F2p reached its limits?

The ceo of SuperData research claimed that f2p reached its limits:

http://www.screwattack.com/news/superdata-ceo-says-free-play-popularity-decline

I tend to disagree. Some reasons here.

First there is a lot of talk about families and kids. If you ask big f2p games about their audience then you will notice that families and kids are not their audience. In fact most f2p games have a pretty mature audience. PvP games tend to address 90% males 16-25 years old while MMO RPG's and strategy games have an average age beyond 30, some of them even 35+.

F2p is not for kids. Do not try to target kids with f2p games as it won't work revenue wise. Kids are to a large extend non payers and that has obvious reasons (no access to payment systems). And believe me or not: this is good.

The talk also claims LoL has a 11% worldwide market share. Having $681 million yearly revenue thus us hard to believe. I can name 10 games who have more revenue, some even double than LoL. Add all the medium and smaller ones then LoL can't even reach 3% worldwide market share.

Most companies analyzing the f2p market fail to notice that older good f2p games are still around with a healthy audience and revenue. If you check just the genre MMO RPG's: there is an endless number of games available and every week more are coming to the list. Most of these games you never heard of.

Furthermore the analysts underestimate the mobile f2p market. As most of you should know most revenue of App Appstores on mobile are coming from f2p games (not apps, not paid apps, just games). Considering that the number of mobile users will double in the next 2 years to 3 billion (and that is a conservative number as the growth is exponential) we soon reach a point where the worlds population own smartphones and control their lives with them. This means the good old and new f2p games on App stores will also double in revenue.

And last but not least: the audience of f2p games is not a fixed amount of people. It is not static. In fact it is a very dynamic group which loses people all the time (no interest anymore, death, job, etc.) and gain many people all the time as new humans are born every minute and come to the age to play on mobile. So no, there will NEVER be a saturation in target audience.

Often analysts make the mistake of taking a sample of a few months as a forecast basis for the future. This is of course a basic approach but fails to take trends into consideration. It also fails as it usually only takes a sample of the market and forgets how large the f2p market really is: it includes mobile, client, browser games and territories like Asia and Japan. And some territories are just not explored yet in f2p and will grow really fast really soon (like India). there you go, 1b people added to the audience.

All in all I tend to disagree for the above reasons. I say that the f2p market will continue to grow and dominate all other business models on most formats so that sadly we might see some type of genres, game types or formats diminish over time simply because it doesn't make sense for companies who invest in games for revenue to go the risky route.

Dissecting League of Legends

My talk on League of Legends made quite a fuzz on the internet. The GDC Europe 2014 Video should be up on the vault, but here is the Casual Connect San Francisco version:



Link to the article of Casual Connect with interview:
http://gamesauce.org/news/2014/08/14/teut-weidemann-i-teut-you-so-casual-connect-video/

Link to the few articles:

Lee Alexanders article:
http://gamasutra.com/view/news/223071/Dont_monetize_like_League_of_Legends_consultant_says.php

http://www.pcgamer.com/2014/08/11/ubisoft-analyst-criticizes-league-of-legends-monetization-warns-other-studios-not-to-try-it/

http://www.polygon.com/2014/8/11/5991115/league-of-legends-riot-monetization

http://www.gamesindustry.biz/articles/2014-08-11-if-they-let-me-change-league-of-legends-i-could-double-its-revenue
(read the comments, excellent stuff in there!)

Btw this is interesting for people who listened to my talk and know League of Legends itemsales:

http://oce.leagueoflegends.com/en/news/store/sales/satisfy-your-sweet-tooth-sugar-rush

Short history of MOBA's:

http://venturebeat.com/2014/09/01/the-history-of-mobas-from-mod-to-sensation/

Quo Vadis 2014

The title doesn't mean I am asking where we go in 2014 but it is the name of the largest developer conference in Germany happening next week April 8th to 10th.

My talk on Thursday morning will dissect the monetization of Puzzle & Dragons. After my talk about doing the same with World of Tanks was so successful I decided to expand those topics. Btw this is the first talk I will hold on an iPhone!

At Casual Connect 2014 in San Francisco in July I will repeat that exercise with League of Legends.

I am doing this simply to educate teams how these games work. I usually pick top f2p games for this as they aren't at all "evil" - which seems to be a major criticism of f2p. I assign 3 pillars on those dissections:

Public Metrics
Numbers and data I find online, either from services like Appannie, Comcast or simply from the game providers PR or shareholder messages.

Own Monetization & Online Game Experience
I use my professional skills to take the game apart into its foundations and mechanics and examine them for their functions.

