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[jeffrobot]

Hi Everyone,

I'm a big league of legends player, and I love their business model for about a million reasons. Some of those reasons are for myself as a consumer (I get to play their game for free) and some of them have to do with how it benefits Riot (the developer) and the game itself.

For those who aren't familiar with how League of Legends works, I'll give you a synopsis of the major points.

First, everything in the game is purchased through an in-game store. New champions, new skins for your champions and runes (tiny persistent upgrades to your champions) are all bought in the store. The store uses two currencies, one is RP, which you buy with money, and one is IP, which is earned through playing the game. RP is the thing that makes this game free to play, Riot earns all their revenue through people purchasing RP and using it in the store.

The first reason I love League of Legends so much: Everything in the store can be bought with IP, the free currency you earn by playing. There are a few exceptions, NONE OF WHICH AFFECT GAMEPLAY OR YOUR COMPETITIVENESS. Those items that are ONLY available for purchase with RP are new skins (which are purely cosmetic), and limited time "IP Boosts" that temporarily increase how much IP you earn from the game. There are a few others (Rune pages) that are similarly not necessary to play the game.

So right off the bat, the game is completely open to people who don't want to pay a cent. You could be in the top players of the game and never spend any money, theoretically.

And yet, Riot has over 200 employees (see their LinkedIn profile) and they are making tons of cash. Why aren't they poor? Because people are willing to pay $5- $10 for the new champion released every 2 weeks, and $5- $10 for cosmetic skins for their favorite champions. Basically, because they want to look cool, or don't want to wait to earn enough IP to buy the champion.

Like any Free-to-Play company, Riot has scaled their economy to make it pretty time-consuming to play the game entirely for free. Most new champions cost 6,300 IP, and you get between 70 and 200 IP a game. Games last anywhere from 30 minutes to an hour, so it'll take you a while to earn that 6300 IP. But guess what, there are 5 or 6 champions that cost only 450 IP, another 7 or 8 that cost 1350 IP, and more that cost 3150 IP etc. etc. I bought one 6300 champ, didn't like him, and swore off 6300 IP champs forever, since they take so long to afford and I might end up not liking them.

And the cheap champs are not undervalued. All the champions in the game are balanced. I have a friend who is in the top 50 players in the world, and his main is one of them. And Alistar and Ashe are 2 other 450 champs, and they are both played frequently.

The point is: League of Legends is not some sneaky game that forces you to pay money to play. You don't have to think to yourself "Well, I could probably stay competitive if I only spent $20 a month, so after 3 months that' sixty dollars, so am I getting the value..." Nope, none of that. I've been playing for months and haven't paid a cent. On the other hand, I have friends who have played just as long who have each sunk $30 - $40 into the game because they want skins and champions fast. To each their own. And just for your information, I own about 10 champions, and given that Riot makes a different 10 champions free to play every week, I usually have about 20 champs to choose form every week (more than enough).

So to everyone who thinks F2P games HAVE to be SNEAKY and constantly asking you for money - it's not true. It's just an assumption we all like to make, but in my opinion, Riot is blasting that assumption to smithereens.

So that's why the business model is good for the player. Why is it so good for Riot? Well, there are a bunch more reasons that I can see, and probably some that I can't. The first reason is the best/most coolest in my opinion.

When your game is free, anyone can try it. ANYONE, for no penalty! Let's bring Dark Spore into the conversation. Dark Spore looks pretty cool, but I'm not sure if I want to spend $60. What are my options? All I can do is try and get more information to inform my decision. ULTIMATELY, it comes down to me deciding if I want to spend $60 on a game I don't know if I'll like, which given today's marketplace (Steam's $2 sales, other f2p games, mobile games) is increasingly difficult to justify. So some huge number of the people that look at Dark Spore and are interested in it, decide they aren't gonna take the chance. They pass it by. Maxis gets $0 from them.

League of Legends on the other hand - anyone who is curious about the game, gets it. It's theirs. They now own it. And since it's a really great game, a ton of those people keep playing it. Here's a fun fact for you: I introduced LoL to 3 of my friends, and now they all play it and have paid money for items. My 1 download of the game led to 3 more people downloading it, all of whom have spent money. if LoL was not free, I would not have downloaded it, hence none of my friends would, hence Riot wouldn't have made that ~$100 they did from all my friends. Now let's look at Dark Spore.

