Companies that are Investing in Free-to-Play and the Challenges they Face

A lot of companies are adopting the free-to-play model, but what will happen when the market reaches its saturation point? how is this model sustainable if 90% of the market is playing 10% of the games.?

A lot of companies are adopting the free-to-play model, but what will happen when the market reaches its saturation point? how is this model sustainable if 90% of the market is playing 10% of the games.?
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Dark Souls publisher Namco Bandai is adopting the Free to play model with its new game Ridge Racer Driftopia, the game is being released for PC and Playstation 3 and it’s the first game in the Ridge Racer series to accept the controversial business model.

The company had previously stated that it had no interest in such model, but with the increasing importance of the model and the current trends in the market it looks like Namco Bandai wants a piece of the cake just like all the other fancy-pants studios.

“Free-to-play is playing an increasingly important role, so it’s very exciting to be bringing one of our most successful franchises to the free-to-play space for everyone to enjoy.” 

Apparently they changed their mind, only a year back they were saying that F2P games couldn’t be high quality, and now they are releasing an F2P game. What changed? Well a lot changed in 12 months, companies are no longer seeing the model like a weird animal that one should be afraid of, they are accepting the model and now have a deeper understanding of it

Namco Bandai isn’t the only company venturing into the unknown, Ubisoft’s foray into the new market includes the acquisition of Anno developer Related Design, the Germany based developer is now completely owned by the French publisher. Ubisoft owned 30 percent of equity, which means the most recent transaction was for the remaining 70 percent.This step reveals Ubisoft’s interest to develop online free-to-play games because Related Design’s staff will continue development of online free-to-play MMO Might & Magic Heroes Online.

The competition in the free-to-play marketplace is getting harder, everyone is afraid to be left behind, companies are trying to adapt to the new environment by changing their organizational structure in a struggle to catch up with the fast paced industry.

What lies ahead? Well, Mythic co-founder Mark Jacobs has a grim vision of the future:

“Let’s just see what happens in three to five years—and I’m betting closer to three—where free-to-play will become just another model. Right now you’ve got everybody chasing it, going ‘Isn’t this great? Free to play, we’re going to make so much money.’”

I wonder if the free to play market is saturated with companies trying to get a piece of the cake, the problem is, in early stages when a new business model is created, early adopters are rewarded with higher profits but as other companies enter the market to get their hands on the juicy revenue stream, profit margins start to decline to a regular level and those companies that cannot compete at this new level have to leave the game, usually after a hit to their financial muscle.

“You know, free-to-play is just another model, and just like every other model in the industry, it will hold its special little place for a while but then there will be consequences,” says Camelot Unchained creator Mark Jacobs. “Those consequences in a few years will be a bit of an apocalypse. You’re going to see a lot of developers shutting down… if you go free-to-play, you really have to compete with every other free-to-play game out there.”

Free-to-play is a risky model. They are giving their game away for free! The hope is to capture a large consumer base whereby they can make their money back (in the form of in-game purchases) beyond the break-even point and still be profitable enough to offset the risk, but if 90 percent of the market is playing 10% percent of the games, then a large number of developers are going to have a bad time.

About the author

Joe Triana

Hi guys! I'm just a guy with a profound love for video games. I have a Bsc in Economics whatever you don't want to know about that. You want tech!!