How AAA Games Can Be Free (Or Close to It)The core video gaming industry has been – and still largely is – dependent on a model of heavy investment towards blockbuster initial sales. It's worked well enough for the past couple of decades or so, but issues have come to burden the model that was once so profitable for many. One, AAA games have become prohibitively expensive to make and market; two, used game sales have become prevalent and publishers and developers don't see a dime from used.
Publishers/developers have tried to supplement their normal income in several ways. Most modern releases come out at the price point of $59.99 and many have some form of online play or downloadable content. These sorts of solutions tend to load up cost at the front end for users and they aren't always successful (in fact, I think the higher retail price is detrimental to certain games).
There's been a lot of gnashing of teeth trying to figure out how to extend out the economic model for games, which is far less well developed than compared to television and movies. However, when Sony recently offered up free games to PSN users as a result of the PSN hack, they may have stumbled onto something. While the cause of the free games was doubtlessly a negative, it opened the door to a new release business model.
"After some experimentation, free or very cheap products may end up being the way to go for the industry."
"While the Welcome Back program was designed to rekindle the activity and consumer trust of PlayStation Network users, the data suggests it may have highlighted a new profitable sequence for video games," said EEDAR's Jesse Divnich at the time. "ESRB president Patricia Vance once discussed the lack of 'release sequences' in the video game industry compared to other forms of entertainment. For instance, a movie is first released in theaters where it generates the most revenue, then moves to the Pay-Per-View market, followed by the rental market and lastly, broadcast for free on network television. Within the video game industry, however, these sequences typically occur simultaneously with games being available physically, digitally and for rental concurrently and rarely made available for free."
It's notable that the free games included as part of the PSN “Welcome Back” program included InFamous and LittleBigPlanet. LittleBigPlanet 2 had released earlier in 2011 while InFamous 2 released while the “Welcome Back” program was still ongoing. It's highly likely that the available free prequels helped stir up some interest in their newly released sequels.
"The data [from the Welcome Back program] would indicate that the free sequence may be incredibly beneficial to the video game industry. For instance, LittleBigPlanet 2 experienced a 66 percent gain in IGN Page Views and a 23 percent increase in Unique Interest (an IGN viewer indicating interest or purchase in a title) in June compared to the month of May,” noted Divnich. “A strong possible explanation for this would be that after consumers played LittleBigPlanet for free through the PlayStation Network, many actively looked for the sequel and in some cases purchased the game."
"Using a separate metric, GameTrailers.com Media Views, LittleBigPlanet 2 trailer views increased 69 percent over the comparable time period, independently reinforcing IGN’s results,” he continued. “Lastly, using Google Insights, a third independent data source and Dead Nation, another game from the Welcome Back program, consumer searches for 'Dead Nation 2' skyrocketed the week of June 11th. Similar to LittleBigPlanet 2, EEDAR believes this data suggests consumers were actively seeking for more information (and possibly would have made a purchase, if a sequel had existed) for Dead Nation 2."
Making games a free download before their sequel releases is not a sustainable business model. Many gamers would wise up and wait for the free version to release, particularly if we're talking about a single-player game. There are alternatives, however – the full game could be offered as a cheap download, like $5, for the month leading up to the game's release.
There is an alternative as I see it to make full games as free downloads. Instead of making the free downloads available to everyone, they could be made available to PlayStation Plus subscribers and Xbox Live Gold members. Similar to other gamers offered on Plus, they could be made available to subscribers for free as long as they maintain a Plus account. Not only would the games be promoted by their prequels, but this would also encourage users to sign up for these subscription services.
If you regularly got games like this for free, would you subscribe to a service like PlayStation Plus?
Another possibility that hasn't been fully explored enough is that of ad supported games. Now before you close your tabbed window right now, let me outline this idea. In-game advertisements have failed as an industry because they don't fit into the context of most AAA games and are often seen as being disruptive to the game experience. However, what I'm imagining is a system where games could be downloaded for free, but would have a pre-roll ad or maybe a space where an ad runs while the game is paused. This has already proven to be a successful model in the mobile sphere, and when gamers actually get some value out of the ads (namely, a free game) they'll probably resent them a whole lot less.
The above ad supported model is something that I think would work best with PSN or XBLA titles. It gives players a chance to try out a title for as long as they like without paying, and it gives the developer a little cash from the advertisements. I'm not sure it would work as a replacement for the cash received when a AAA title can command $59 on release, but it's not a bad alternative.
Of course, there are already free-to-play games like Free Realms on the PS3 right now; I believe that Microsoft with the Xbox 360 will follow suit soon. With shorter development times and the ability to more immediately monetize a development investment, Sony is pushing Home as a new platform for free games.
"I'm very biased but I'll let you look under the hood for a minute. In PlayStation Home, you can build a full-on game that looks like a console game – for example, a full-on FPS or racing game – with a team of just 6-10 people and it'll take 6-9 months to complete,” said PlayStation Home director Jack Buser. “Everything's done with scripting using [programming language] Lua... so with a very small team you can create a game that's up and running on PS3 in just six months. And it's monetizing immediately!"
"I'm a big games historian and read lots of books on game history. If you fast forward 10 years, it is my personal belief that games will look a lot more like what's going on in PlayStation Home than what they typically look like today,” he asserted.
Ten years down the road is an eternity when it comes to video games and it's hard for me to imagine disc based products being completely phased out unless the Internet becomes a lot faster, cheaper and more universal. However, games still need better alternatives than retail supplemented by a little DLC and perhaps a multiplayer component. There are smarter ways to extend the life of AAA products, and after some experimentation, free or very cheap products may end up being the way to go for the industry.
