Just over a decade ago Western gamers paid for their subscriptions to
massively multi-player online games one month at a time and they were
perfectly content to do so. Any gamer who dared to grumble about
subscription fees was treated to fellow gamers reciting a litany of
ways in which a MMOG subscription represented a true value. “You’d pay
as much to go to a movie and buy some popcorn and a soda,” they’d say.
“For about the same price, you’re getting hours of entertainment all
month long.” They would talk about the expense involved in keeping
servers lit and maintained, providing support and quality assurance,
and moving the development process forward with content updates and
expansions.



But revenue models have experienced an evolution in recent years and
monthly subscriptions are no longer the only way that MMOG developers
earn money to cover their expenses. Free-to-play games, once scoffed at
by Western gamers with “you get what you pay for” attitudes, have
achieved enough mass market appeal in North America and Europe that
several once prominent MMOGs recently converted to some sort of
free-to-play or “freemium” model to bolster their profits.



Where revenue models are headed is the subject of some debate, and two
recent Ten Ton Hammer editorials took a look at both sides of the coin— href="http://www.tentonhammer.com/editorials/f2p-future">the
move to free-to-play versus the longevity (at least
in the West) of the href="http://www.tentonhammer.com/editorials/5-reasons-subscription-here-to-stay">subscription-based
MMOG. We can only speculate as to where MMOG subscriptions
(or the lack thereof) are headed, but we can show you where they’ve
been and how they’ve evolved to meet the demands of an ever-changing
market.

Monthly Subscriptions Set the Standard for Early MMOGs

cellpadding="10">

In the beginning there was the subscription-based MMOG. Most gamers
agree that Meridian 59, launched by the 3DO Company in fall 1996, was
the first true 3-D MMOG or graphical MUD. It href="http://www.thefreelibrary.com/3DO+Delivers+First+Entertainment+Product+for+the+Internet%3b+Meridian...-a018679814">set
a standard that other games would, and still do,
follow--a monthly subscription model. Meridian 59 launched with a box
price of $39.95 and a monthly subscription fee of $9.95 per month for
unlimited play. (For what it’s worth, it also delivered up the Internet
by providing a free copy of Netscape Navigator 2.0 Personal Edition.)
By the close of the third quarter 3DO href="http://www.thefreelibrary.com/3DO+Reports+Profitable+Second+Quarter+Results%3b+Revenues+Up+To+%2426.8...-a018812911">announced
record profits and, even though those profits weren’t
directly attributed to the launch of Meridian 59, the idea of a
subscription-based MMOG gained significant momentum.



About one year later, Electronic Arts served up Ultima Online, calling
it “the most ambitious and widely anticipated online game ever
developed.” Bringing people to the Internet was a necessary part of
online game development in 1997, and EA bundled the Internet with UO
much like 3DO did with Meridian 59, including a free trial of the ISP
AT&T WorldNet as well as a copy of Netscape Navigator. And,
just like its predecessor, UO’s monthly fee was a flat $9.95 per month.
UO introduced the idea of the free trial, making its monthly
subscription kick in after and “ href="http://www.thefreelibrary.com/The+World%27s+Most+Anticipated+Online+Game+Hits+the+Market+as...-a019778144">introductory
period.”



"We chose flat-rate pricing because we wanted to provide an immersive
game experience that didn't require players to keep one eye on the
computer monitor and the other on the clock," said Chris Yates, then
the vice president and chief technology officer of UO’s developer and
subsidiary, ORIGIN Systems, in the company’s press release. "Internet
gaming of this magnitude is new to most players. We wanted to offer a
compelling price point to encourage players to get online and into the
game."



