«Market Leader» - news and previews making you rich.

• Book 1
• Book 2
• Book 3
• Masterforex-V Trading Academy Forum

Investing In Video Games: Pay To Play Or Free To Play?

02 February 10:11 AM

The video game industry in the US and Europe seems to have reached its climax. Millions of gamers are looking forward to purchasing their own copy of another bestseller. They are ready to pay monthly fees for playing online and to buy various artifacts and items to take advantage over their enemies. Investors now seem to be more willing to invest millions in the industry.

The video game market of the CIS states is not as developed as the western one. Consequently, it presents special interest to the giants of the global video game industry. Pay to play and free to play are the 2 basic business approaches to earning on MMORPGs.

What are the essential differences between these two business approaches?

Pay To Play Or Free To Play: Which Is Better For Investors?

According to Vladislav Tsarenko, Masterforex-V Academy’s video game expert, pay to play (PTP) and free to play (FTP) are essentially different approaches. PTP implies monthly or annual fees for playing a certain MMORPG while a free-to-play MMORPG speaks for itself: no fee is charged unless a gamer wants to buy some artifacts or to upgrade his/her character to get an edge in the game.  


Free to play. FTP is more popular among developers. Its major advantage is that a gamer can test it for free without any limitations. That is why such games are more popular and widespread. Everybody likes freebies. If a free-to-play game is really awesome, then sooner or later some gamers will want to upgrade their characters or simply to get an edge over their enemies. A gamer’s desire to become stronger, faster and better than opponents seems to be the major market driver. It makes more and more video game developers start their free-to-play MMORPGs, with millions invested in these projects.  Such upgrade fees are usually small for an average gamer – $5 to $10. Of course not all the gamers who play FTP MMORPGs pay such fees. Moreover, when a game’s rules and conditions are really tough, most gamers will start leaving the game. In this case, others won’t upgrade because this just won’t make any sense. So when creating a successful FTP game, a developer should focus on the balance between the paying minority and the “we like freebies” majority. Numerous bonuses and promotions should help developers encourage their clients to pay.

There are many free-to-play games on the net, including Perfect World, Allods Online, Land Of Chaos, Granado Espada etc.

Pay to play. Unlike FTP, a gamer, who wants to play a PTP game, has to pay a monthly fee to get an access to it. This approach is often used for the industry’s coolest, high-budget games created by the world’s best developers. Considerable funds are spent on advertising campaigns and beta-testing to make such a game extremely popular and highly anticipated even before the official release. World Of Warcraft (WoW) may serve as a striking example of a play-to-play MMORPG.  This game was highly anticipated because it was a sequel to the famous WarCraft series created by Blizzard, a video game giant (for more details read the article “Tips For Investors: Blizzard Conquers Video Game Industry”). As a result, over 13 million gamers around the world keep paying monthly fees ($10 - $15) to play this MMORPG.

However, developing a pay-to-play game is always risky. Such a game should be really good to interest gamers so much that they would want to pay regularly for playing it. That is why developers always start beta-testing before the official release of a PTP game.  During the period of beta-testing gamers get a free access to the game in order to decide whether to continue playing it after the official release.

The biggest advantage of this approach is that EVERYONE PAYS. Another plus is that all the gamers are equal in rights and cannot buy an edge over their opponents, like it is done in a free-to-play game. The major drawback is that a PTP game can fail to come up to gamers’ expectations. In this case, the game is doomed to become unprofitable because nobody (or very few gamers) will pay. The Russian version of Warhammer Online is a striking example. The developers ignored the fact that the CIS’s gaming community is far less willing to pay for games, thus preferring free-to-play MMORPGs.

These are some of the most popular pay-to-play games : World of Warcraft, The Lord of the Rings Online, Warhammer Online, Star Wars: The Old Republic.
 

Hybrid approaches. To tell the truth, these days there are very few games that are 100% PTP or FTP. Most pay-to-play games are modified so as to provide free-to-play options up to a certain level. Later a gamer will have to switch to the paid mode if he/she wants to continue playing and developing his/her character. Moreover, some PTP games offer some items a gamer can buy for his/her character. Fortunately, they don’t give gamers an edge over their opponents. On the other hand, free-to-play game projects offer their clients an opportunity to get a premium/VIP account. This is a set of certain bonuses and VIP services for those clients who have paid a certain monthly fee.

Therefore, developers strive to utilize the strong sides of both the approaches to make as much money as possible. Once again, WoW can be cited as a striking example here. The developers have recently allowed their clients to play WoW for free until they reach level 20. Moreover, the gamers can pay to change the name of their clans or to purchase pets. Blizzard has recently confessed that by rendering these “small” services the company earns big money. For example, a pet costs up to $25.

The bottom line:
When investing in a MMORPG it is necessary to determine which business approach it will be based on.

If it is a pay-per-play game, an investor should find out if the advertising campaign is good enough to make the game highly anticipated and to attract an army of devoted fans who will be paying monthly fees.

If it is a free-to-play game, everything is simpler. The only thing an investor should do prior to investing is to evaluate the quality of the game, i.e. whether it is good and interesting enough to make gamers pay for various items that will make their characters better, stronger and faster than their opponents. Once again, make sure that both the paying minority and the “we like freebies” majority will get what they want. The former will pay only when they want to get an edge over the latter.

Market Leader and Masterforex-V Academy would appreciate if you could participate in a survey. Please, visit the Academy’s forum for traders and investors and answer the following question:

In your opinion, what kind of MMORPG is better to invest in?
 

You are free to discuss this article here:   forum for traders and investors

Got a question? – Ask it here »