Freemium service models – paying for convenience in games February 20, 2008
Posted by jeremyliew in asynchronous gaming, business models, digital goods, freemium, mobile, subscription, virtual goods.trackback
Last week I noted that free-to-play games will become increasingly dominant. I’ve also noted in the past several use cases for the digital goods business models that will be one of the primary monetization mechanisms for free-to-play games. Selling increased functionality can result in user dissatisfaction if players perceive that the only way that they can “win” is to buy more powerful in game functionality. This can be managed through the use of a dual currency system, as Matt Mihaly noted in a guest post.
One other monetization mechanism that free-to-play games can offer is services. Some games, especially real time strategy games, can be somewhat inconvenient to play because they require constant monitoring and occasionally require actions to be taken in game at a certain time. Gameplay can inconveniently interfere with other activities, like work and sleep.
Travian is a good example of this. In Travian each action takes a certain amount of time, and there is no way to “queue up” orders (e.g. if you want to upgrade your mine after you’ve finished upgrading your farm field), or to “schedule” orders to be carried out at a certain time (e.g. if you want to time a raid on another village to be coordinated with another attack). Instead, Travian requires a player to be in the game at a specific time to give an order.
Offering a player the ability to queue up orders or schedule orders as a premium service is a non controversial way to monetize users. Players who do not want to play can be just as effective as players who are willing to pay (they just need to be able to get online at the right times to give their orders). Players who pay for the service are paying simply for convenience, not for additional in game power.
Managerzone‘s mobile premium service is another example of such a service. As I noted previously, the mobile service gives a player certain alerts and allows a player to take a number of actions in the game from their mobile phone, without having to log on to the website from a computer. This makes the game much more convenient to play, but again doesn’t disadvantage a player who choses not to pay for the mobile service since they can still do everything from the website. It looks like Blizzard may also be considering a mobile version of World of Warcraft.
I’d be interested to hear from readers of other examples of games monetizing premium services.
Lightspeed Venture Partners Blog 
Jeremy, very interesting. I have a couple of concerns about the pay-for-convenience model for games. Perhaps the Travian guys have already thought them through. The first is that this model essentially ties your UI to your revenue stream. That can have certain unintended consequences. I think for the game to be the best it can be, those two aspects should generally be orthogonal. If there’s pressure to increase revenue, will some parts of the UI become more inconvenient? Will some features be designed from the start to have a certain amount of inconvenience built-in? After all, when you’re charging for convenience, the amount of aggregate inconvenience essentially becomes your inventory. The second concern is that when you have a freemium model, there must be a clear value proposition for the user to want to pay for the premium part. If it’s just one convenience, that’s pretty clear. But what if it grows to be a large number of different alerts/automated actions? It can become quite confusing to users whether it’s something worth paying for. A mobile service is a much clearer value proposition in this respect. Finally, I think any game involving a large number of players will inevitably have some controversy at some point. But when you add in money and UI differences, there’s definitely potential for those controversies to become much more heated. What do you think?
Qian,
I don’t think I’d advocate deliberately making UI bad in order to create premium opportunities. The downside of losing players would far outweigh the upside in revenue. I think that path is self correcting
Jeremy, indeed I don’t think any sane company would think that they are intentionally creating bad UI. But it’s pretty hard to find the balance, isn’t it? Let’s take the Travian example. Would they gain any players if they offered the premium service for free? If the answer is yes, then one could say that the UI decision is costing them players. If the answer is no, then how much value are they really adding and how many players would pay for it? So by making users pay for convenience, there has to be enough of a UI difference to make the value apparent. And if the difference is that significant, then the developers are intentionally choosing a significantly more inconvenient (or bad) UI for free users.
I don’t think it’s necessarily a bad thing to exclude some players/users. Obviously any product that isn’t completely free must do that. But I’m just not sure that the UI is the right place for it. It’s hard enough to come up with really good UI designs even when there are no other considerations.
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