The Hidden Cost of Freemium

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Free.  Everybody likes free.  I mean, what’s not to like about free?  It’s free!  Free, free, free - use the word often enough, however, and it begins to lose its meaning.  “Free special offer (some rules and restrictions apply)!” “Free entree (with purchase of equal or greater value entree)!” “Free ski trip (after we badger you into investing in a timeshare over the course of an eight-hour 'seminar')!”  Free just isn’t what it used to be, and nowhere is this more evident than the world of electronic games.  Users are steeped in phrases like “free-to-play” and “freemium” to a degree that free really does start to sound like a four-letter-word.  Free they say?  Nonsense, we say.  Let’s take a look.

Before we get too far into things, it should noted that free does exist in the world of software.  There are a large number of quality programs and games that are available completely without charge.  Such offerings have grown out of the selfless, community-driven efforts of thousands of people who view the Internet as a tool for global enrichment and collaboration.  Though not everyone has the means to offer their work for free, those who choose to do so are to be commended.  Please pay a visit to http://osswin.sourceforge.net to see some of the staggering array of programs and games available for free.  

Now, let’s take a look at the phrases listed above --“Freemium” and “Free-to-play." They both imply the same concept:  players are given the game for free, but in order to unlock certain features or sometimes to even keep playing, they are required to spend some money.  And that's where this all starts to go sour.

Freemium on Mobile

The Freemium business model has been around for a few years in the gaming world, but it really took off when Apple enabled what is known as “in-app purchasing” for their App Store apps, hereafter referred to as IAP.  Using IAP, developers can give a game away for free on the app store and then charge players from within the game itself for “premium” content, skipping the app store altogether.  

The popularity this business model enjoys grew out of unfortunately high numbers for app piracy.  There are a large number of pirated iOS apps available for jailbroken devices, though that number is even higher for Android, given that its open, almost PC-like design makes it so that no jailbreaking is required to play pirated apps.  The numbers are disputed in some cases, but no one seems to be questioning that piracy, overall, is indeed a problem.  With free-to-play titles, additional paid content is locked absolutely to an exchange between the app and the app store so that even if a free-to-play app is pirated, it won’t do players much good without the IAP connection.   While some clever hackers have found ways around this, IAP is still turning out to be a better revenue source for game developers than simply selling the app as a whole.  

But that’s the problem, isn’t it?  Game design isn’t about creating unique, fun experiences anymore--it’s about milking players for every cent they’ll spare.  It’s difficult not to sympathize with game developers who are often just a couple of people working in a garage and trying to make a living.  However, many gamers who are also legitimate app purchasers feel somewhat betrayed by this trend.  For close to 40 years now the business model has been, “You buy the game; you play the game.”  Now the model is, “You download for free, then you play, then you pay, then you pay, then you pay, then you pay” ad infinitum.  The profit potential on a single copy of a game is basically infinity dollars.  It’s hard to look forward to playing a game when you know you’re going to run into an outstretched hand, constantly grabbing at all your money and even harder when the hand reaches out to stop you if you’re unwilling to pay.  

Of course, not all freemium games are so obnoxiously greedy.  When applied correctly, the freemium model is a win-win for developers and players.  So, let’s compare and contrast.  First, an example of the people who are doing it right:  Halfbrick’s Jetpack Joyride (for iOS and Android).  

 

 

The key gameplay mechanic of Jetpack Joyride is simple but fun: touch the screen to move the main character, Barry Steakfries, up and down on his jetpack to avoid onrushing obstacles like missiles and electrified gates.  As you play you’ll collect coins that can be used to purchase additional content, like different styles of jetpacks, different costumes, and gadgets to add new spins on the gameplay.  The game is so much fun that you’ll likely play it enough on its own to collect all the coins you’ll need without paying a dime.  However, if you’re feeling appreciative towards the developers for releasing such a fun, free game, you can spend a few real-world dollars on coins to more quickly access the above add-ons. 

But then there are the games that get it so wrong, such as Gameloft’s Six Guns (iOS and Android), an open-world action game in the tradition of Rockstar’s Red Dead Redemption.  But where Red Dead and other open-world games shine, namely the sense of immersion and escapism they provide, Six Guns falls flat on its face as it pesters players at every turn to spend real-world money.  Completing a mission?  You should spend some money!  Out of ammo?  Spend some money to reload!  Oh, and don’t mind the banner ads for other games every where you look.  The experience grows very old very quickly.  One gets the feeling that they are not playing a game but rather stuck in a living hell of constantly swiping a credit card.

