Will they be the future trend or will they fade soon?
Figures and trends over the past few years clearly show one thing: the gaming industry is heavily committed to recurring spending and the free-to-play model is the biggest source of revenue. There is no indication that this will change anytime soon. On the contrary: the percentage of revenue that publishers derive from these games is constantly growing and this is in any case a conscious strategic choice, which will also continue in the future. In short: there will only be more free games. Developers of all games release free versions of their games, including online blackjack game developers. Although free games are a great way to test the waters with a foothold, they face many financial, ethical, and professional challenges.
The question is whether “full games”, which have to be paid for separately, will suffer from this trend. There are certainly indications to this. For example, GTA V never had a single player expansion because all the attention is focused on GTA Online. Epic Games stopped developing Unreal Tournament a year after Fortnite’s breakthrough, and recently Ubisoft decided that the next title in the Division series would be a free-to-play game. How much this game changes from predecessors that had to be paid for separately remains the question, but it does indicate that the shift to free-to-play may affect existing franchises as well.
In many cases, however, publishers have bet on two horses. For example, Call of Duty free games are separate from other shooters in the series that require payment. Activision also says that these full games sell better thanks to the free games, giving the publisher yet another reason not to let the focus on these individual games slack off.
Additionally, revenue from free-to-play games comes primarily from the mobile market, and in many cases mobile games are separate from paid console and PC games. Fortnite with crossplay on mobile platforms, consoles and PC is the big exception. EA is opting for the Call of Duty strategy with its upcoming mobile versions of Battlefield and Apex Legends; smartphone games are separate from the PC and console versions.
The market for paid games has grown faster than that for free games
Free-to-play games have been the gaming industry’s main source of revenue for years, but the market for paid games for PC and consoles has grown significantly over the past year. According to analyst firm SuperData, revenue from these games increased by 28% in 2020, while free games increased by 9% during the same period. This solid growth is partly caused by the corona pandemic and it is questionable whether this trend will continue, but it indicates that in addition to free-to-play, there is also a large growing market for paid games.
Additionally, the gamer market is in better shape than ever. The number of players increases enormously and with it the range of games. Major publishers are seeing a significant shift in revenue model affecting some of the biggest game franchises in the world. However, if you look further, there is a huge selection of games that are traditionally pay-to-play.
The gaming industry is also largely determined by console manufacturers Sony, Microsoft and Nintendo. They are currently not or little focused on free games. They take advantage of it; on every dollar spent on free games in their download stores, they earn about 30% in commission. So, even without releasing these games themselves, they earn huge amounts of money from them.
Focus on single player games
All three console makers are currently investing heavily in individual games, making them the leading provider of large narrative single-player games. This leads to market fragmentation, as Nintendo and Sony games can’t or hardly be played on other platforms. At Microsoft it’s slightly different, as all new Xbox games from their own studios will also be released for Windows and are part of the Game Pass subscription, so they can also be played via the cloud. Currently, Xbox cloud gaming only works on mobile devices, but streaming hardware for TVs and Xbox integration into TVs are on the way.
Sony has big ambitions to reach more people by bringing PlayStation games to smartphones, but PlayStation Studios CEO Hermen Hulst recently pointed out in an interview with PlayStation Blog that narrative single-player games are PlayStation DNA. . “We love making them and will continue to make them as long as players enjoy them.”
Nintendo has the most classic revenue model. The Japanese console maker mainly makes money from sales of its Switch and its own games. Nintendo had ambitions to expand with smartphone games, but those plans were shelved.
Risks of free games
Another reason why paid games will continue to exist is the fact that free games are not without risk. To have a chance of success, publishers must invest heavily in the development of a free game and if the game fails, that money is wasted. A game that is paid separately, even if it is not a huge success, still brings something.
Successful free games have tens to hundreds of millions of players, but not all of them spend money on it. Numerous studies show that a small percentage of gamers accounts for the majority of spending. Publishers therefore depend on a relatively small group for real income.
Publishers must also find a balance in free games: players must remain interested in the game, and be persuaded to return often and spend money regularly. However, mechanics that rely too heavily on spending can deter players. Another risk is that the release of a free game could hinder the sale of paid games. Overall, free games are no guarantee of success.
Legislation and ethics
The revenue model surrounding recurring spending in the form of micro-transactions is also under scrutiny from regulators. Loot boxes are particularly criticized in Europe, for example by the UK Gaming Authority and the Belgian Gaming Commission. This has not yet had major global consequences, but locally it poses some problems. Globally, attempts by regulators to do something about loot boxes are little more than pinpricks so far.
The financial results do not yet show any opposition on this side. In addition, gambling authorities only check whether games comply with gambling legislation. Separately, there’s the discussion of the ethics of games like Fortnite, which are largely aimed at children and rely on psychology to make money.