People Understand "Free."

Free-to-Play games are both the future and the present of the online gaming landscape. I'm certainly not the first to say this, but let me be clear: All things online will be free. You can't beat free*, so eventually all business models go there. Physical CD shops gave way way to iTunes, which still competes with BitTorrent and other free music outlets. For many people, making money when you give a service away simply hasn't worked. How much money are you making from Google Ads on your homepage? Probably not much. This direction has been predictible but the monetization models have not.

In the last five years there have been two major success stories that have been misunderstood by the industry: MapleStory and Magic Online. My next post will be about digital trading card games, but today lets focus on the strangest MMO I've ever seen make money.

20 years ago we paid $10/hour to play multiplayer roleplaying games in chatrooms on GEnie and the ImagiNation Network. Now we pay zero to play Dungeons & Dragons: Tiny Adventures on Facebook, or zero to play the MapleStory MMORPG. Nexon, which produces MapleStory, have picked up a tidy sum – about US$20million in North American revenue in 2005, the last year in which they publicly disclosed figures. This game features cute, quirky 2D characters in a side-scrolling MMO. It cost nothing to register and nothing to play... Nexon makes their money selling virtual items.

Nexon's virtual item model in MapleStory is simple and to-the-point. You can't buy things that will make your character better in terms of raw gameplay. Those items must be earned in game, and they can be traded between characters. The "cash shop" items are generally cosmetic: yes, that hat would look nice on Audera. They charge dimes and quarters for most of these items, but they only last for a week or two. You are renting the virtual property – you don't own it.

Not all of the items are cosmetic: there are "XP badges" which double the rate of your characters' XP gain, "pets" which pick up items dropped by enemies automatically, and so on. These are convenience items – things that make your experience easier and/or more efficient without out making your statistically stronger than other characters.

At Austin GDC 08, Nexon's Min Kim mentioned that the main reasons they "rent" instead of "sell" is that it encourages repeat purchases and it simplifies the customer-publisher relationship. When MapleStory (for instance) shuts down, they only need to turn off the cash shop, and then wait a few weeks. Then no one's "purchased property" will still exist, and they can turn the game off without anyone complaining (or suing!) about "their" property being stolen. Of course, the MapleStory EULA says the same sorts of things as most other online games: you are licensing, not owning, and the publisher can do whatever they want whenever they want. But by enforcing their behavior from day-one, Nexon saves themselves more headaches down the road.

I believe that there are many similar opportunities across all genres and platforms. EA wanted to start down this path with Battlefield: Bad Company, but why not The Sims? (This model seems written for The Sims 3, honestly.) People don't mind paying for content. Just don't make them pay for the game before they are allowed to also pay for the content.

Let me take it back to the iTunes reference above. iTunes is free. You can download it now and listen to music you have. It is a solid player with a great interface. If you want to buy something to make your experience better -- like a new song -- they provide a simple interface for that, too. Despite the fact that you can get any song ever produced on the net for free somewhere, iTunes has made a ton of money for Apple by giving a great experience that is easy to use. So, too, does Nexon. Their game is free and you never need to pay anything.... but go into any 7-Eleven or Future Shop and you'll see those Nexon Game Cards. And iTunes cards. Millions spend money on "free."

People understand "free." They also understand that free rarely actually means free. Telling people about the real cost of free is important – I would say vital – to the success of a free-to-play product. Next time I'll talk about Chron X and how our inability to really explain free cost us in the end.

(* You can beat free: "We Pay You." This is what Upper Deck used to launch the Vs. System trading card game to brief success, and was tried by Tenacious Games for The Spoils. There is some other card game, "poker" I think its called, where they pay you to play it if you are good at the game. That seems to have some success.)