commander Shepard is going to stay as straight as a video game company ignoring its loyal fans and heading right towards the money.
The worrisome thing isn’t just EA’s bullheaded stance that every game can be marketed the same way, it’s also that they seem to be heading down towards the wrong end of the F2P model. In his interview with Kotaku, Moore claimed that “The great majority [of players] will never pay us a penny which is perfectly fine with us, but they add to the eco-system and the people who do pay money—the whales as they are affectionately referred to—to use a Las Vegas term, love it because to be number one of a game that like 55 million people playing is a big deal”. Aside from calling players oversized aquatic mammals, this sounds suspiciously like the evil cousin of F2P, the “pay-to-win” (or, for those of us who love our acronyms, P2W) model. You can already see this in action on EA’s line of online PLAY4FREE games, where you can “Equip your in-game persona with performance-enhancing goodies” and “Level up faster and improve your abilities” by buying in-game credits with real money. In the real world, those are called anabolic steroids, and there’s a good reason that they’re banned in competition. Tying performance to how much money you’re willing to spend just kills the spirit of competition in multiplayer online games. How would you feel if you were Usain Bolt and you got repeatedly beat by less talented sprinters who just doped up while the Olympics committee turned a blind eye? It’s pretty much the same thing in P2W, and if EA wants to make this the norm in online games, I’m not sure that’s a world most gamers want to see or live in (neither am I sure that it is possible to consistently beat Usain Bolt in a race, even on steroids).
If you like pay-to-win, you’ll love EA’s PLAY4FREE service
What’s driving all this is pure economics; $60 games are not a cheap investment for gamers, but they’re not much of a profit margin for game companies either, except for those rare multiplatinum selling titles. Moore’s solution? Cast the net over a wider segment of the population, targeting demographics like soccer moms and businessmen who don’t necessarily fit into the typical gamer stereotype. What concerns me is that instead of reaching out to new audiences while simultaneously producing games for the hardcore faithful, EA is attempting to dumb everything down. When Moore says “Hardcore gamers won’t like to hear this. They like to circle the wagons around what they believe is something they feel they have helped build”, what he really means is, “You’re not bringing us enough money, so bugger off” (I like to imagine him saying that in a heavy English accent while he’s sipping cocktails in his private jet on his way to a gathering of rich executives where they scheme how to wring out more money from their enthralled audience).
If EA wants a good picture of games done right, they need only look at the foremost purveyor of PC games today, Valve. While acting as an independent game developer and bringing us gems like Half-Life and Portal, they also publish games from third-party developers through their digital distribution platform Steam, all while remaining incredibly profitable. You can hardly accuse Valve of price-gouging either, as digital distribution is much cheaper than producing physical copies. It’s important to note that Steam faced its fair share of resistance upon its advent, with people railing against having to be connected to the internet just to play games, which seems kind of absurd today considering that your toaster is probably connected to the internet right now. EA has tried to imitate the success of Steam with copycat platform Origin, though with mixed results. It feels like EA is just latching to whatever direction the market seems to be pointing in, rather than coming up with a solid, unified business model of its own. Unfortunately, with Facebook and casual games posting large increases in user numbers, EA has decided to take the route of seeming least resistance.
EA was founded with the slogan “Can a computer make you cry?”, a poignant statement of vision in an era when computers were generally used to crunch financial numbers, not tell stories. It’s unfortunate to see a company whose original artistic goal has been subverted to the degree that it focuses more on making investors happy than it does on creating works of intelligent entertainment. Having a broad and storied history does not make you the be-all and end-all of video games; while I don’t like to use broad, apocalyptic terms in any sense, it’s a good thing that the indie game scene is more vibrant than ever, because that is one of the few things standing between us and an endless landscape of Farmville clones stretching as far as the eye can see. However, EA happens to be one of the titans of the mainstream games industry, and what they do over the next few years is going to heavily affect the future of our pastime. Maybe if they concentrate more on making better games, Peter Moore won’t have the time to make terrible analogies to the Gap (you can read the original Kotaku article and interview at http://bit.ly/PrUsbp).
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