The Evolution of Free-to-Play

Free-to-play games are nothing new – in truth, they’ve been around just as long as we’ve had video games, in some form or another. I thought I’d take a look into how and where the idea developed, and where things might go from here.

To start, a few definitions and examples:

  • Freeware – completely free full software packages (e.g., PKZIP, McAfee Antivirus, many others) – often these came with the expectation that, if you liked the software, you’d mail the developer some money to support them
  • Shareware – essentially “demos” or trials – generally only the first level or episode was given away as shareware, with the rest of the game requiring purchase either at retail or via mail order (the first episode of Wolfenstein 3D was originally released as Shareware, as was Doom and Commander Keen). Copying/sharing was encouraged as a distribution method
  • Adware – software that proported to be free and provided some utility, but ultimately results in a number of advertisement pop ups and redirections. Gave shareware a bad name
  • Freemium – game is free, with microtransactions (e.g., Warframe, Paladins)
  • Subscription – mothly subscription to allow access to game servers (e.g., World of Warcraft)
  • Games-as-a-service (GaaS) – pay to own, with constant ongoing updates in the form of free (Overwatch/Lawbreakers) or paid (Destiny/The Division) DLC

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The concept of Freeware began in the early 1980s, where programmers would develop software either on their own or on behalf of a company, and release it on disc under a “freeware agreement”, which essentially stated that it was ok to distribute/copy/share the software with anyone under the proviso that none of the content was altered in any way, which included an info file outlining the company/programer details, along with information on how to send money if the user was happy with the function and performance of the software. This system worked quite well, for the most part, and many organisations were happy to note sales that were larger than what was expected. However, while this model suited small, single function software applications, it didn’t make sense for larger applications, such as video games. A new model was developed, whereby an aspect of freeware could be utilised as a distribution method, but the whole game would still need to be purchased via retail or mail order. This new system was referred to as Shareware, and in general a developer would offer the first “episode” (or level or section or whatever) of a game for free via shareware (with the same proviso around sharing as per freeware) and the rest of the game available at retail.

While this was a very effective system (I admit that my initial exposure to Wolfenstein 3D, Doom, and the Commander Keen series can all be attributed to shareware), it wasn’t ideal. On one hand, it encouraged disc copying, and copy protection needed to be developed alongside video games in order to protect full versions from hitting the streets for free. As a result, there was a large anti-piracy campaign in the early ’90s that encouraged people NOT to copy discs, and this was seen to have had a somewhat negative effect on shareware, as many users were not clear on the legality. In addition, adware began to appear on the market – these were small, freely distributed software packages that offered a single, simple function, but often resulted in pop-up advertisements, many of which would bog down slow systems and result in infuriated users. As more and more adware began to flood the market, the good name that shareware once had was lost to time, to be replaced by “demos” (which, let’s face it, are essentially shareware).

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The modern free-to-play model originated in the late ’90s with massively multiplayer online (MMO) titles such as Neopets, MapleStory, and RuneScape (among many others) emerging out of Korea and into the Chinese market soon after. Creation of this model is attributed to Nexon with a game called QuizQuiz released in 1999 – the company is still highly involved in many free-to-play games, and most recently has published Lawbreakers, although the developers ultimately chose to release Lawbreakers as a pay-to-play title utilising a “games-as-a-service” model, for better or worse (sadly, Lawbreakers is not doing so well under this model).

The free-to-play model is still very popular in Asian markets, where the freemium model is almost universal.  This model failed to gain traction in other countries initially, likely due to the heavy reliance on the AAA market in those countries, and the perception of quality when comparing free-to-play vs AAA pay-to-play models. Most of these countries (including Japan, Europe, and the Americas) focused on the success of World of Warcraft, which was hugely successful even given it was both pay-to-play AND required a monthly subscription. Many MMOs subsequently tried to snag a piece of this marketshare, with the release of such titles as The Lord of the Rings Online, Age of Conan, EverQuest, Star Wars: The Old Republic and so on – but very few of these titles were able to keep their heads above water. It seemed like the success of WoW was a one-off (and interestingly, the game is still doing very well, 13 years later). But developers continued to chase this model, potentialy believing there was an issue with marketing, or with finding the right player base. The reality is that players just didn’t want to pay that much for their games – it’s one thing to pay $15 a month for WoW, but another thing entirely when a different title is asking for the same amount. These games were looking to lock people into their world, and their world alone, and there really is only enough room for one player in this space.

