'Slick' business models combat piracy
Even though the global gaming scene is on the cusp of digital distribution, piracy and the 'black market' still present a challenge for consumers to buy games for a price that is proportionate to how much it costs to develop them.
Desmond Kurz, gaming and digital manager at MWeb, says the cost of piracy, and the consequent measures imposed to combat it, has seen many heated debates over the years.
"Practically, with many publishers spending enormous amounts of money on game development, it's a serious concern," notes Kurz. With titles like Grand Theft Auto costing a reported $266 million and Disney's Infinity costing $100 million, the industry has come up with a variety of interesting alternatives to the traditional pricing model."
One of the more prominent strategies being employed at the moment, adds Kurz, is the Free to Play (F2P) model which involves players getting access to a sizeable portion of the content without having to pay for the game. From a gamer's perspective, he says, it's great because gamers can essentially trial a game without spending money and if it takes their fancy, they can then spend money on the title.
"The phenomenon of this 'trial' software is not particularly new and likely developed from the shareware and freeware models that were popularised in the 80s. However, the model has been adapted to include a number of money-making alternatives to recoup costs in a seemingly fairer manner."
Kurz points out that the first of these adaptions is the "micro-transactions" model, which sees players spending relatively small amounts of money on the F2P game to unlock additional content.
"Some of the success stories of this include Team Fortress 2, which experienced a 12-fold increase in revenue after its switch to F2P," explains Kurz. "Valve's success with Team Fortress 2 spawned another successful F2P title, Dota2, which has recently generated a staggering $6million prize pool for its international tournament based on the same micro-transaction model."
There have been criticisms of the micro-transaction model, however, notes Kurz, levelled at "pay to win". He explains that his phenomenon arises when players can gain an advantage in a game by paying money as opposed to earning the advantage via skill.
"Another derivation for earning revenue for F2P games is including paid-for advertising in the game. If implemented incorrectly, the in-game advertising can be intrusive and irritating for the gamer. However, sometimes this irritation is part of the effect, forcing irritated players to purchase a 'full' or 'ad-free' version of the game."
To further combat piracy and recoup costs, Kurz shares that some publishers have adopted a hybrid model where games are "free to a point". A classic case of this was with Star Wars: The Old Republic (SWTOR).
"With the rumoured cost of the game coming in at nearly $200 million, Electronic Arts has implemented both micro-transactions for unlocking selected additional content items and a subscription model for complete access, while gamers can still play it mostly in a F2P mode to level cap," he says.
"They are not, however, the only ones to have adopted this form of hybrid model; Dungeons and Dragons Online and Rift, to name a few, did as well. World of Warcraft allows trial users to play to level 20 before having to subscribe to progress."
In his mind, there is no doubt that the F2P model is in operation as a viable commercial model, but it's not without its risks for the developers.
"It still costs money to develop a game, and if you make it F2P, you need to rely heavily on your conversion from free to pay to recover your costs. Failure to do this, spells certain doom."
Kurz's expectation is that as gaming develops and evolves, more models will be adopted to assist developers and publishers to recoup their costs in new ways without having to adopt draconian copyright enforcement.
"The problem with combatting piracy that is likely to persist, is that it's difficult to ascertain what a 'fair' price for a title is, and that definition varies from person to person, he says. "These new models try to resolve this problem, but I think there are better alternatives that may come down the line. Gaming will continue to be an exciting and entertaining industry to be involved in."