I’ve been reading quite a bit lately about how subscription MMO games are on their way out, soon to be replaced entirely by free-to-play MMO games with upsell or micropayment features.
I was also reading a post by Seth Godin recently that included the advice “Whenever possible, sell subscriptions.” In particular, he made the comment that:
Few businesses can successfully sell subscriptions (magazines being the very best example), but when you can, the whole world changes. HBO, for example, is able to spend its money making shows for its viewers rather than working to find viewers for every show.
And this lead me to wonder: We know that a game which embraces microtransactions will need to be designed differently from the ground up. But what does that actually mean? What does a micro-transaction game look like?
One big difference is that we’re no longer talking about a democratic society where every player is an equal. (That’s one of the big reasons that players in the US react negatively to micropayments — both Americans in general and RPG players in particular are very attached to the idea that effort leads directly to reward and that money is a dirty shortcut.) But it just doesn’t make sense for a game developer to lavish the same resources on everybody equally when only a few people are actually paying the bills.
Let’s extend the HBO example. HBO is a subscription service; it is most concerned with adding and retaining subscribers. It does this by producing quality shows that appeal to its audience. In theory, HBO needs to provide just enough content each month so that any given subscriber feels that their subscription cost is justified. Once a subscriber is satisfied that the subscription is worth the cost, spending additional resources on that particular subscriber is a waste — it’s better to move on to satisfiying another customer. This is fairly similar to a game like EQ2 in which expansions and regular game updates provide a broad variety of new content, with just enough depth in each area for different types of players to feel justified in continuing their subscriptions.
In contrast, we can look at the Home Shopping Network as an example of a microtransaction model. HSN provides free content to everyone who tunes in, and profits only when viewers make a purchase. The majority of their income derives from a small fraction of viewers who each spend quite a large amount of money. A slightly larger fraction of viewers spends just a bit of money each, and the vast majority spend almost no money at all. In this environment, the most efficient profit strategy focuses all your resources on the big spenders first and foremost. HSN programs are very carefully tailored to appeal to the big spenders, the people who give them the most money. So long as the big spenders still have money to spend, the best strategy is to target them narrowly.
These are both perfectly viable business strategies, by the way. HBO uses its large subscriber base to focus on high-quality content for all the subscribers. HSN can make tons of cash from only a tiny portion of its audience, so it doesn’t need as many dedicated viewers as HBO in order to be profitable.
So an MMO based on micropayments would focus heavily on the big spenders. An MMO like this is unlikely to provide regular content updates: it’s just not an efficient use of resources to provide too much extra content for players who aren’t paying. And for the players who are paying it’s more effective to give them something new to purchase once a week or so (to encourage repeated small purchases) than to dump a whole bunch of items on them all at once. In fact, it’s likely that a micropayment MMO would largely forego expansions (free or paid, boxed or downloadable) as well, for the same reason. Instead, their development model will likely embrace constant small paid additions (which is going to be a real pain to QA, let me tell you!).
More than that, however, these MMOs will be trying to reach each individual player in an entirely different way than we do now. For instance, if enough heavy spenders would really like a particular niche item — say a giant Cat-in-the-Hat style hat — then it might make economic sense to create that item and sell it. And depending on the cost of resources and the purchase price of the hat, ‘enough’ spenders might be only a few hundred! In a subscription MMO, on the other hand, it is much harder to make the case for niche items like that because all the content needs to appeal to a much larger audience — it needs to help justify a broad swath of subscriptions. So one effect of the coming revenue model revolution may be that our games give up some of their vast breadth in favor of highly targeted depth.
Of course, there are plenty of business models for MMO games that blur the lines between subscriptions and micropayments. But in any case it will be fascinating to see what happens to our assumptions about development as we develop into a more diverse ecology of online games.