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At the same time, the general concensus in regards to the freemium model began to evolve, primarily as a result of the development of the mobile market and the accessibility of the Internet. Many mobile and browser-based games utilise the freemium model (in some cases, apps are cheap to buy, with optional micro-transactions), and this model has proven to be extremely popular with casual gamers worldwide. That said, the mobile games market is also rife with adware, as some developers struggle to learn the fine line between incentivising microtransactions and intrusive advertising – more than a few mobile apps are less “game” than they are “flashy advertisement”… That said, as a result of the success of the freemium market (ignoring the fact that it was app-based and on a very different medium), MMO developers began to switch from subscription models to free-to-play models, mostly en masse. This happened to all MMOs mentioned previously with the exception of WoW, which is still very successfully operating as a subscription – mainly because people who play WoW are crazy.

Back in the mobile market, as popularity grew and the quality of titles increased, it was discovered that many free-to-play titles were simply flourishing. Candy Crush Saga, the mobile and browser game we all loved to hate, reportedly made developers King more than $493 million over a 3-month period during its heyday. The interesting thing to note is that while only a small percentage of players actually made purchases (reportedly less than 5%), it still lead to millions of dollars of monthly recurring revenue, primarily due to the high install base (at one time, the game had over 245 million active monthly players). For this reason, the video game industry has taken notice, and sales models are changing as we speak. Keep in mind that the prime period for Candy Crush Saga was only 3 years prior to the time of writing this article, and you may realise how new this all is.

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Of course, this success isn’t ALL that new – Candy Crush Saga was a huge anomaly, and one people love to bring up in discussions around freemium models, but freemium mobile games have been a success since 2011, when revenue from microtransactions in free-to-play games overtook revenue from premium (pay-to-play) titles in Apple’s App Store. Indeed, the most successful mobile games today are all free-to-play – look at Clash of Clans, for a more recent example, and you’ll understand what I mean.

When it comes to free-to-play on PC and console, the last 5 or so years have been a period of learning. Initially, developers weren’t really clear on how microtransactions could be offered, and there was a tendency towards offering desirable equipment behind a paywall – imagine a more powerful weapon or vehicle for players willing to invest the cash. This lead to an outcry amongst players that this resulted in a “pay-to-win” environment, where players who were willing to pay had a distinct advantage over “free” players. This really only applied to competitive titles, but the outcome was clear – developers needed to offer paid content that was desirable, but wouldn’t provide an edge to those willing to pay. As a result, we now have titles leading the waqy in this regard – look at Blizzard’s Overwatch, for example. While this is a premium, full-priced title (a point of contention, I might add), Blizzard has deployed a very successful “Loot Box” system, where players can choose to pay to purchase Loot Boxes, which contain random cosmetic gear. This has proven highly successful, although there are many players who disagree with microtransactions being included in premium titles (but this is an argument for another article). More recently, several free-to-play titles, such as Paladins and Warframe, have applied a similar, although slightly more complex, approach to transactions, each to their own levels of success.

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As a result, there is a burgeoning new free-to-play market emerging in the PC and console space – one that has been in place for around 5 years now, but is only just now beginning to gain momentum. Games have been in place from massive AAA developers (think Blizzard and Valve) for several years now, and are amazingly popular. Games such as League of Legends, DOTA 2, Hearthstone, and Heroes of the Storm to name a few. More recently, there have emerged a couple of smaller developers with a focus entirely on free-to-play – think Digital Extremes with Warframe and Hi-Rez Studios with both Smite and Paladins. In some ways, many still overlook these games, as the stigma of the free-to-play model still seems to be common among many players: “free-to-play games are lower quality than premium titles”; “free to play titles are no fun – it’s all about microtransactions”; “free-to-play titles are pay-to-win – the more you spend, the more fun you’ll have”. In most cases, none of this is true. Warframe has a huge community, many of whom believe that the game is bigger and better than Destiny even promised (but never lived up) to be. In fact, there are so many high quality free-to-play games on the market right now that I’ve decided I’m going to broaden my horizons, and give these games the chance they deserve. In my opinion, free-to-play will soon be just as normal as AAA premium titles – in fact, I’ve got a feeling the emerging AAA “games-as-a-service” model will end up deferring to the free-to-play model, but of course, this remains to be seen.

For now, I would suggest you jump on your PC, PS4, or Xbox One, and take a look at the free-to-play games on offer. You might be surprised. Four of the top 10 games (by player count) on Steam as I write this are free-to-play, while others are using a similar “games-as-a-service” model (paid, with microtransactions). Warframe is frequently in Steam’s top 10, while Paladins – often criticised as a knock-off of Overwatch – is consistently in the top 20, and BOTH games are very highly rated by users. For the most part, these games are deep and involved, and packed full of content, and virtually everything can be unlocked just by playing the game. In some cases, the games are better than full-priced retail AAA games. It’s time we drop our pre-conditioned expectations and branch out our interests, because free-to-play is here to stay.

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