Websites, news articles and press releases for older MMOGs have faded
into Internet obscurity, but as best we can

cellpadding="10">

tell Sony Online Entertainment was the first, and perhaps the only,
MMOG publisher to increase its subscription price well after its launch
date. The most commercially successful MMOG to launch in the 1990s, href="http://www.tentonhammer.com/taxonomy/term/38">EverQuest
delivered the virtual world of Norrath to gamers in March, 1999 with a
very Walmart-esque monthly subscription price of $9.89. By early 2002
EQ was facing competition from newcomers href="http://www.tentonhammer.com/taxonomy/term/209">Asheron’s
Call, href="http://www.tentonhammer.com/taxonomy/term/40">Anarchy
Online and href="http://www.tentonhammer.com/taxonomy/term/39">Dark Age
of Camelot. In April, 2002, one year after releasing a $10
special classic edition box designed to make EverQuest accessible to
casual gamers, EQ raised its monthly subscription to $12.95, although
SOE offered a reduced price for players buying subscriptions in
multi-month blocks.



By the time EverQuest II and World of Warcraft launched, $14.95 had
become the standard monthly subscription price for pay-to-play titles,
and remains so today, with some strategic variations and package
pricing thrown into the mix.

style="float: right; background-color: rgb(173, 134, 13); width: 253px;"
border="1" cellpadding="10">

Enter the Free-to-play MMOG

The browser-based Java MMOG href="http://www.tentonhammer.com/taxonomy/term/322">RuneScape stands
as one of the early pioneers of free-to-play online gaming and its
popularity is undeniable. The game was recognized twice by The Guinness
Book of World Records as the “ href="http://services.runescape.com/m=news/newsitem.ws?id=1386">Most
Popular Free-to-play MMOG” in the world. RuneScape pioneered
what’s known as a freemium payment model--base gameplay is free but
members can opt to pay a monthly subscription to unlock additional
content. RuneScape’s developer, Jagex, made its premium services
available in early 2002 and within a week after launch over href="http://www.runescape.com/kbase/guid/jagex">5000
players subscribed making RuneScape one of the largest
pay-to-play Java games in the world at the time.

cellpadding="10">

Another free-to-play title that struck a chord with a North American
audience came from Nexon, a company headquartered in Seoul, South
Korea. Its first contender, the 2D side-scroller, href="http://www.tentonhammer.com/taxonomy/term/293">MapleStory,
opened its virtual doors in Korea in April of 2003. It took over two
years to make it to North America, but the game boasted 3 million
registered North American users (87 million worldwide) by late
2006. MapleStory is probably the game responsible for
introducing many Western gamers to the idea of microtransactions. It
features a Cash Shop where players use real money to purchase virtual
goods such as character appearance items and enhancements. MapleStory’s
popularity with its demographic remains strong. In late 2010 Nexon
America announced that more than one million players had made
microtransactions in the game.



MMOGs for young gamers, a growing market, have traditionally offered
either a freemium or microtransaction-based model. The success of
free-to-play titles such as SOE’s href="http://www.tentonhammer.com/taxonomy/term/287">Free
Realms, launched in April 2009, proved that parents don’t
necessarily have the same reservations about microtransactions that old
school gamers do. Just seven weeks after launch, SOE announced that
Free Realms had passed the 3 million player mark. While 3 million
players don’t necessarily equate to microtransaction sales…they don’t
hurt.

style="float: right; background-color: rgb(66, 66, 66); width: 253px;"
border="1" cellpadding="10">

Are free-to-play games the raging financial success they seem to be?
With few exceptions, MMOG developers are notoriously tight with their
numbers. In the free-to-play sector, some developers report their
“average revenue per paying user” (ARPPU) when tossing around earnings
figures. Those numbers can sound impressive when compared to the
“average revenue per user,” which includes all logged in users, both of
the paying and non-paying variety.



Western gamers accustomed to subscription-based payments have balked at
free-to-play games and the concept of hybrid payment setups. They also
complain that free-to-plays lack the quality and substance of their big
budget pay-to-play contemporaries. Still, the genre is undoubtedly
gaining more and more ground as better quality free-to-plays hit the
Western market. So much ground, in fact, that in the past year or so
the industry has seen a number of aging (and not-so-aging) formerly
subscription-based titles convert to a free-to-play model.