 

 

Six Guns makes an attempt at actually providing gameplay.  Some games aren’t games, they are simply profit generators with addictive reward systems.  My favorite of these is a little game titled Tiny Tower by Nimblebit (iOS and Android).  The gameplay consists almost entirely of building a skyscraper, floor by floor, adding shops, restaurants, apartments, entertainment venues, etc.  Once you’ve built your floors you have to stock the respective shops, which means either waiting at a glacial speed for your “bitizens” to give you enough coin to do so or paying the game’s "social network" payment processor, Mobage, for “bux” which can then be used to buy coins.  If you’re the sort to lounge in front of the TV and watch all this play out, that’s fine, but if you want to see any aggressive growth in your tower, you’ll end up spending real-world money.  Then your tower’s next floor gets built, you can restock all your shops, and your bitizens are happy.  Until you need to spend twice as much on the next floor of your tower and you’re out of coin again.  Oh joy.  During all of this you’ll likely lose sight of the fact that you’ve not been playing a game at all but have been manipulated into spending real dollars for pretend bux to keep non-existent people happy.  It’s quite addictive, sort of rewarding, and if you’re patient you can play for free, but you have to be patient on a cosmic scale.  

 

 

Freemium on mobile isn’t in and of itself a bad thing as long as players download these games with their eyes open to the fact that they will probably be manipulated in some way to spend money.  But not all players, namely young children, have a sense for money.  They just press the buttons that let them keep on playing, even if those buttons result in huge bills.  This was a problem for parents of children playing Smurf’s Village (iOS and Android) on iPhone when in-app purchasing was first enabled by Apple.  In order to keep the game playing at a tolerable speed, players would need to spend real-world money on - what else? -  smurf berries.  Parents who let their would-be smurf mayors play the game without restriction found that they had been charged anywhere from several hundreds to several thousands of dollars.  Apple nipped this problem by requiring a password for in-app purchases by default.  Google still has not set this as the default option for Android, but users can enable a PIN requirement for purchases.  For more information check out this Techlicious.com article, by Heidi Leder.  

Although not as dominant as it is in the mobile app market, “Freemium” is also widely used among PC games. It most often appears in two areas--games on Facebook and MMORPGs (Massively Multiplayer Online Roleplaying Games: online games featuring hundreds, sometimes thousands of people playing the game together simultaneously with a persistent world that exists even when a player is not logged into the game), many of which are available on Steam, the premier platform for digitally-distributed PC and Mac games. Both areas have seen a tremendous amount of growth in so-called “Pay to Win” models, in which the player must continuously spend money to buy in-game items that will make them more competitive in the game’s online community.  Although money isn’t required to play these games, the structure of the game so strongly encourages it that the player is either noncompetitive or gets a drastically reduced version of the game world without it.

Freemium on Facebook

Almost all Facebook games are designed to make money off of a freemium model. Typically these games revolve around three structures:  money-locked “premium” content, an in-game “energy bar” that imposes an arbitrary limit on the amount of time someone can play the game, and an in-game currency that cannot be obtained by means other than spending money on a credit card.  All these are designed to generate revenue in different ways.  The locked features are designated as “premium” content but are the only way to make the player competitive versus other players; the currency is necessary to buy powerful items but doesn’t appear in the game at a fast enough rate for the player to buy anything without spending actual money to obtain more, and the “energy” bar allows such limited usage that the player will feel compelled to spend money to obtain more play time.

 

 

All these elements can be seen in the popular Facebook game, Marvel Avengers Alliance.  The game has an energy bar of only 60 units, and each “mission” (battle) the player takes part in takes 10 units of energy. Each 10 units of energy takes an hour to regenerate, meaning that you can fight only 6 battles in a session before waiting 6 hours to play again—unless you spend money on energy to play again more quickly.  Most of the content (characters, weapons, etc.) is also locked and requires different amounts of in-game currency to obtain, and many features required to complete the “premium” sections of the game or be successful in player versus player (PvP) combat require the game’s currency, “gold”, to unlock. “Gold” is generated at such a low rate in the game that the player is forced to pay to obtain more, and, without paying, the player only gets a severely-restricted experience. Most Facebook games follow variants of this model, which encourages the player to continue to spend money to obtain the best aspects of the game by restricting access to features or imposing time limits on nonpaying players.

