Tobold's Blog
Wednesday, November 13, 2013
 
Complaining about monetization

In many points I agree with Chris that there is no good reason to complain about SOE selling $100 founder packs for the Free2Play Landmark supplement for EQ Next. If a fan wants to spend money on his favorite brand, why not? And wouldn't SOE be stupid to not charge for this and leave money on the table? If you don't want to pay, you can still get the same product, or rather a better product, for free later.

But then I would want the same courtesy extended to other companies and other games. If it is okay to sell an advantage (early access) for a Free2Play EQ Next Landmark for $100, then it follows that it is also okay to sell similar advantages in other Free2Play games. You can't buy the $100 Trailblazer pack for Landmark and then complain about how unfair it is that somebody bought a "gold tank" in World of Tanks, or added inventory space in some Free2Play MMO, or Hearthstone cards, or whatever. Just like paying for early access, paying for stuff in Free2Play games is no longer unusual enough to justify complaining. It is pretty much the standard business model of today.

Nearly 9 years ago a blogger posted an article named Camels and Rubber Duckies, with a brilliant explanation of the demand curve, and the power of segmentation: "separating your customers into different groups according to how much they are willing to pay, and extracting the maximal consumer surplus from each customer". That is all very basic economics. And all those early access and Free2Play systems today are just exactly that sort of variable pricing which brings a game company more money than if they charged a fixed price.

If you think that is a new idea, I'd recommend a trip to the rebuilt Shakespeare's Globe Theatre in London. 400 years ago Shakespeare and everybody other theater owner already happily sold tickets for the same play for different prices to different customers, offering added advantages like seats or boxes for those who paid more. Everybody got the same "content", but those who paid more got more comfort.

Companies getting wiser about who their customers are and how to be profitable is mainly controversial because those companies used to be so extremely bad at it. Early MMORPGs were designed to favor the worst possible customers, the unemployed guys living in his mother's basement of South Park parody fame. "You can't kill someone with no life", but you can't get much money out of him either, and he tends to use a maximum of resources for a minimum of payment. Companies very much prefer the sort of fan who expresses his fandom with his wallet instead of just playing the game 16 hours a day. And once these companies noticed how many people would happily pay big bucks for a sparkly pony, they started to learn how to redesign their game to rather attract the spending kind of customer instead of basement guy.

As the Camels and Rubber Duckies article mentions, monetization isn't without pitfalls. It is easy to get wrong and either make it too easy for everybody to play for free, or to make the advantages for whales so outrageously good that most normal people don't even bother playing that game. The demand curve tells us that for best effect we need both the large number of people who pay little and the small number of people who pay a lot, and everything in between. So there is still room to argue whether a specific offer is well done or over the top. But complaining about game monetization schemes and segmentation in general just makes you look like a dinosaur in this age of Kickstarter, early access, and Free2Play.

Comments:
I think EVE Online does it perfectly. I mean theoretically perfectly, you can't do any better.

They allow players to pay each other while CCP receiving a cut, as the trading can only be done (legally) via buying PLEX from the company.

The in-game price of the PLEX is free-market decided between the players themselves.

No one can tell "the whales get too much advantage for their $20" because the advantage is given to them exactly by the players who could make that statement. I mean if you think 620M ISK is too much for a PLEX, you shouldn't trade your 620M ISK for a PLEX, no one is forcing you.
 
But what if SOMERblink legally sells 1 billion ISK for $20? Okay, CCP now changed the rules and put them out of business, but for most of the year the price for PLEX wasn't determined by players themselves.
 
Then I'll be a damned dinosaur! Fear my roar! HARRUMPH! HARRUMPH!
 
Isn't this the same old discussion on F2P where in every discussion common sense soon goes out of the window and it always comes down to some people whining due to expecting something for nothing?

No game with a significant development cost can be free. Someone must pay for it or it doesn't exist. That is where it all goes wrong. The "free" tag should NEVER be used.

As you point out, if there is no advantage to being a patron then rational consumers will choose to be freeloaders instead and the company goes bust.

Sure PVP games that play in the same arenas over and over again can be funded by cosmetic items due to their lower running costs.

PVE games where the content can be "consumed" and new content needs to be churned out to maintain interest typically cannot be funded by cosmetics. These games have to sell something of real value.

The payment model is fair if the cost of buying all the power boosts equates to what you would pay for a subscription game. That covers what you said about preventing Whales from gaining such an advantage that they deter others from playing. If the "cap" on the power you can purchase is the equivalent monthly cost of a WoW sub then there is no problem.