The Pay-to-play Turned Free-to-play Revolution

style="float: right; background-color: rgb(66, 66, 66); width: 253px;"
border="1" cellpadding="10">

When it comes to MMOGs that converted from subscription-based to
free-to-play or freemium models one MMOG quietly set the precedent long
before Dungeons
& Dragons Online made it fashionable to take an aging
game and revitalize it by stripping away its monthly fee. Shadowbane,
which launched in 2003, went subscription-free in 2006. In fact, the
game was offered as freeware and later, to fund continued operating
costs, became ad-driven. Shadowbane featured advertisements at login
and logout, but it also served up a unique death penalty—players who
died were forced to watch an advertisement (although Ubisoft was
merciful and made certain that ads were displayed no more often than
every 10 minutes, even to the most death addled players.)

style="float: right; background-color: rgb(66, 66, 66); width: 253px;"
border="1" cellpadding="10">

While Shadowbane’s switch to ad-supported freeware marked a milestone,
it was more of an attempt by its developers to keep a game that had
become something of a cult classic alive for its fans when subscription
revenue could no longer support it than an attempt to revitalize the
game. Arguably, the first developer to recognize the potential of a
free-to-play model to breathe new life into a struggling game was
Turbine’s Dungeons & Dragons Online.  In June, 2009, href="http://www.tentonhammer.com/node/69501">Turbine
announced that DDO would go free-to-play as Dungeons
& Dragons Online: Eberron Unlimited. DDO went big and included
a major content upgrade and a raised level cap with its free-to-play
launch. After downloading the free client, DDO’s hybrid payment model
offered players the ability to purchase adventure packs, items and
account services a la carte from the DDO Store or to subscribe and get
unlimited access to all of the game’s content. The free-to-play move
caused a tremendous resurgence in popularity for DDO and set the stage
for more free-to-play conversions to come.

style="float: right; background-color: rgb(66, 66, 66); width: 253px;"
border="1" cellpadding="10">

Other games, including SOE’s EverQuest
II, followed suit, but EQ2 didn’t go down without a fight.
Some time before announcing that EQ2 would offer a free-to-play
iteration called EverQuest II Extended, SOE made a last ditch attempt
to bolster subscriptions by offering veteran players the ability to pay
$5 for a one-month subscription that allowed for 3 consecutive days of
gameplay. This, SOE assumed, would be a great option for players who
didn’t want to pay a full monthly subscription but perhaps still wanted
to experience major content updates and in-game events or take
advantage of double experience weekends. The href="http://www.tentonhammer.com/node/83536">new
subscription pricing apparently wasn’t a hit, and EverQuest
II joined the ranks of the free-to-play in September, 2010.



The free-to-play conversions have come rolling in steadily. Other
notable titles to convert to some sort of free-to-play model include href="http://tentonhammer.com/lotro">The Lord of the Rings
Online, href="http://www.tentonhammer.com/taxonomy/term/52">Pirates
of the Burning Sea, and href="http://www.tentonhammer.com/co">Champions Online.

What Lies Ahead

We’ve likely only scratched the surface with regard to what lies ahead
for the free-to-play sector, but are subscription-based MMOGs on their
way out?



“Faced with fierce competition from social games and console video
games, MMORPGs in the Western market have already shown signs of a
slowdown,” said Martin Olausson, Director of Strategy Analytics Digital
Media. “The traditional subscription model that most Western MMORPGs
adopt has lost traction and growth momentum.” Strategy Analytics offers
a href="http://www.businesswire.com/portal/site/home/permalink/?ndmViewId=news_view&newsId=20100810006504&newsLang=en">report
which supposedly details the decline of subscription-based Western
MMOGs and a tremendous boom in the Asian marketplace, where MMOGs are
primarily free-to-play.



 It’s certain that we’ll see more creative revenue strategies
from MMOG developers in the months and years ahead. There’s no doubt
that MMOG payment models as we’ve know them are constantly evolving and
that monthly subscriptions are no longer the only way for Western
developers to roll.