Let's say I buy Dark Spore for $60. Okay, Maxis earns $60. What are the chances I'll get my friends to buy the game? Pretty bad. My friends are not about to drop $60 on a game they don't know anything about (I'm the guy in my friend group who does all the research and lets my friends know about games). Especially since they already play LoL (and it's so deep they don't need any other game). But I have some real statistics. I showed Dark Spore to 4 of my friends. 2 or 3 of them even played it. How many of them bought it? None. Because it's just not worth it. But LoL is free, so everyone downloads it and gets hooked. And then eventually they start paying money - if they want.

As a developer, your F2P game is going to reach many times the amount of people you'd reach if it was a flat rate. SO MANY MORE PEOPLE WILL PLAY YOUR GAME. It's insane. Proof? Heroes of Newerth is another game that copied the Dota formula and came out around the same time LoL did. HoN and LoL were big competitors. But HoN went the flat-rate path - $30 to download their game. Well, LoL is one of the most played PC games today and has won several awards, and HoN? I never hear about it. I don't know how many employees they have because their Linked In page is blocked somehow? But I'm pretty sure its safe to say LoL smoked them and left them in the dust ages ago.

Dark Spore, like most games, is going to sell a lot of copies when its launched and the hype is high. People having to make that tough decision on the $60 are reading about the game, theyre seeing trailers, they think oh man that looks cool. Launch time is when the game is going to make its sales. We all know how this works. But after the game has launched, the pressure to buy cools down, and only people who are really really intrigued by it for some reason are going to do the leg work to look around the web for information and finally decide to buy it. Also, if the game is fantastic, word of mouth could keep sales going, but I played the Beta and I don't think that's going to happen. And this is where being F2P has another HUGE advantage.

Since there is no reason not to try a F2P game, any word of mouth the game generates is like a billion times more effective. Your friend says LoL is cool? Okay, download it. BAM. Now that player is sucked into LoL and joins in the fun, and becomes a potential source of income for Riot. So F2P doesn't rely on that huge marketing push at the beginning. It's okay if no one downloads your game when it launches. The people playing your game are going to naturally propagate it. If your game is good, it will literally do the marketing for you.

There are a lot of F2P games that haven't been nearly as successful as LoL. I can't tell you why that is with scientific exactness, but it's probably because they aren't as fun as LoL, plain and simple. DotA is a great formula ; )

So my question is - Why the heck is Dark Spore not F2P? It's design is a perfect fit. It has tons of playable characters, upgradable abilities... and on TOP of that, the characters were made using the Spore character builder! It would be SO EASY for the developers to create awesome new skins for their heroes. LoL skins are mostly just new graphics, and the heroes models stay the same (for the most part). But if you're heroes were made with the Spore character builder, it'd be so easy to make really big, cool changes to them, and sell them.

My theory? EA/Maxis is just behind the times. They don't understand F2P, so they see it as a risk and don't want to go with it. But JEEEZZZ. It's going to suffer from all the disadvantages the flat rate games face. It's not gonna be huge - and who knows, if it was F2P, it would definitely have a shot at hugeness.

And while I'm at it, I'm going to go ahead and say that the F2P model is so awesome, it should be used in way, way more games. In games that we typically assume shouldn't be F2P. Like, single-player games, AAA Shooters, all that stuff. It just has so many advantages, and if the paid part is fair and balanced, so few disadvantages... I feel like slapping my forehead now any time I see a $60 game, and I want to cry for the developer, because so few people, comparatively, will get to play their game.

In conclusion:
F2P, when done fairly, is going to net you WAY more players because word of mouth is so much more effective.
When you are netting way more players, small purchases add up, yada yada, you know how that works.
Your game doesn't have to have a huge launch and then inevitably suffer from stagnating sales.
When your game has SOOO MANYY PLAAYYERSS the community is HUGE, which means tons of support inside and outside the game, which leads to moooooreee downloads and sales.
And, last but not least, more people get to enjoy the game you're working so hard on : D

Thanks for reading.

[Nugsy]

I don't understand this thread at all.

Darkspore is nothing like LoL.

