This post is specifically focusing on the development of games in MMO industry. To me, this is one of the most important topics in gaming.
I'd like to present this helpful link, if you're familiar with anything MMO, you should know this site, however for those who don't, here it is:
http://www.mmorpg.com/gamelist.cfm/gameId/0
There's also this one, but we're going to discuss the first one:
http://mmohut.com/gamelist
The reason we're discussing the first one (even though mmohut is, personally, a more reliable source.) is because mmorpg.com specifies if the game is pay-to-play, or free-to-play.
If you look closely, you'll notice that there's a significantly larger amount of free-to-play games than pay-to-play. There's also a distinct difference in the popularity between the two types of games. There's a struggle for dominance in the online gaming industry right now. It has been somewhat drilled into our heads that a pay-to-play game should have a better quality than a free-to-play game. This is for the most part, not true.
Pay-to-play games such as World of Warcraft, and Everquest work of an expansion system, where every time another section of the game is developed it is packaged in an expansion pack and the efforts within the game are sold directly to the players. This method is a static system and it is frequently used. The reason this system is static is because the publicity ultimately results in the profit margin.
Pay-to-play games also have the advantage of having the game packages on the shelves at stores such as Wal-mart, or Game-stop. This itself creates advertisement, and focuses the advertisement where the playerbase is. This also results in a higher player-base and the whole project projects upward.
Free-to-play games however, don't have the opportunity to sell their expansion packs on the shelves like pay-to-play games because simply, they're free. As a result, most "expansions" to free games are sometimes considered to be "patches" instead of expansions. So what is the advantage of this method? Why are there so many free-to-play MMOs on the market? How are they gaining profit?
Well, most games gain most of their revenue from cash shops. The cash shop method is not a static marketing method. It is also very complex, and delicate. However, when exicuted correctly, can result in equal, and sometimes superior profit margins to generic pay-to-play.
The reason why Free-to-play games can become popular quickly is because of their accessibility to play. They require no fee, and are simple to set up. Pay-to-play games typically use security keys that result in additional steps to get into the game. Free-To-Play typically you can simply download, log in, and go. With the ability to easily jump into the game, people are more inclined to try it. And statistically speaking, the more people who try the game, the more people will stay in the game. This is the fish line into the game, the bait at the end of the hook is the cash shops.
Cash shops entice the existing players to purchase in-game items to fund the game. This offer is a very delicate balance. In order for players to buy these cash shop items, the item must be heavily desired. But in order for the item to be desired, it must be extremely useful, but if you make it too powerful, you create an unbalance between non-cash shop players, and players who do buy items from the cash shop. If the item isn't enticing enough, nobody will buy the item and the company will not make any money. However, if you intentionally force an imbalance within the game, diehard players who didn't buy ingame items before, are now forced to in order to be as good as other players. This can only happen in certain circumstances.
1: The game must have some form of PVP Interaction.
-To make performance items significantly important, the moment PVP interaction is implimented, players WILL abuse the cash shop function to utterly decimate their opponents with unfair advantages.
2: The game must be Free to Play from the beginning.
-Free-to-play games easily hook players in and creates an easy way to lock in their targeted community size.
3: The game must be balanced from the beginning.
-If the games' cash shop function forces players to buy ingame cash shops from the beginning, then the game will not keep the player-base necessary for the game to breathe.
4: The cash shop items must, for a limited time, be more easily obtained (or at discount prices).
-limited discounts make the items more enticing and give the players an opportunity to push more pocketbook further.
A grand example of abusing the system is the game developed by Neowiz Games/Pentavision: S4 League
S4 League is a free-to-play game that was released in 2006. The game gained a large playerbase until early 2010 when the adjusted the game to be very PEN (in-game currency) restricting. They did this by making items (weapons and armor) wear off in 30 days, and you would have to re-buy the item. This forced players to play more frequently to avoid getting PEN locked. Then, several months later, developed the game to have Force Pack items. Force Packs were weapons with significantly large status boosts (HP+5% SP+5% Movement speed+3%). These items were stackable in a set of 3, as well as 1 accessory. Once they did this, the balance between cash shop players and free players was completely broken. cash shop players had the ability to obliterate anyone in their path with little-to-no skill at all. And skilled players with cash shop items were near-invincible.
However, to recap; this was only possible because the game became popular before these adjustments were made. The adjustments forced players who loved the game, even players who didn't buy cash shop items, to now buy cash shop items to stay competitive. Neowiz understood this would eventually drain the games' player-base so they inflated the prices of these Force Packs to be extremely expensive at times, this was possible by making the obtain method of gaining a Force Pack chance based, only available by buying cash shop currency. This made the value of geared accounts to be, at minimum, about 60-90$ per account. Some unlucky players would have to buy about 200$ to gear their characters to be fully competitive.
To recap; how does this add up against Pay-To Play games? Pay-to-play games tend to be more structured, they tend to have stronger, and more stable engines. They tend to have better quality graphics, and are more frequently advertised outside of the internet which results in a larger player-base. Pay-to-play games also have the ability to gain more money through expansions.
So what does this mean for the future of online gaming? Hybrids. Many Pay-To-Play game companies are giving cash-shop features, such as Aion, and even World of Warcraft to some extent. The reason for this is this is a transition from the pay-to-play system to a free-to-play system. Pay-to-play is a reliable way of making money within a game company, but it also costs more to start and maintain. I predict that we will be going a new route of a Buy-to-play, cash shop hybrids. Buy-to-play (example: Guild Wars) allows the advertising of the game within game stores, no monthly fees allows the player to easily stay in the game once they enter the game, and lastly, cash shop system to generate funding for the company.
