GD Column 18: The End of Games?

The following was published in the May 2011 issue of Game Developer magazine…

In a GDC speech from March 2010, ngcomo’s founder Neil Young described the advent of free-to-play gaming in the West as “the most significant shift and opportunity for [game developers] since the birth of this business.” Since then, more and more game developers are making this transition.

In June, Turbine announced that it’s profitable, subscription-based MMO Lord of the Rings Online would adopt a free-to-play model, based on the success of a similar change with their MMO Dungeon and Dragons Online, which increased the game’s revenues five-fold. In November, EA announced Battlefield Play4Free, a downloadable, free-to-play shooter built on the Battlefield 2 engine, meant to improve on the success of the similar, WW2-based Battlefield Heroes. In February of this year, Riot Games, developer of the popular free-to-play strategy arena combat game League of Legends, was purchased by Chinese games behemoth Tencent for $400 million, signifying the massive revenue potential of the format.

Indeed, few major franchises are not being considered as raw material for a transition to free-to-play; the revenue potential is simply too large to ignore. In March, at the Bank of America Merrill Lynch 2011 Consumer Conference, Activision CFO Thomas Tippl stated that, shockingly, Starcraft 2 was not worth the effort from a financial perspective. Although the game sold very well, grossing over $250 million dollars, the lack of any ongoing revenue coupled with the high development costs meant the final return on investment was simply not high enough. Ultimately, publicly-traded companies, like Activision, must invest their money in projects with the highest potential profit margins and, increasingly, free-to-play games are beginning to dwarf single-purchase games in that regard.

Neil Young’s own ngmoco provides an interesting example of how this shift can change a company’s priorities. The smartphone developer’s first major hit was Rolando for the iPhone, providing the young startup with its first major revenue stream. However, ngmoco soon discovered that although they could make modest profits on singe-purchase mobile games, their most profitable releases were free-to-play games built with in-app purchases. Within a month of release, their kindgom-builder We Rule became the highest grossing “free” game on iOS devices.

Understanding that free-to-play games would be the only way to scale their business, ngmoco cancelled single-purchase games, including the guaranteed money-maker Rolando 3, in favor of games which fit the freemium model. In Young’s words, “If we can’t make the game free-to-play, we’re not going to release it.” The strategy worked as his young company was purchased by the Japanese social gaming giant DeNA in late 2010 for an impressive $400 million.

A New Design

Today’s game designers will increasingly hear similar mandates from their own management teams. However, shifting to free-to-play design is not a straightforward process. Indeed, designers of single-purchase games have a much easier job as they only have to focus on one thing: making the player’s experience as much fun as possible. In contrast, designers of free-to-play games must make the game engaging enough to attract and retain players while also holding back enough of the experience to drive microtransactions.

The energy model is a proven mechanic that maintains this balance for many free-to-play games, including my own Facebook-based RPG Dragon Age Legends. Under this model, certain player actions, such as starting a battle in Legends, consume a set amount of energy. Once a player uses up all of her available energy, these actions are unavailable until the energy regenerates, commonly at the rate of one point every five minutes.

Thus, with a full energy bar, the player can typically fight four or five battles before getting stuck. At that point, he can either decide either to let the energy recharge naturally, which might take two hours for an empty bar, or to purchase an instant refill with real money. While they still have energy remaining, free players have access to the full game experience – the battles in Legends do not work differently for paying players – but they have to deal with some impatience after they hit the energy gate.

In single-purchase games, designers would rarely build a game mechanic that intentionally tests the player’s patience; in fact, that is a hallmark of bad game design. Thus, free-to-play games upend many of the assumptions that designers bring to the table from traditional single-purchase design. Indeed, this break is creating a great deal of anxiety within the game design community as many developers feel that their original motive for making games – to bring players as much fun as possible – is now in danger. Noted independent designer/programmer Chris Hecker recently echoed his own concerns:

The problem I have with free-to-play is business types rarely talk about what you’re giving up by going to that model.  Microtransactions warp game designs, not necessarily for the better or for the worse, but they certainly make the designs different. If the profitability of microtransactions makes it so most companies go towards this model with their big-budget titles, then that is a shame and a loss, because there are lots of designs that are interesting and important to the art form to explore, but that don’t lend themselves to microtransactions and free-to-play. I hope single-purchase, “complete experience” games don’t go away; not because I’m old and curmudgeonly–although I am–but because there is an entire subspace of game design there that still needs to be explored.