 

 

MMORPGs and Steam

For nearly a decade and half, most MMORPGs (MMO for short) operated on a monthly fee pay model—in order to access the game’s online world, a player would have to pay a monthly fee. Typically these games were sold at stores such as Gamestop and Best Buy, and would offer complementary “first month free access” deals to reward people for purchasing the boxed game. Some of the games that were sold in this manner include World of Warcraft, Everquest,and City of Heroes. The retail PC game market has mostly been replaced by games as digital downloads, primarily delivered through a service called Steam.  Most Steam games require the player to pay a fee to access as a digital download, but a growing number of games have become available as “Free to Play”.  Many of these games are MMORPGs which have changed their policies from demanding a monthly access fee to having much of the game content available via fees for specific content (characters, weapons, parts of the game world, etc).

 

 

Some of the MMOs offered on Steam that are listed as “Free to Play” are Star Trek Online, DC Universe Online, and Dungeons and Dragons Online. Although these games can be played for free, the free version of the game typically offers only a very restricted version of the game experience. The player is strongly encouraged to unlock various features of the game, either by buying access to these features off of Steam or by paying the dreaded monthly access fee. Essentially, all that “Free to Play” accomplishes in making the MMO “free”  is eliminating the payment for the retail version of the game and allowing the player a different way of paying the fee (lump sum versus monthly fee). The MMO is still designed to be a “pay to play” or at least “pay to play well” genre in most cases.

The Fallout

Clearly in an Internet-dominated world of players that either prefer casual, cheap games to $60+ AAA titles or prefer to pirate such games, free-to-play/freemium has an important role--that of guaranteeing revenue.  However, when developers or publishers choose to abuse this practice to the point of making players pay more for a “free” game than they would have for a normally-priced one, something has clearly gone wrong.  

Such practices have some disturbing consequences for games and gamers beyond simply paying too much for a free game, either intentionally or accidentally.  Larger publishers such as Zynga, Glu, Gameloft, and others have figured out that they can make cheap knock-offs of well-made popular titles, give them away for free, and still make bank.  This discourages other small publishers and developers from creating new, original ideas that run the risk of not making a profit.  Such was the case with a great little mobile game called Whale Trail that started off at $1.99, but when it failed to make its developers money was forced to go freemium (iOS and Android), crippling a lot of the fun in the process (though, to be fair, the $1.99 version is still available on Android and is still great fun). 

 

 

Seeing how profitable freemium games can be has a many larger, AAA game publishers talking it up as the future of all electronic gaming.  So now rather than designing games around a good story or inventive gameplay, developers are building games around a business model, and we can tell you as gamers for over 30 years, we’re not happy with how this is unfolding.  Freemium can work well for both sides, but the real money lies in manipulating players in a fashion not unlike a slot machine, except there are no waitresses walking by every five minutes to refill your drink.  

Then there is the issue of ownership.  The concept of ownership is a tricky enough one in a world of digital distribution.  For instance you do not actually own any of your Kindle or Nook eBooks in the manner that you own a physical book, you’ve only purchased the right to view them, but you cannot trade, re-sell, or donate them.  The same is true for pretty much all downloadable electronic games, but you can usually count on being able to re-download the game from the service that sold it to you.  Freemium games, on the other hand, are ephemeral things that come and go with their profits; they rely on a server connection to guarantee your purchase’s existence.  So what happens if those servers crash, or the game is taken offline?  What becomes of your purchase then?  

And finally, what happens when microtransactions of a freemium nature take place in other forms of entertainment?  It sounds laughable, sure, but it sounded laughable for electronic games only a few years ago, and now freemium is quickly becoming king!  What will it look like when an entire generation of consumers comes to expect microtransactionas as the default?  The how of it is difficult to envision, but it wouldn’t be entirely surprising either. 

Electronic gaming can transcend so many barriers and has a potential future as one of the most brilliant interactive mediums and, dare we say, art forms, ever.  It is sad to see it dragged down in this fashion.  To developers and publishers we would say, don’t be too greedy, you’ll kill the game as we know it.  To gamers we would say, don’t pirate, please pay for your games, they’re worth it--and you’re only shooting yourself in the foot.   And to anyone new to gaming by way of a smartphone or Facebook, we would say, hold tight to your wallets: you’ll not be playing a game, you’ll just be swiping your credit card 'til it melts.