Unfortunately as soon as you use the phrase "free", Freeloaders will always expect parity and a level playing field with patrons but that is pure entitlement and shows a lack of understanding as to how much games costs to develop, how much patrons are prepared to pay and for what they are prepared to pay.

If WoW went free to play tomorrow but you could buy loot roll bonuses up to the limit of £9GBP per month (same as current sub) people would whine like crazy....because you used the "free" word.

If it were a cap of £50GBP per month then they would have a fair case to complain and boycott the game on the grounds of it being too expensive.

That is common sense but common sense is in short supply if you have told consumers that the game is free2play. If firms used the phrase "unrestricted demo" or words to such effect it might be different.

But would such a description suck in as many punters?
 
To me it’s simple really, these head starts are form of “cheats”. Many items in cash shops are also “cheats”. The more cheats a game has the less interesting it gets.

Your Shakespeare' example only hold if the content doesn't change but many of these cheats actually changes the “content” in MMO and thats what annoy people. What is “content” in a MMO well thats whole different story...

 
Let's just remember that, taken to the extreme, this method creates a world in which water suppliers sell the first litre of water that a person drinks a day for 80% of his daily available income.
If they have the data they could do this ...
 
Nils, that is economical nonsense that you are sprouting there. And you know it. The price curve depends on supply and demand, and as long water is relatively abundant, it will remain cheap.

If you want to see price segmentation for water in action, compare the price of tap water with the price of a bottled water, knowing that various tests have shown that bottled water is of no higher quality than tap water in several European countries.
 
"Companies very much prefer the sort of fan who expresses his fandom with his wallet instead of just playing the game 16 hours a day."

I wonder if this is actually bad thinking. The fan that plays the game 16 hours a day is also the fan that thinks about it when not playing, writes in his blog about it, tries to convince other people to try it out. This fan creates the invested community that from my point of view is so immensly important for the longevity of an MMORPG.

There is probably a PhD in a scientific analysis of this somewhere.
 
@Lost Forever

You don't explain why you consider these things to be cheats?

Why are they cheats?

If they forced every player to buy the headstart would it still be a cheat?

What if they called the headstart a "boxed product" and charged for it? Kind of like GW2?
 
This fan creates the invested community that from my point of view is so immensly important for the longevity of an MMORPG.

That might have been true a decade ago for Everquest. Today the most avid players are doing an excellent job of trying to keep new players AWAY from their favorite game, by doing their best to exclude them and deride them.
 
Diamonds are relatively abundant and they sure aren't cheap.
 
Huh? Diamonds are extremely rare compared to the alternative form of carbon: Coal. And those deposits are hard to reach. You can't compare that with water, which falls from the sky.
 
"Huh? Diamonds are extremely rare compared to the alternative form of carbon: Coal. And those deposits are hard to reach. You can't compare that with water, which falls from the sky."

A much better example would have been food, which is relatively abundant, enough so that the nation I live in is plagued by obesity: and yet malnutrition and starvation still exists. People literally still starve to death on this green Earth.

"The price curve depends on supply and demand,"

Price segmentation in the way you describe relies either on having a monopoly on a particular product and segmenting price over time (early access), offering slightly different products that people will pay more for (differentially priced tickets for different seating sections, some luxury goods), or offering limited bonus features for extra money that end up being most of the profit of the arrangement (high end service experiences such as trips, resorts, etc). None of these situations are good examples of a classical free market--which is why they offer more profit than sticking to that model, when feasible.

Offering "supply and demand" as a refutation to Nil's point doesn't really make sense, he's postulating some sort of monopoly/oligopoly on water supply, obviously; responding to that with an argument based on normal market behavior is a non sequitur. In countries without sufficient consumer protection, such as Mexico, such consolidation and price influence on water supplies is starting to be seen. (By which I mean you can find citations talking about disruptive water monopolies in Mexico as early as the 1970's)

Hewitt de Alcántara, C. (1988). "La modernización de la agricultura mexicana, 1940-1970". Siglo Veintiuno Editores.

Nils is offering an extreme end-point, but not deceptively, as he clearly indicated his point as such. That situation is indeed the logical end-result of price-segmentation analysis, which is why most countries do not privatize their water supply.
 
