IndustryGamers - Informing the Games Industry

Free-to-Play Gaming Market to 'Explode' to $7 Billion by 2015

Posted June 11, 2010 by James Brightman

Online games and social games have been taking off, and the free-to-play (F2P) model popularized in Asia is starting to take hold across the world. According to new data from DFC Intelligence and commerce solution firm Live Gamer, the category is "expected to explode over the next few years, reaching over $7 billion worldwide by 2015 – more than double the revenue for 2009."

In North America and Europe alone, DFC forecasts that the "MMOG Lite" market will grow from about $800 million in 2009 to over $3 billion by 2015. The report, “Consumer Trends in Virtual Goods and Downloadable Gaming in North America and Europe,” found that "top Korean F2P games that require a large client download and feature robust game play are able to convert over 10 percent of users into paying customers." On the other hand, simpler social games on Facebook and other networks actually have less than one percent of users that purchase goods or currencies for the game.  With a lower customer acquisition cost on social networks, the report suggests that a game can do well with a large volume of free users.

“Another interesting result of this study is that the idea that F2P games have a ‘microtransaction’ business model is actually quite misleading," noted DFC analyst David Cole. "Historically, the average purchase is over $10 and some games offer an optional subscription. Going forward, it is obvious that understanding consumer purchase patterns and preferences will be a necessity for continued success. Advanced analytics provided by platforms such as Live Gamer’s are a valuable resource for tracking these patterns."

“The free-to-play model is increasing in popularity at an astounding rate, both in the U.S. and worldwide," added Andrew Schneider, co-founder and president of Live Gamer. "We'’re seeing average revenue per paying user top $28 per month across the 145 titles that Live Gamer powers around the world. With engaging games and a solid monetization strategy in place developers and publishers can see great success leveraging item-based business models.”

James Brightman has been covering the games industry since 2003 and has been an avid gamer ever since the days of Atari and Intellivision. He was previously the EIC of GameDaily Biz.