Self Experimentation
I play the game as a player for a while (usually until mid game) and then as a payer (note the missing L) and research what this changes in the game experience compared to the former experiment.

Those three usually give me enough information to understand fully how the game works in terms of game mechanics & monetization.

I hope to see you at one of the above conferences.

Good F2p games clones and what it means for you

Well guess what: most successful f2p games are all clones of existing games. Or at least close adaptions.
Lets check some out.

Clash of Clans (iOS)
The best monetizing f2p game from the west does 2 million US$ a day, but the team did a close to identical game called Galaxy Life in their former company Digital Chocolate, which again is an adaption of a Facebook Game called Edgeworld by Kabam.

HayDay
By the same developer Supercell this is basically a Farmville variant. A good one yes, but still a lot of mechanics were taken from that old Facebook game by Zynga (which in turn cloned it from an Asian game)

League of Legends
Yes, even they adapted the grandfather of Moba, a Mod for Warcraft III called Dota. And yes, Dota2 is the sequel. Of course the setting and graphics changed, but the fundamental principle of the game remained the same (and yes, I know the guy is one of the original Dota mod creators)

Puzzle Dragons
A match three game with RPG elements and monster fusion meets Pokemon. The most successful mobile game from Asia even dwarfing Clash of Clans in revenue. Variations were available before (like Puzzle Quest) but not the mix like they did. Clones are appearing daily.

Candy Crush Saga
Well take Bejeweled, attach a meta game and progress, voila you have a game which does 30m a month. Many tried but King.com Saga recipe seems to work for casual games. Only after Candy Crush moved to iOS it bat their former revenue king Bubble Witch Saga which doesn't work on mobile as well due to interface issues. Clones have been tried, the more successful ones are even from the same publisher King.com. None can reach the success (and if you wonder there is a reason for it).

World of Tanks
Counterstrike with tanks. Nothing special right? Attach a progression system and monetization and voilá you have a hit. I might be too simplistic but under the hood WoT is nothing else.


So what did those games above do to actually be that successful? The numbers are extreme. Millions of users, millions of revenue even daily. The above games dominate the f2p online space. No wonder companies try to clone those games - some even 1:1- all those images are from a different Clash of Clans clone.

It seems there is enough potential in old successful game loops that you simply take these, attach a meta game with progression and monetization strategy and you might have a million seller. It seemed to work for the companies above right?

What really happens is that f2p is still young and exploring new areas, so expect more mature games (or more core as you would say) to expand into f2p space soon, so that the two leaders LoL and WoT can be challenged.

Also expect any game loop you know to be misused as a f2p game at some point. Some already have been tested like Black Jack, Golf, Poker, Asteroids, Mahjong etc. It is a formula and simple (core gamne loop + Meta game & progression) and will be exploited as such. It is so simple that I wonder why the huge wave of these games hasn't arrived yet.

The Tigers of Asia

When I started in online games 1997 I realized this is going to be big. I had no idea how big, but I felt it as I was already hooked to online gaming.

When I experienced free to play the first time and learned it came from Asia I knew they were ahead of us. Luckily the Asian developers and publishers didn't know how to tackle our gamers at that time. There seemed to be a vast difference in play style and game style. I even made a talk about it on KGC, the Korean Game Developer Conference.

Some years later the Asian Tigers became giants, so large in fact that they own major shares in western gaming giants. The revenue they pull in just from their local market is so high that they can play money games in the west - exactly when we are shaken up by the console transition year.

I said years ago we should be prepared for the time when Asia understands our gaming market. Are we prepared? I doubt it. Maybe we should prepare for a time where most large and creative companies are owned by Asian online companies.

LoL is not a good role model for f2p

League of Legends, or LoL for short, is often mentioned as a successful f2p game you should learn from. Fact is that LoL is one of the largest MMO's to date. Of course it makes tons of money for Riot and their owner Tencent.

So why am I hesitent to use LoL as a role model for good f2p models? The reaon is simple: their monetization system is very very specific and only works due to their reach.

Simple explanation: Revenue = Active users * conversion * ARPPU

Their active users is phenomenal high (42 million MAU as of this writing) and this multiplies the revenue formula to the skies.

But their conversion is low, i.e. how many players actively pay. That is my biggest critic. If you use LoL as a role model you might end up with a low conversion and if you fail to get the reach your game fails badly. That's a huge risk. A game can survive with an average reach and a good conversion easily, but rarely the other way around.

Note that the ARPPU is somewhat dependent on the conversion. If your conversion is low your ARPPU can be unusually high and vice versa.

Again: LoL works wonderfully for Riot and Tencent as their reach is so high. Sidenote: their reach is so high due to Tencents reach.