An article by Ben Holmes, the former director of Playfish and now the main partner at Index Ventures, about the economics of F2P games appeared on the pages of The Wall Street Journal.
As he writes, if you look at iOS and Android markets now, three things will immediately be clear:
- all charts (paid, free, cash) are dominated by games
- most of the top games are made not by American, but by European teams
- F2P games earn the most money
In the article, Ben offers his version of why F2P projects are the most popular.
To answer this question, Holmes suggests looking back to the past, when retail played a dominant role in the interactive entertainment market. Back then, users were more serious about buying games. In order not to make a mistake with the choice, they even read reviews.
As a result, some players were delighted with the purchase. In hindsight, they were even willing to pay much more than the amount paid. Other users were disappointed and thought they had overpaid for the project. The third, very important group may have had any expectations regarding the game, but was not ready to pay the asking price and, as a result, remained on the sidelines.
The new format helped to reach this audience. And today, gaming companies take from each player as much as he is willing to pay. Moreover, thanks to F2P, even a non-paying user plays an important role in the fate of a particular product, setting ratings, increasing its visibility in the tops. As a result, everyone is happy, both users and publishers.
Ben’s other conclusion boils down to the fact that F2P games are an economic experiment in its purest form. Companies allow customers to set a price for a product and determine the necessary characteristics. The amount that the user is willing to give, in turn, demonstrates the usefulness that he extracts from the game for himself.