A New Hope

League of Legends, one of last year’s most successful strategy games, provides an interesting case study which ultimately shows that Hecker’s primary concern – the design space explored by single-purchase games could be lost – is valid. The game is commonly held up as the best example of free-to-play design done right. Not only has League of Legends been both wildly popular and commercially successful (see the $400 million purchase above), the game has also garnered critical acclaim, sweeping the first-ever Game Developers Choice Online Awards. Most importantly, however, the game’s business model has been accepted peacefully by the core gamer community, one which typically views microtransactions with suspicion.

Because Leagues of Legends is a highly-competitive, team-vs-team arena combat game, microtransactions which could give one side an advantage over another would be wholly unpalatable to a large portion of the Western audience. Instead, the game only hands out bonuses to players who have invested large amounts of time in battle.

The meta-economy employs a dual-currency model common to many free-to-play games, with a time currency (IP) which is earned through play and a cash currency (RP) which is bought with real money. Items which can boosts a player’s abilities (Runes) can only be purchased with the time currency (IP), providing players a strong incentive to keep player to earn more IP. Cosmetic items, which only change the player’s appearance, can only be purchased with the cash currency (RP), which simply appeals to a player’s pride or vanity.

The player can also buy a temporary boost with RP which increases the rate IP is earned. This microtransaction present a time-vs-money question to the player; she can spend some money now to earn Runes faster, or she can simply play some more games to earn the extra amount of IP required.

Still, the most interesting microtransaction is the character unlocks. League of Legends descends directly from the popular Warcraft 3 mod Defense of the Ancients, in which the player gives up control of an army of units for control of a single hero. The mod’s depth came from the different combination of hero types – 103 in the current version. League of Legends has a similarly large stable of “champions” – 72 as of March 2011.

However, these 72 champions are not all available at all times. Instead, a rotating selection of around ten are available each week, which means that players have only limited control over which champion they can use. This cycle can greatly upset a player who has become quite good with a specific champion but who must now learn a new one. Some players enjoy the challenge of mastering a new set of skills and attributes, but many others prefer to keep winning with a champion that works for them.

Accordingly, League of Legends gives players the option to unlock champions permanently, with either IP or RP. Like the energy mechanic common in social games, the character unlocks are charging players for their impatience. Can they wait weeks until their favorite champion is again available for free or days until they earn enough IP to buy the unlock, or will they just spend some real money right now to get back into the action with their favorite character? This model works well for both gamers, who are getting an incredible experience for free, and for the developer, who can rely on player impatience to generate revenue.

Nonetheless, single-purchase games would never be designed this way, with players limited to a small sub-set of possible characters each week. (Indeed, the single-purchase strategy game Command and Conquer 4 was roundly criticized for forcing players to “earn” the right to build certain units over multiple play sessions.) Although League of Legends could make the transition to a single-purchase game by simply unlocking the majority of champions immediately, not all single-purchase games could just as easily make the transition to free-to-play.

For example, StarCraft 2 is not so easy to imagine as a free-to-play game. The franchise is a model of a tight, elegant ruleset, with no extraneous parts or redundant options to muddy the design. Indeed, even with the new units added for the sequel, Blizzard removed enough old elements to keep the unit count down near the original 12 per race. Indeed, few reviewers even felt the need to comment on the lack of a fourth race to differentiate the two versions.

Could StarCraft 2 follow the League of Legends model? Perhaps Blizzard could allow everyone to play the Terrans for free but only offer the Zerg and the Protoss to paying players? This model would probably fail both for business reasons (not enough opportunity for repeatable purchases) and for design reasons (having 90% of the players forced to use Terrans would destroy the balance). Anything more aggressive – like actually selling extra siege tanks during battles – would violate the concept of a fair playing field, a core tenet for strategy games.

An Old Lesson

Thus, if Activision believes that making a game of StarCraft 2’s scope is not worth the effort, will this type of tight, intricate design simply disappear? Although microtransactions are still relatively new in Western video games, they are not new for physical games in the West. The emergence of Magic: The Gathering and other collectible card games (CCGs) in the ‘90s showed the power of microtransactions for encouraging players to make recurring purchases within the same game system over many years. The makers of CCGs have been dealing with this new world which necessarily mixes business and game design at least a decade before us.

