The concept of an online game that is free to start playing and subsequently generates revenue from a small subset of users willing to pay extra for virtual items, characters and other perks is all the rage in Asia. Countries like China and Korea are seeing free-to-play models dominate the over $6 billion Asian game market outside of Japan. However, the free-to-play (F2P) model has been slow to come to the established game markets of North America and Europe. DFC Intelligence recently released a 235-page report, The Market for English Language Client-Based Free-to-Play PC Games, where they estimated English language client F2P games generated only $249 million in revenue 2009.
The good news is the growth potential for F2P games in English-language markets is strong. DFC forecasts the market to reach $2 billion by 2015, with a CAGR of 34%. In other words, F2P games are just now getting started in key game markets like the U.S. and U.K. However, if the history of the Asian market is any indication, increased consumer usage of F2P products could have a major impact on the entire game industry establishment. For some companies it will represent an opportunity while other companies will face major challenges to their core operations.
There are many reasons why client-based F2P games have been slow to take-off in Western markets. The most notable reasons are a lagging technology infrastructure, delivering subpar Internet connection speeds, that has limited consumer acceptance. Client-based F2P games face competition at one end from high-end console and subscription online games and on the low-end from low cost and easy to access browser and application-based games.
Going forward the biggest market driver is improvements in technology that will make it easier to access and store online digital content. The growth in popularity of browser-based games can also be seen as a key market driver. Easy to access browser titles are acting as a stepping stone to introduce consumers to the concept of playing games online, using virtual currency and buying digital content. Of course, another key driver is the improvement in quality as companies learn how to balance a game between free and paying users. Many established game brands and intellectual properties are looking to enter the F2P market and some high-end subscription games are finding they can have more success going to an F2P model with an optional subscription.
In short, the marketplace is poised for growth as consumers start to embrace the free-to-play model. The good news is that for the right company a F2P model can be very profitable. The bad news is revenue from this area in the next few years will be limited compared with the traditional boxed retail model. An additional factor is how consumers will respond when the number of available F2P games skyrockets. How will developers and publishers have to adapt their content to attract enough paying players to be profitable? The major challenge is in understanding the risks and opportunities and what will separate the winners from the losers.
DFC Intelligence is proud to be providing IndustryGamers readers the exclusive opportunity to purchase a DFC report on the English language client-based F2P market for $500. This report is a 25-slide Powerpoint that acts as a companion to the 235-page DFC report. This purchase also includes a separate report from Pando Networks on Online Game Content Delivery. Pando is a game delivery services company and the report provides actual network performance data from around the globe.
This report is part of a new series of custom targeted DFC Intelligence reports and briefs that will be available for purchase online through the IndustryGamers website. The reports in this series will provide poignant analysis and forecasts on key topics facing the games industry worldwide. You can skip the $500 purchase price on your first report and receive it for FREE if you submit your game industry credentials below:
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