I'm not sure that was clear. Summing up, while merely citing the free market is a poor refutation, pointing out that the fact that price segmentation is bad for society when applied to things like water and oxygen, and non-luxury food, doesn't actually have an application to it being good or bad for luxury items, is a full refutation of Nils's point, which seems to be more of a red herring-type distraction than anything else.
 
Nils specifically said drinking water. Your examples on water monopolies only work for large quantities of water for irrigation.

A drinking water monopoly simply wouldn't be a feasible idea in most countries, due to abundance of rain, e.g. an average of 715 mm per year of rainfall in the United States. So with just 1 square meter of space you can catch enough rain for your drinking water needs.
 
" So with just 1 square meter of space you can catch enough rain for your drinking water needs."

The answer to that is obvious--make rainwater diversion illegal. Many US states already have passed such laws(12 states regulate the practice, only Utah and pre-2009 Colorado have/had what I would consider bans instead of just a regulatory process--but we're arguing hypothetically here) Honestly, it would be easier for someone living in a big-city apartment to illegally grow plants which produce drugs(which clearly does happen to some extent), such as marijuana or mushrooms, than to set up an illegal rainwater diversion/harvesting facility, while remaining undetected. Drinking water is relatively common, true, but a substantial proportion of the world population lives in large urban areas, and finding clean and healthy water in these cities of substantial size located in previously arid or desert areas is often not that easy to do(if you hypothesize that the entire current system to legally deliver cheap and potable water to everyone were somehow suspended due to the decree of some evil dictator, of course--or one could consider some cities in India where the potability of the widely available water is dubious). Passage of a relatively simple to enforce rainwater collection ban in a city such as Los Angeles, or Mexico City, would make drinking water something that you could feasibly charge ridiculous rates for; were it legal to establish a monopoly on such a thing in that jurisdiction, which it obviously isn't at this time(obviously not in LA, I don't really know what the legal situation is in Mexico city). Although the political will for such an act is obviously not present, it's certainly theoretically possible for the authorities in those areas to raise prices and ban private sales/collections to the point where people would smuggle water like they currently smuggle drugs.

That said, this entire discussion is completely offtopic to the original article, as the situations are not analogous. None of the arguments in your original post are affected in the least by anything in this side discussion, but if you want to keep discussing this unlikely and dystopic vision, we can.
 
I'm just saying that SOE offering early access bundles for EQ Landmark will under no remotely likely chain of events lead to you having to pay 80% of you income for drinking water.

That is just Marxist bullshit talk. It sounds logical to people who have no clue, but we all know what happened when people tried to actually make Marxism into real policy. Why do you think Russia and China are going capitalist now? Because capitalism doesn't work?
 
I completely agree. There is a reason games have gone FTP, and it wasn't just "to save the game", it was to make a crapton more money. All haters of the system really have to do is look at a game like DDO, a game that really was dead, and how it what... just released it's 20th major update?

In my mind, sometimes I compare sub vs FTP as I compare American Baseball to European Soccer.

American Baseball has a system set up where the teams that rake in the most money split that money with teams that make the least. This allows for a semblance of fairness among the teams, and every team, even if it's a small market, can get a shot. It doesn't work, of course. I don't think the Yankees monitary hold on baseball will end anytime soon, and seeing the Kansas City Royals win is not that likely in my lifetime. To me, this false communistic/socialist method of profit sharing is similar to the subscription model. Everyone pays the same price, everyone has access to everything. So with an equal playing field, the only true commodity is time. Those that have more of it will succeed over those that play less.

But European Soccer is totally financially driven. London has multiple soccer teams, and the driver to what league a team plays in is how good they are (if you're not good, you can be kicked down to a lower league), so the teams that are in the most talented leagues are those that can afford to be there. This seems like a much more fair system, really. The leagues naturally will divvy themselves up into their financial strata, and make real competition between them. To me, this corresponds with FTP. A player who pays will always have an edge over those who don't. But those who pay really don't mind that. It is, afterall, what they are paying for. The free market will give a smart FTP model lots of money as people already don't mind paying it, and will do so to get ahead.

This feels more fair than anything else, especially to someone like me who has more than enough money, but not enough time.



 
This comment has been removed by the author.
 
"But what if SOMERblink legally sells 1 billion ISK for $20? Okay, CCP now changed the rules and put them out of business, but for most of the year the price for PLEX wasn't determined by players themselves."