However, the wild success of CCGs – Magic still regularly grosses over $200 million yearly, which dwarfs non-collectible card games – did not send single-purchase, “complete experience” physical games into extinction. Indeed, the card and board game industry is more diverse and innovative than ever before.

In fact, two of the most successful card games of the last few years have taken a mechanic directly from Magic, adapted it to fit the format of a single-purchase game, and found commercial and critical success. Dominion turned the meta-game of a CCG into a traditional card game by having players build and play a deck of cards during the game. 7 Wonders turned drafting, a folk method for distributing CCG cards, into a game by conducting a single draft after each individual card play.

These examples of successful single-purchase games emerging from the shadow of Magic prove this format can still thrive in a world with microtransactions. Indeed, these designers brought some of the gameplay of Magic to a new audience simply because not everyone is ready to buy only a small part of a card game, which will never be complete. Many gamers will never be ready for CCGs, just as many gamers will never be ready to spend money on a free-to-play game.

Thus, if every video game adopts microtransactions, many players will be left behind who are looking for a different type of experience. Microtransactions DO warp the game design towards a model that supports recurring purchases. However, this shift leaves a great deal of space behind as a vacuum ready to be filled by smaller publishers and developers who are looking for great opportunities. The profits from single-purchase games can easily justify the development costs for teams that take their budgets seriously, and these profits can only go up as more and more big publishers abandon this still fertile design space.

10 thoughts on “GD Column 18: The End of Games?

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  2. The comparison between Command and Conquer 4 and League of Legends doesn’t seem apt. League of Legends cleverly restricts the breadth of the game. Limiting the variety of games players can have, rather than their complexity. New players don’t need an especially broad game anyway. My understanding is that C&C restricts the depth of the game, limiting strategic options until the player shows that they are responsible enough to handle them.

    You are, of course, still correct. League of Legends is a free to play game, and the developers will eventually be faced with uncomfortably philosophical questions. How many is too many characters? What are the standards for single player free games? But their model seems to have postponed these choices.

    Tl;dr: I disagree that playing League of Legends for free is a significantly different experience than paying $20 for Heroes of Newerth. For now.

  3. The example of Dominion is a relevant one: I know a great many ex-Magic players who have taken to games like Dominion and RftG with great delight, because it’s so refreshing to them to only have to make a single purchase* to have a complete game!
    So here’s my prediction: a glut of free-to-play crap will dominate for a while, single-purchase games won’t die out, and then at some point (either because a particularly apt game comes out, or because the monetisation of FTP gets so unbearable) there’ll be a huge rush back to single-purchase games – being able to buy a whole game and have access to all its features all the time will be novel and exciting.

    * and then all the expansions..

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  5. I totally agree that videogame design is warped when microtransactions come into play. I suffer it every day as I work designing social games, where we also have to take into account spreading the game among player’s friends (aka viralization).

    Even without wanting it, I often find myself thinking about monetization and viralization BEFORE finishing the actual game design. That’s because we’ve been told so many times (by our superiors) that they’re very important… I mean, they’re important, but it’s bad when they make ourselves (game designers) forget about the core thing about games: to be fun.

  6. I’m sorry, the Dragon Age : Legends idea sounds terrible when viewed from the perspective of the gamer, an artificial constraint on a game, including the creation of artificial frustration, does not lend itself well to the idea of monetisation for the sake of necessity but it is suggested as mostly for the sake of income.

    Game design has the ability to create seamless, non-frustrating experiences, to hard-code the monetisation into game design itself is an invasion of monetisation into leisure-time itself rather than an understandable price to pay for access to leisure.

    Imagine going to a beach with the intention to relax, all while being harrassed with the burden of impending payment, rather than simply paying for access to relax.

    The whole process appears to be self-detrimental to the aims of the product.

    It is better to make a product and find a way to sell it (out of necessity) rather than create what could be considered predominantly a monetary-vessel.

    We don’t want to invoke feelings of dread, with gaming being the chair and looming-payment performing the role of The Sword of Damocles hanging over the head of the user.

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