The Business and Design of Free-To-Play Games


Games Trail Music in iTunes style Revenue Model

B-Side reprinted this article on 5 Alternative Revenue Streams for the Music Industry. (I'd link to the original article, but B-Side "cited" the source without a link, so I can only link to their repost.)

In any case, the article outlines 5 revenue models for the faltering music industry. They are:

  1. Free (ad or sponsor supported)
  2. Pay What You Want (donations)
  3. Pay By Popularity (price increasing with popularity)
  4. Subscription (Rhapsody style music services)
  5. Music Tax (ISPs add tax to offset industry losses = bad idea)

The article puts forth these revenue models after asserting that "iTunes isn't the answer," but I'd say that it's a darn good start. iTunes was at least partially responsible for weening me off music pirating entirely (kids and declining music savvy also deserve credit). And while some of us in the game industry like to snicker at "old media" such as music and its antiquated business practices, the game industry is behind the music business in at least one way:

The iTunes model hasn't been applied to games yet.

We're still out there trying to get people to buy the whole album, rather than just the tracks they want. Services like Steam and episodic games like Sam and Max are great steps forward for the industry, but neither one allows consumers to instantly purchase and enjoy only the portions of the game they desire, like iTunes did for music.

One way to stop people loading up their Nintendo DS's Revolution R4 card with 100 pirated games from BitTorrent is to give them all those games "for free" and charge a capped micro license based on which games they play and for how long.

For instance, if I play 10 minutes of Pokemon, 2 hours of Touch Darts and 50 hours of Puzzle Quest*, I would then be billed something like 10 cents, $1.20 and $20 (or whatever the cap for PQ would be). Couple that with electronic distribution's removal of COGS and you're right back to the same profit margins you already enjoy (on titles that cap out), with the added benefit of monetizing lesser played titles that would otherwise have been pirated.

While this may be new for traditional AAA games, casual games already have a fledgling version of this model courtesy of Double Trump's Micro License scheme. Their PlayOn Arcade site has the details, for those interested in creating an iTunes-esque service for big budget, retail games.

* These are actual figures. I finished Puzzle Quest. :)

add to :: Add to Blinkslist :: add to furl :: Digg it :: add to ma.gnolia :: Stumble It! :: add to simpy :: seed the vine :: :: :: TailRank

Comments (9) Trackbacks (1)
  1. I think your logic is flawed, Music and games are not comparable in that sense. I think it would be fairer to compare games to movies, name a service that sells you portions of a movie at a time. Episodic games are comparable to tv shows, to provide an itunes like service for games would not be possible its like selling portions of a song.
    Sorry your whole argument is illogical, who goes out and samples a section of the song they like ‘oh id like from 1:35 to 1:45 i love that chorus’
    and most likely people but music on itunes and other services after hearing the song (on radio or word of mouth etc) how are people going to buy the “portions of games they like” unless they’ve played it before in which case…they have bought it? if u want a bite size version of games they are available as ‘demos’
    piracy….piracy will exist, people will find a way to get around it, and until the industry realises that the price is the major reason for piracy (i think a lot more people would get legit versions of games if they could pick one up for half the price they are available atm)

  2. and do you REALLY want to be paying to play? I would hate to have to pay on a time based system, it wouldn’t give people the chance to enjoy their games, imagine getting a book from the library with a charge by hour on it….

  3. W0rd – thanks for expressing this. Remember back in the days of shareware games? Like, Doom, Quake, Duke Nukem 3D. You paid about $15 for the first third of the game, then $40 for everything else (usually, the first third was given away for free, but these days, that’d be tough to justify). I liked those days.

    This is all about minimizing consumer risk. I recently bought 2 games for $40 (I won’t name which…) and ended up hating both of them ( of them was BioShock). This sucks, and because of those experiences, I’m a lot less likely to buy full-priced games now. If I could just pay $15 for the first third of BioShock (OVERRATED!!!), and found out that I didn’t really like it, then fine – I lost $15. No biggie. Low risk.

    But these days, publishers expect people to pay $60…maybe I’m just getting jaded, but that’s a sizable investment for something I’ll probably end up not liking (if I can dislike BioShock..the possibilities are endless). So, I’m a lot more wary about buying full games these days. Why not make that $15 off of me – and maybe I’ll go for your $40 deal afterwards – rather than letting me spend that $15 on drinks (something I know I’ll enjoy)?

    Bite-sizing. A lot more friendly to the frugal, and jaded (read: older, has more spending power), consumer.

  4. Good writeup, but if there’s one thing the currently incredibly successful gaming industry doesn’t need to do is to adopt business models from the currently crashing-and-burning record industry.

    The introduction of the ‘iTunes model’ hasn’t stopped the bleeding for the record industry, far from it. One could even argue that by changing the emphasis the way it has (singles and ringtones) it’s devalued the product and hurt the industry even more.

    I agree that Steam and episodic content are a great way to go, but the games industry is making money hand over foot so I don’t think any comparison to iTunes and the record industry fits.

  5. You bring up an interesting idea, but currently, most free to play games have to have a constant internet connection to keep tabs on how long you play and if you are using any hacking software. I like to play my Nintendo DS on the plane and bus, but won’t have access to the net there… Also, changing the revenue model for single player games like puzzle quest or touch darts won’t stop piracy. If pirates have the capabilities to rip and load games, they certainly can uncap the pay to play restrictions on the game, assuming the entire game is on the disc.

  6. Hi Chris,

    1) You wouldn’t need constant access to the web to implement a pay per play scheme. It could check periodically and update your billing, perhaps. Or you could pre-purchase credits that could be debited in an offline scenario.

    2) Pirates will always find a way to beat any scheme, but if you can make it as easy or easier to purchase a product at the right psychological price point, I believe most people will choose to be on the right side of the law.

    Speaking only from personal experience, I went from being a massive music pirater in the late 90s (thousands upon thousands of tracks) to buying all my music via iTunes today. And that’s pretty much solely because the price is low enough and iTunes is the easiest way for me to get consistently high quality, error-free music.

  7. Here’s an article on A World of My Own and their Rent To Own (i.e. iTunes) system.

  8. We really liked your blog and this info on the ad-supported model…we believe in it enough to have just pushed out BETA 2 of our site!

    The Songnumbers Team

  9. Thanks for the article and Adrian thanks for the link :)

Leave a comment