NPD Group: 91 Percent of Kids Online Gaming is Free
For those of you who read F2P.biz regularly, you might recall an article I wrote about Asia's virtual goods lead. In it, I talked about Brad and Kyle, my cousins aged 7 and 13 years old from the Southern Ontario city of London.
During a visit, I chatted them up about their gaming habits and watched them play for a while. It was clear that free to play PC games had almost entirely usurped retail, pay-to-play products in their personal gaming library. Their favourite games were titles like Puzzle Pirates, Habbo Hotel and Runescape.
Well check out the latest NPD study, "Kids and Gaming," as reported over at Worlds in Motion. The most relevant stats for me were:
- 91% of online gaming among kids ages 2 to 17 is free
- 9% pay to play - these are primarily kids from higher income households
- The likelihood of a child paying increases with their age and time spent gaming
- Half of all kid gamers are "light users," clocking five hours a week or less
- The other half were medium, heavy or "super" users, at 6-16 or more hours/week
- The average time spent playing online was statistically higher among females
Look at that first stat.
That is so incredible that it has to be wrong or misinterpreted by me. If that's true, where is the retail, pay-to-play gaming industry headed as the next generation of kids comes of age? The study does say that eventually kids (males, mostly) graduate to consoles in their late teens, but as new free to play games start catering to a "new adult" demographic, fewer and fewer teenagers will make the jump from free to $59.95.
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F2P Jobs: How to Work for a Mogul
Here's a great opportunity for a Colorado-based (or relocation-willing) Producer to work in the Virtual World/Casual MMO field.
This position is as the lead producer behind a new child-themed casual MMO backed by Barry Diller's IAC. Diller is one of the last true media moguls, in the vein of Murdoch, Eisner and formerly Martha Stewart and Conrad Black. Sidebar: A salacious read is Autumn of the Moguls by Michael Wolff.
IAC has been on a gaming industry spending spree lately, with their most recent acquisition being Garage Games in Eugene, Oregon. But this particular opportunity is in Boulder, Colorado.
The Game / Virtual World Producer drives the product vision and development of a MMOG and sub games for kids, from concept through release, and is responsible for the definition and execution of future releases. Manage third party developers and migration to, and management of, an internal development team.
- Oversight of the design of MMOG and all games - including interactivity, UI, inventory management, AI, NPCs, social networking and community features, and point systems.
- Maintain an ongoing understanding of youth market trends and emerging technologies in the on-line gaming space. Primary focus is on kid-oriented games.
- Strong desire to make a difference in the lives of children and a passion for games/MMOGs.
- Flexibility for some travel."
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Dallas Snell Talks Dungeon Runners, Free to Play and NCsoft 2.0
NCSoft the MMO giant has credits that include the massively popular Lineage, Lineage II, Guild Wars, City of Villains/Heroes and the upcoming Tabula Rasa. But Dungeon Runners, one of only two free-to-play games from NCsoft, is unlike most of their other products. DR is based on a tiered subscription model, where users can play for free, or opt to pay a monthly subscription ($4.95) to access upper level content.
Free To Play spent an hour with Dallas Snell, NCsoft's Director of Business Development, discussing Dungeon Runners, the free to play model and the future of NCsoft. Dallas has been a prominent figure in the games industry
since 1983 having to contributed to over 20 titles during his time at Origin and EA. After a short sabbatical from gaming, Dallas returned to the industry in his current role based in Austin, Texas.
The earliest version of Dungeon Runners began as a different project entirely back in 2001, before being put on the back burner, where it remained until 2002 when it was dusted off to be a game titled Exarch. That too was eventually put to rest until Dungeon Runners was resurrected in its current incarnation about 18 months ago. Today the team consists of over a dozen internal employees with a heavy contingent of art outsourcing.
The decision to resurrect Dungeon Runners and make it a free to play game (versus a full retail MMO) came from NCsoft CEO Robert Garriott and Chris Chung, the former ArenaNet General Manager, who operated out of Korea at the time and therefore had early exposure to the free to play model. Chris is back in Austin now and looking to push NCSoft further into casual MMO development, replicating the success of Korean companies like Nexon.