[Triplefox]

A lot of the $60 games are supported with the fabled "marketing push" - getting a nice display at Gamestop, hyping the game in previews, putting an ad on city buses, etc. And a lot of the trappings of what we call "AAA" are associated with marketing decisions. But the overall conceit of the push - in today's marketplace - is to compress the game's sales period into a very short timeframe where it completely dominates the charts and popular discussion, and the majority of money is made in a period of weeks and months. Portal 2 - for one example - is a great $60 game. Both the customers and the publisher take a big risk by going for the $60 price point, but if the game can offer a one-of-a-kind experience, like Portal 2, it still ends up being "worth the money."

F2P is a much longer-cycle model, one based on retaining customers who will come back to the product for potentially hundreds of hours of play. This sounds good, except that now you have to build the studio and the product around maintaining it for that period of time. The game must market itself and entangle monetization decisions with design decisions to have any hope of executing well. Maxis does not have those skills as a core competency; they have been supported by EA's marketing for decades now. Therefore it would be less risky (from their perspective) to make the $60 product because it lets them retain the same studio structure and focus their efforts on making the game good - keeping in mind that it's a type of game that is also outside of their core competency.

I would point to what another EA studio - DICE - has been doing with Battlefield; DICE started within the retail space and later produced a F2P game internally - BF Heroes. This game was then transitioned to and maintained by Easy Studios, who have gone on to make a "sequel" game, BF Play4Free, again based on DICE's work. This puts them in synergy: DICE can focus on the cutting edge product(in this case BF3) while Easy works on monetizing the older ones. These F2P games are not are of the same quality of the retail games, but they retain most of the same characteristics.

From a consumer perspective we just want the F2P game right off the bat, and maintained at the $60 quality level. Actually executing on that is hard and that's why LoL is one of the only examples of it working.

[jeffrobot]

Hey TripleFox,

Thanks for responding. I understand what you're saying about it being a totally different challenge in terms of development and support. Also, thinking in terms of "core competencies" of a company is not something I'm used to doing. Thanks for making me aware of those kinds of considerations.

What's interesting, and one of the reasons I'm looking at Dark Spore in particular, is that Maxis has special plans to keep working on it after the launch. They've said in press releases that they want to continue developing it "sort of like an MMO" and keep releasing new champions, etc. So given that, I don't know why they don't make it F2P. They're preparing for the long-haul, but they don't have a continuous source of revenue since their current players won't be paying any more, and since it isn't F2P it won't have that "market itself" advantage. Does that strike you as a mistake?

I've searched for the article where the developer said that, but I can't find it. You'll have to take my word for it.

Also, given the developer has never done this before... do you not think they could just start off by copying LoL? I mean, I don't think Riot has much experience with F2P before this, and they pulled it off.

As for that other dude who responded:

They're similar in that both games are comprised of many small, distinct purchasable objects. By that I mean the Champions/Avatars you play as. I think these are the main source of revenue for LoL. Dark Spore has champions too, and they could be the main source of revenue for Maxis. In fact, Dark Spore actually has more opportunities, since you collect loot, which could also be sold. LoL doesn't have loot.

Also, Dark Spore has a big pvp side to it, though the marketing isn't focusing on it. Anyways, the PVP has the potential to be very deep, since each player controls 3 heroes, and each hero has 4 moves (that's a lot of room for players of varying skill levels). You could build the sort of long-term, sustained PVP interest with that that LoL has.

[Triplefox]

A pledge to continue support could be interpreted in a number of ways:

• Empty marketing message of the "We do things right around here, cause we're the best" sort.
• Actual mismanagement of the product - some EA executive looked at the studio and technology to determine, in top-down fashion, the type of product they would make, without fully considering the implications of the game design.
• They may have the expectation that Darkspore can sustain word-of-mouth interest, supported by the updates. (This would still be mismanagement since a F2P product can take better advantage of word-of-mouth.)
• They plan to transition to the F2P product as an end goal. There are many ways in which they could transform the retail game in this way, and it would let them perform a form of price discrimination: The early adopters who pay up front get to play early, get single-player content, and will probably have bonuses later on, after the F2P transition takes place. People who come in later only play the multiplayer component. Something along those lines.

It's anyone's guess which of these would actually be true, since the inner workings of any big publisher are so driven by corporate politics. But I think an explanation based on  transitioning the retail product to a F2P one would probably be the most rational. It would fit with my first idea of the $60 release being used to address a core competencies issue.