Even with that, the price is determined by players. Some engage in sanctioned trade (PLEX & GTCs) and some in the black market. Players eventually determine what ISK costs in both markets, with the spread between the two plus possible CCP sanctions determining how big each market is.

That cap on black market prices is one of the reasons why PLEX works so well and why companies like SOE, Jagex and Carbine either have or will soon adopt the model into their games.

But that gets away from the topic of the post. Basically I try not to play F2P games because they cost too much. When a mount in Neverwinter costs more than I pay for 3 EVE accounts for a month, that's a bit much. But if you enter a F2P game, you know what your getting into. Complaining about it is silly. If it bothers anyone that much, just don't play the game.
 
"Nils, that is economical nonsense that you are sprouting there. And you know it. The price curve depends on supply and demand, and as long water is relatively abundant, it will remain cheap."

Only if there is competition. Since a video game is pretty much unique, competition is difficult. That's why almost all video games cost the same. They only get cheaper over time.

All I'd like to point out is that price segmentation isn't necessarily good.

Do you know the examples of laser printers with extra software to make them slower? That's price segmentation, too. It's good for the individual company, but economic waste from a societal point of view.
 
Do you know the examples of laser printers with extra software to make them slower? That's price segmentation, too. It's good for the individual company, but economic waste from a societal point of view.

I know, and the article I linked to even describes more examples like that. But I am not sure that it is economic waste: By selling you a crippled version at a lower price and the full version at a higher price, the company makes enough profit to survive. The alternative is NOT full version for everybody cheaper; the alternative is nobody gets that laser printer, because it isn't economical to produce.

Only if there is competition. Since a video game is pretty much unique, competition is difficult.

You appear to have a strange definition of competition. Only Coca-Cola can sell you a Coca-Cola, but that doesn't mean they don't have competition from Pepsi. Video games are very far from being unique, for every Call of Duty there is a Battlefield, for every World of Warcraft there is a Guild Wars. Companies don't have real monopolies, they can only push people so far before the customers say "Well, normally prefer the unique product from company A, but if it is too expensive or too much hassle, I'll buy the somewhat similar product from company B."
 
" Only Coca-Cola can sell you a Coca-Cola, but that doesn't mean they don't have competition from Pepsi. Video games are very far from being unique, for every Call of Duty there is a Battlefield, for every World of Warcraft there is a Guild Wars."

Taking that a step further: If Coca-Cola cost 30 dollars, and Pepsi costs 29, I'll order a root beer for 1 dollar, or a glass of milk, etc. If all video games cost hundreds of dollars, some people would watch movies, or go out, instead, and only the real gaming fanatics would still buy those games. obviously we're talking about subscription/online games here, or someone would have brought up piracy by now ~_~
 
I think the SOMERblink thing is a red herring.

Gevlon's basic point is that Eve (and EQ2 which copied the system) allows players to trade time for work at a value determined by the players supply and demand for the respective commodities.

Hypothetically, if Eve were localised to real world countries we'd see a variance in plex value reflecting GNP. Players from richer countries would pay more for time.

It's one of the better methods of allowing players to become effectively gold farmers.

SOMER found a clever workaround that allowed them to receive kickbacks from a 3rd party for something they did within the game. It was unforeseen and now it's been discovered it's been fixed. It was just a loophole in an otherwise sound system.
 
Oops I meant cash for work (or cash for time if you prefer).
 
"I wonder if this is actually bad thinking. The fan that plays the game 16 hours a day is also the fan that thinks about it when not playing, writes in his blog about it, tries to convince other people to try it out. This fan creates the invested community that from my point of view is so immensly important for the longevity of an MMORPG."


I'd dispute everything about that statement.

1) Who cares if he thinks about it when he isn't playing.
2) Not blogging if he's spending every waking minute playing it. Blogs about games are mostly only read by people playing that game. Marginal utility as far as PR goes.
3) Since everyone he knows is playing the game, he's not attracting anyone, and honestly he's probably scaring people who know him in RL away.
4) Community--- these are the guys who drive the community crazy by being elitist douches and setting the competitive bar so high that people who retain a sense of perspective end up being second class citizens.

Every business has to deal with problem clients; it's just part of the bell curve that comes with having to deal with lots of people. I'd guess the far end of the obsession spectrum is more trouble than it's really worth, but you can't get rid of them.

 
Post a Comment

Links to this post:

Create a Link



<< Home
Newer›  ‹Older

  Powered by Blogger   Free Page Rank Tool