Free-to-play contrasts with pay-to-play, which obviously means you pony up before getting started.
But while the term “free-to-play” is technically correct, the business model rests on the concept that some players will pay at some point in the game. There are some free-to-play (F2P) games that do not have an option for payment (some generate revenue through advertising), but the most successful F2P games operate on a “freemium” model. You can play for free, but players are incentivized to spend a quarter or a dollar or more at various points during gameplay.
A dramatic shift took place in 2011. Between January and June of that year, the prevailing gaming model was upended, with free-to-play (or freemium) games overtaking premium (pay-to-play) games. The inversion was not incremental. It was a massive disruption of the status quo. In January, 61% of app store revenues came from pay-to-play and 39% from free-to-play. Six months later, the numbers were more than completely reversed: 35% to 65%.
Free-to-play and freemium models have become hugely popular with players and likewise with game publishers. For the publishers, it may seem counterintuitive but here’s the rub: Pay-to-play games have a limited revenue-generation lifespan. Freemium revenue can be unlimited.
As one industry commentator notes, the game publisher Blizzard opted to charge $15 a month for players to access World of Warcraft.
“Just as Blizzard didn’t give gamers any way to play WoW for less than $15 a month, it also didn’t give gamers any mechanism to give the company more than $15 a month,” writes Justin Davis. “How many millions of hooked WoW players would have exceeded that subscription price for years to get a deeper, more exclusive WoW experience?”
Recognizing the now-overpowering dominance of free-to-play games, we can extrapolate the size of the market based on the size of the entire mobile gaming market – and the numbers are staggering.
The report indicates the global games market is likely to generate $81.4 billion this year, which is a spike of 7.8% from 2013. This level of growth is expected to continue, topping $100 billion by 2017. At present, mobile gaming generates about 27% of total global gaming revenues. The massive growth is due in part to increased use of smartphones and tablets for gaming, as well as truly dazzling numbers from China, where gaming revenue jumped 35% in a single year.
Eyal Lichtmann, CEO of BidOkee, is not surprised by the numbers.
“As massive as the market is already, it is still, to some extent, the thin edge of the wedge,” he says. “The massive growth in China alone, which represented $13.7 billion last year, is still practically a drop in the bucket given the potential of that single market’s expanding economy and growing player base.”
Lichtmann’s app, BidOkee, is currently in development. BidOkee is an auction-themed three-tile match game, like Candy Crush, that gamifies online retail by rewarding players with valuable, tangible consumer goods in exchange for in-game achievement and actions.
While he claims the app itself will revolutionize free-to-play gaming by adding a free-to-win proposition, he also says the crowdfunding project that will fund the development of the app is revolutionary in itself.
“Ours is the first gamified crowdfunding site that rewards backers with points they can use to bid for real, valuable products on our integrated auction platform,” Lichtmann says, adding that both the crowdfunding project and the app it funds reflect BidOkee’s driving principle: Free-to-play (F2P) and free-to-win (F2W). It may not trip off the tongue, but Lichtmann insists that “F2PF2W” is the future of gaming.
“And BidOkee is the first in this next-gen gaming era,” he says. “As the global gaming market keeps snowballing, free-to-play and free-to-win is what is going to drive the next chapter in this remarkable story.”