Freemium is the Future!

27 Jun
June 27, 2012

Well, according to one EA COO Peter Moore.

“I think, ultimately, those microtransactions will be in every game, but the game itself or the access to the game will be free,” he said. “I think there’s an inevitability that happens five years from now, 10 years from now, that, let’s call it the client, to use the term, [is free]. It is no different than…it’s free to me to walk into The Gap in my local shopping mall. They don’t charge me to walk in there. I can walk into The Gap, enjoy the music, look at the jeans and what have you, but if I want to buy something I have to pay for it.”

Yeah. Right. Just like “The Gap”. Games are just like retail department stores. Where you browse other products, which are themselves probably not games.

Now, this isn’t just EA executives sharing more of their eerily accurate insights into the business of gaming. No, this line of logic was repeated from another quarter. Epic’s Tim Sweeney thinks Freemium is the inevitable evolution of the market, too.

So are these two gentlemen right? Yes and No.

Yes, they’re right in the sense that I think there will be a lot more focus on the Freemium model in the future. And I think that soon we will see at least a few “breakout hits” in the AAA Freemium (non-MMO) space. Someone is gonna make a lot of money at some point, and there will be a lot of publishers and developers following suit.

But no, because I honestly think there will always be a demand for games which don’t try to intrude on your gameplay experience with a virtual clothing retailer overlay. Maybe not for all game types, but I don’t think the “pay once, enjoy a premium product” model will go anywhere, or cease to be tremendously profitable.

Consider a different industry. The restaurant business. Has the spread of fast food chains destroyed the market for high-end restaurants? Not where I live. Yes, fast food is convenient, and no, not everyone can afford high-end restaurants, and certainly not every day of the week. But there are enough people who want to eat premium quality food, and regularly enough, that there are many good quality restaurants in my city. Many of those situated within walking distance of fast food chains.

Those high-end restaurants survive, and thrive, because there are many people who have large amounts of disposable income, and who will pay a premium for quality. Who are beyond the point where “eating cheaply” is the deciding factor in their eating-out decisions, and who will seek out and support restaurants for a number of qualities, some quite subtle. From quality of food to “service”, “ambiance” and “novelty”. These things have a monetary value, and for many that monetary value outweighs the allure of “cheap”.

That’s why it seems remarkably silly, to me, to predict that the entire market, or even most of the market, will shift to Freemium. It’s rather like confidently predicting that fast food chains will replace all other forms of eating experience. It seems a failure to realize that there are different types and tiers of customers, with different tastes and preferences.

I won’t deny that Freemium games have a place in the ecosystem of gaming, possibly a large place, and that they may make a lot of money for some developers and publishers.

But I predict there will always be a market for a more “premium” gaming product, one that, without add-on gimmickery*, is a complete, highly enjoyable and polished experience. And I believe that those products will also make a lot of money for some developers and publishers, just as they do now.

* I exclude expansion content here, even DLC expansions. To me, an “add-on gimmick” is like the virtual Gap, a store for knick-knacks unrelated to gameplay. If I like a game, I have no problem with them selling me more chunks of content, if I want it. As long as that is extra content, and I don’t feel like it’s been removed for the express purpose of selling to me for extra profits.

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