As for copying LoL directly...it's not a startup so they can't pivot on a dime, they have to build a Plan and do Learning before they Enter The Market. Maxis probably isn't the group within EA that is charged with the goal of "make the best DOTA clone" or they would have marketed it that way from the start, and from the materials I've looked at I can't get a handle on what Darkspore is supposed to be, given that it's so far removed from the pedigree of Maxis.

The backbone of most publisher strategies is to jump on the bandwagon - to look at successful products and make sure they are positioning something similar and competing in the next business cycle:

Battlefield vs. Call of Duty
Rock Band vs. Guitar Hero
Dragon Age vs. Elder Scrolls
etc.

So what would EA's "DOTA clone" be, if not Darkspore? And is Darkspore positioned against something else, or is it an experiment like Mirror's Edge?

Here's one wild theory. We know that Valve is working on DOTA 2. EA has run the retail release for several of Valve's recent games. If they continue this partnership, then EA's "DOTA clone" will be DOTA 2. This, of course, implies that there will be a retail release for that game - which opens up the questions we had with Darkspore again; as well, it would make even less sense to go for retail.

EA has multiple ways to learn how to approach this genre of game and they may be trying several of them, hence it's hard to come up with any really solid interpretation of what they're doing and if Darkspore is related - like I said, I don't understand the intentions of the brand very well, I only have a handle on the monetization part of it.

Aside:

According to Wikipedia Maxis has been hosted in the EA Redwood Shores campus - now known as  Visceral Games - since 2004, which could explain why Darkspore has a broad resemblance to Dead Space in theming. But there is no Mobygames entry for Darkspore yet so it's hard to track down the team and see whether their background has had an influence, or if all these decisions were top-down.

[zircon]

Actually...

(a) HoN was free to play for awhile, pre-official release. Many people I know played for a long time prior to the release of the game (myself included.)

(b) HoN also has a microtransaction model for cosmetic stuff, like LoL. It's doing well for them, despite the $30 'entry fee'. They also do free weekends like Valve does with TF2.

(c) http://en.wikipedia.org/wiki/Heroes_of_Newerth#Reception HoN's score on Metacritic is about the same as LoL and it has been quite a commercial and critical success. 400k+ sales is nothing to scoff at, not to mention the avg. players per day is VERY high.

(d) Even though LoL might get somewhat more attention overall, HoN is in many ways a more competitive game - many people stopped playing DotA and switched to HoN, as it's "less casual". HoN has had a ton of tournaments since pre-official release, and continues to have a huge number of competitive events worldwide (with prize values dwarfing those offered by LoL, as far as I can tell.)

In other words, you're basically comparing Farmville to StarCraft. They're not the same game. HoN has done VERY well with its model, financially, critically, and in terms of community reaction. LoL gets more media attention due to its model, but that doesn't mean HoN was a failure. It's one of the most successful independent games of all time.

[synapse]

Yeah, HoN is doing well...  but Triplefox is right: LoL smoked them.  The critical reaction is unrelated to the business model.  In fact, if HoN really does have superior gameplay, the F2P would've only increased the community reaction due to more users.

This is a kickass thread with really clear and important points.  Thanks!

[zircon]

I didn't say community/player reaction, I said media attention. My point is that the critical reaction is pretty similar. They have nearly the same score on MetaCritic and both have won some pretty prestigious awards. On top of that, HoN's status as a competitive game is much more established than LoL's. The hype of LoL is because of its business model.

Has LoL really "smoked" HoN, which has over 200,000 players a day and 12.3+ million players total? According to a Dec 2010 forum post on the LoL forums (by an admin), LoL has ~3-4 million players (total). Again, LoL gets all the media attention, but HoN is actually extraordinarily successful - moreso than LoL by some measures.

[PowRTocH]

In other words, you're basically comparing Farmville to StarCraft.

 

[zircon]

I'm talking about business models. LoL has the same kind of model as Farmville. Free to play, microtransaction-driven, focused on bringing in casual players. HoN has the same kind of model as StarCraft. Single-purchase (with microtransaction options, all aesthetic), balanced for competitive play sometimes at the expense of the casual experience.

[synapse]

Actually...
HoN has done VERY well with its model, financially, critically, and in terms of community reaction.

I didn't say community/player reaction,

Anyway, Riot sold for several hundred million.  Like I said, HoN may be better in some regards, but that's not my point.  The point is that F2P is insanely good for reach when you have mtx that kill the initial sale price.

