Gaming

Good riddance: the death of online gaming’s monthly subscription model

The Old Republic‘s free-to-play shift signals the end of an era.

Kyle Orland – Aug 1, 2012 4:02 pm | 196

Everybody's giving away free games! Credit: wsssst

We’re calling it now: the era of paying for online games with a regular subscription fee is officially dead and over with. The concept of paying a regular, flat fee for access to game time has had a good run since apparently getting its start in the mid-’80s, and the business model will no doubt continue to limp along for a while in some corners of the industry. But it seems obvious now that offering online games for free, and monetizing players once they’re hooked, has fully replaced this outdated business model.

The final nail in the coffin was yesterday’s announcement that EA would allow Star Wars: The Old Republic players free access to play eight characters up to the maximum level of 50 starting this fall. Subscribers that choose to pay $15 a month will get additional perks like added mission and character creation options, faster in-game transportation, and priority logins, but the vast bulk of the game will now be available for free, greatly expanding the current, level-limited free-to-play demo (players will also be able to get some subscription benefits via a la carte microtransactions). The Old Republic software will also be reduced from $60 to a bargain-basement $15, complete with a free month’s subscription benefits, to entice more players to make the leap.

The Old Republic‘s free-to-play move comes as EA announced that the game’s current subscriber numbers have dipped below 1 million players, down from 1.7 million in March and 1.3 million in May. That’s still more than the 500,000 monthly subscribers EA CEO John Riccitiello once said the game would need to be “substantially profitable,” but the trend line is definitely worrisome. If EA and Bioware can’t seem to make the monthly subscription model work after investing over $100 million and years of development into a game with a top-tier, universally known franchise attached, it seems clear that the model just isn’t viable anymore.

Voting with their wallets

The death of the online game subscription is surely unwelcome news to some gamers, who still associate free-to-play games with vapid, social gaming clickfests or pay-to-win schemes that kill the spirit of fair competition. But those stereotypes are getting less salient as a wider variety of games make the model work without compromising their traditional gameplay.

And while some gamers may grumble, in aggregate players are overwhelmingly voting for free-to-play with their wallets. Lord of the Rings Online saw its monthly revenue double after it stopped requiring subscriptions in 2010. DC Universe Online saw a seven-fold revenue increase when it did the same late last year. Even the venerable Team Fortress 2 started bringing in 12 times as much money when it switched to a primarily hat-based business model. I could continue, but you get the idea.

The free-to-play model definitely doesn’t work for all games—see the recent failure of Microsoft’s Flight as an example—but for games with an overwhelming online component, it just seems vastly superior from a business standpoint. This makes sense when you think about it. Online games are usually only as strong as their player base, and getting rid of initial costs lets a game build up a much more robust set of players much more quickly. Letting players decide exactly how much they want to pay for bits of additional game content also leads to an almost perfect form of price discrimination, maximizing the potential profits to be had from each of those players. Or, as Massively Editor-in-Chief Shawn Schuster put it to Ars Technica, “Many players don’t mind paying for the whole buffet, while others just want sushi. It’s all about providing choice.”

The holdouts

The one giant-sized exception to this, of course, is World of Warcraft, which still manages to attract over 10 million paid subscribers even in today’s free-to-play-heavy world. But a multi-year head start and strong network effects among WoW players might make the game an example that’s nearly impossible for anyone else to emulate.

“I think that WoW is immune [to free-to-play pressures] because it has built barriers to others’ entry,” Wedbush Morgan analyst Michael Pachter told Ars Technica. “The most significant is the community of WoW players, so even if a new game comes along that is rated higher by critics, it will attract only a portion of the loyal WoW community, and the defectors will feel pangs of guilt. It’s sort of like why Google+ can never overtake Facebook—it might be a superior product, but without your friends on the service, Google+ is just not as fun as Facebook is.”

But even WoW might not be able to resist the appeal of microtransactions forever. “World of Warcraft will provide more and more cash-shop options as subscriptions dwindle, but Blizzard’s experimentation with Diablo III‘s business model shows that they’re ready to grow and expand with what current players want,” Massively’s Schuster said.

Not every new MMO maker has given up on the traditional subscription model just yet, though. Funcom’s The Secret World bucked recent trends by launching confidently with a required $15 monthly fee last month. “No triple-A, big MMO has launched yet with a free-to-play model,” Funcom Creative Director Ragnar Tornquist told Rock Paper Shotgun last month in a statement that seems to purposefully ignore all the major games that have successfully transitioned to the model post-launch. “We wanted to go subscription-based because we think that players are happier paying a steady monthly fee to get new content, to get the service, to get all the benefits of a game that has a growing, living world, than to keep charging [sic] them for little things.”

But Bioware won’t stop providing new Old Republic content just because the game is free-to-play. In fact, the company says it’s going to increase the frequency of those updates, presumably as a way to attract more people to give the game a try (or even a second try). And free-to-play players can choose not to pay for those “little things” if they don’t want to, while The Secret World‘s subscription is totally non-negotiable.

It’s that kind of inflexibility that has proven to be the online gaming subscription model’s ultimate downfall and the main reason we won’t be mourning its passing all that much.

Listing image: wsssst

Kyle Orland Senior Gaming Editor

Kyle Orland has been the Senior Gaming Editor at Ars Technica since 2012, writing primarily about the business, tech, and culture behind video games. He has journalism and computer science degrees from University of Maryland. He once wrote a whole book about Minesweeper.

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