There's been speculation that NCsoft chose subscriptions as the primary revenue model in Dungeon Runners due to a belief that North American players preferred that model to microtransactions. However, that was not the rationale for the subscription decision. Instead, Dungeon Runners' optional subscription fee was chosen simply because a microtransactional model wasn’t yet set up in the Dungeon Runners code base. To remedy that, the team is currently working on getting microtransactions running within Dungeon Runners before the game is launched in Korea.
Dallas made frequent mention of NCSoft's embrace of "Web 2.0" development philosophies. In particular, NCsoft's use of the free to play model, Dungeon Runners as a testing ground for future products and the company's strong commitment to reducing barriers to entry for all NCsoft products were all offered as proof of the company's Web 2.0-ness.
Dallas often referred to Dungeon Runners as an experiment, saying that although Dungeon Runners currently utilizes subscriptions, within a couple of months in-game advertising will become a part of DR. In fact, the ads are already in the world, but visible only to testers, NCsoft and Double Fusion (the in-game ad provider). F2P.biz was asked not to reveal how the ads will be implemented, but expect an announcement from NCsoft soon. If all goes well with the ad experiment, Dallas says NCSoft will consider the possibility of scrapping Dungeon Runners' subscription fee all together.
On the other hand, by their own account NCSoft is seeing higher than normal conversion rates with their current subscription set up, so perhaps Dallas won't be so quick to abandon it.
What are those great numbers?
Among active users (online within the last month), Dungeon Runners has a high free:paid ratio - i.e. there's a larger proportion of paid to free users than among most f2p games. Dallas cites Runescape with a 5:1 ratio (free to paid, online at any given time), and says that DR is hitting 3:1, or after content updates, as high as 2:1.
Additionally, NCsoft expected a monetization rate of 1-3%, but their numbers are reportedly "significantly higher" [Dallas declined to give a specific number]. Dallas claimed not to know the cause of the higher monetization rate, but one contributing factor may be that the large majority of in-game activities or items are available only to paid users. Dallas acknowledged this and went on to say that the dev team is strongly considering raising the ceiling for free users as currently only 1-2 hours of free play will result in players hitting the ceiling with respect to what they can get for free.
Further to NCSoft's recently announced plans to release free to play content on the Sony network, Dallas talked about his company's goal of becoming "device agnostic" in order to break down the segregation of gamers between platforms. NCsoft plans to build their own cross-platform community service, with friends lists, inter-game messaging, and other features similar to Xbox Live. NCsoft also intends to release desktop, facebook and mobile widgets to extend gamers' experience.
According to Dallas, NCSoft thinks of Dungeon Runners as a "MMO light" or a game that straddles the gap between casual and core gamers. In Dallas' opinion, the success of products like Runescape makes it likely NCSoft will develop even more accessible games - perhaps even browser-based - to further minimize the barriers to entry.
With 40+ data probes plugged into Dungeon Runners, NCsoft approaches the product as a testing ground for ideas to be built into other games. The probes measure everything from time played, rewards frequency, item usage, leveling curves and dozens of other useful metrics. Outside of the game, account-level metrics are tracked in a publisher module that will allow NCsoft to track and analyze a single player's activities across all their products.
In Dallas' eyes, retail may soon become "extinct" with digitally delivered gaming ruling the day. He spoke candidly about the struggles facing music and film and how games are uniquely structured to develop their own delivery solutions. To that end, products like Guild Wars and Dungeon Runners are blazing trails for NCsoft.
Finally, as already mentioned, a recurring theme from Dallas was his commitment to lowering the barrier to entry in all NCsoft products. As evidenced by their free to play experiment, NCSoft strategy is to grow their customer base as widely as possible, then monetize the largest possible proportion. Most flatteringly, Dallas said his officemates all had printouts of F2P's article, Top 10 Ways to Reduce Barriers to Entry, and were treating it as a white paper of sorts.
Thanks to Dallas Snell for his time and to Opal Lertutai, NCsoft PR, for setting us up.
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