[synapse]

I'm talking about business models. LoL has the same kind of model as Farmville. Free to play, microtransaction-driven, focused on bringing in casual players.

You really think Farmville casual is the same as LoL players?  That's an insane comparison.  There are thousands of games that have 'the same kind of business model' as Farmville.  That's like comparing it to Pong because they are both electronic entertainment.

[zircon]

What would you say the differences are between the business model of Farmville and that of League of Legends? If you were explaining it to an investor, what would you say? Besides the platform being marginally different (can't play LoL on mobile devices, though both work on computers), what are the differentiating factors of the business models?

As for my post you quoted, I think you're misunderstanding me. I said that the community reaction to HoN and LoL has been about the same. I then said that the MEDIA reaction to LoL has been quite a bit bigger, and I proposed that it's because of the business model, since, all other things equal, both games are comparably successful (very recent $400million buyout of LoL notwithstanding). Even considering the buyout, it's difficult to say that is a measure of LoL being "more successful". The owner of S2Games is incredibly wealthy independently and funds the studio himself. So, he doesn't involve himself with investors, since the whole studio is his passion project to begin with.

Does that all make sense?

Anyway, the only reason I brought this up was to correct the misconception that LoL "smoked" HoN, since the latter has (AFAIK) a significantly larger playerbase, outstanding sales, a thriving competitive community, etc. The OP used the two games as an example of how F2P is far superior, but I think any indie dev that achieved the level of success of HoN (which itself has "smoked" the overwhelming majority of AAA titles in terms of sales, revenue, playerbase, etc.) would not be complaining. That's all.

[synapse]

It makes sense, and HoN is obviously doing a really kickass job.  I don't mean to take away anything from there success - I would love to be in their position.  My only major point is that F2P ends up getting a lot of reach and the benefits of that usually dwarfs the upfront price-point of games.

[bateleur]

Interesting thread.

It's worth noting when doing this kind of analysis that it's not actually valid to construct an argument along the lines of "LoL is free to play, LoL is successful, therefore f2p is a good business model". That would be like arguing that buying lottery tickets is a good way to get rich because this one guy won millions. Instead, we have to look at f2p as a market sector and ask things like:

* How saturated is this market?
* How risky is releasing a title using this model?
* Does the f2p model scale to higher budgets and team sizes?

Darkspore doesn't look to me as though it's targetting the same demographic as LoL at all. It looks very shiny, but the gameplay looks bland and not very strategic. Also, the cynic in me suspects it's just an attempt to recoup some of the vast cost of developing Spore and that Maxis have no intention of doing anything interesting with it.

[synapse]

The F2P business model is cross-demographic, so it doesn't really matter if Darkspore is a different audience than LoL.  And there have been a HUGE number of examples of how the F2P model is often superior to pay-to-play.  I don't get why there is still any skepticism about this.

[bateleur]

And there have been a HUGE number of examples of how the F2P model is often superior to pay-to-play.  I don't get why there is still any skepticism about this.

Yes, often superior, but very far from always.

Certainly I have no plans to release any f2p games and I've yet to play one which has held my attention for more than half an hour. As such, I am skeptical about f2p. Not because it's inherently bad, but because it seems to be mistaken for some kind of upgrade on the old demo/pay model.

[Triplefox]

F2P isn't interesting as a business model alone. It's a new "game lifecycle" that you can architect the entire design around, and because of that, it's ripe for innovative works.

The industry shift from arcade games to "home versions" was the same way - most of the early home products were full of arcade game trappings - points, lives, continues, highscore - that didn't work out of the arcade context. Those things had to be scrapped, but it took some really breakthrough designs to set a new mold for gaming.

I speak, of course, of the late 80s-early 90s, the period where we got a huge number of modern genres: Mario, Zelda, Metroid, Doom, Street Fighter, Dune 2... all games that exploited both the technology and the product model in new ways.

Fighting games, in particular, are interesting because they were able to transition to consoles cleanly, unlike other types of arcade games. You played games like Space Invaders or Galaga at home and it was like a "practice mode" for the real thing at the arcade - or you played Zelda and got to play the long-form exploratory game, but you couldn't bring that experience into the arcade. Street Fighter 2 enjoyed a strong presence both in the arcade and the home, and that was a big step forward.

So my conclusion is that there's probably stuff waiting to be made in F2P - great games that happen to be potentially massive hits - that we've never even thought of. Fascinating, and a bit scary.