Analyst group DFC Intelligence predicts that the English-language free-to-play market will grow to a value of over $2 billion by 2015.
“Why buy the cow if you can get the milk for free?” somebody’s mom once said. It’s a fair question, and also the basis for our entire free-market system: I have something, you want it, give me money and the world goes ’round. But North American game companies have recently begun to discover what those in other parts of the world have known for years: “Free” doesn’t necessarily mean that a lot of cash isn’t being thrown around.
The current English-language free-to-play industry is worth $250 million, according to a new DFC Intelligence report, hardly a paltry amount. Yet in just a half-decade that value is expected to balloon to over $2 billion, thanks in large part to maturing systems and a growing realization that “free-to-play” isn’t necessarily synonymous with sub-standard game quality.
“For many Korean companies the market in North America has not taken off nearly as fast as they expected,” said analyst Insun Yoon. “Much of this can be attributed to the immature infrastructure and a lack of established payment and service mechanisms. The good news is that this is starting to change and consumers are starting to realize that the game play of top high-end F2P games can be quite sophisticated.”
There will be an estimated 128 million registered users of F2P games by the end of the year but that number is “fairly meaningless,” Yoon explained. What matters is conversion rate and fortunately for the industry, things have been going well in that regard. “Once a consumer is able to get a game downloaded and running conversion rates for high-end F2P games tend to be fairly high,” he said.
“F2P games can have multiple payment options and most successful games look to bundle products in creative packages such as the ability to buy a monthly or annual subscription that include a set amount of virtual currency,” added David Cole of DFC. “Creativity in marketing, packaging and distribution are the keys to generating increased revenue.”
It may seem paradoxical, but the switch to a free model can actually be very lucrative for middling MMOs that can’t quite cut it in a WoW-dominated world. Turbine revealed in February that Dungeons & Dragons Online revenues grew by a remarkable 500 percent after the game switched to a F2P model in September 2009, a success that inspired a similar move by Lord of the Rings Online in June.