The Ngmoco Sweden GM believes in freemium's future, and fears for the doubters...
It would probably take something extraordinary like a ten-year gardening leave contract, concealed in confidentiality agreements, to prevent Ben Cousins from discussing the demise of console gaming.
He isn’t simply a director who resigned from Electronic Arts. He is a sharp and outspoken businessman who, since 1999, has accumulated privileged knowledge of the traditional games sector across two console generations.
Now he’s gone; fleeing to the mobile and social sector that he, rightly or wrongly, portrays as if it were a lifeboat escape from a sinking tanker of discs and boxes.
Unlike the executives that shuffle sideways from one traditional publisher to the next, Cousins has abandoned that side of the business entirely. Today he runs the Sweden division mobile group Ngmoco, owned by Asia’s casual games titan Dena.
He can say what he wants, and does.
Tomorrow he will be in London to keynote the inaugural F2P conference, to discuss the past and future of freemium games.
In the Q&A below, Develop discussed some of the themes he will be speaking on.
Tell us more about what you’ll be discussing during your F2P keynote.
I’ve been working in freemium since the 2006 on PlayStation Home. We really didn’t have a clue what we were doing back then and freemium was just happening in Korea.
I think looking back it is easier to forget how completely different the gaming landscape was in 2006. We had this almost completely predominant packaged goods business back then, and all the concerns were about making great 3D graphics, building multiplayer into your games. The main subject of discussion was about sequels and lack of innovation.
At that time I was working with a team in Korea for Battlefield Heroes, which was a real learning experience.
Korean game developers are often seen as being far ahead of the curve when it comes to online content. Was it an eye opener to see how they operated?
Yeah it was. Some of the things they said about freemium and social at the time have completely become commonplace these days. They originated this idea of releasing your game and building it in front of your customers – to shape your game from community feedback.
That was a completely new and radical idea for us. It took us a while to get out of our old-world mentality and adopt to these new ways of thinking.
But the western world in general was behind on this. Even when we announced Battlefield Heroes, I think in 2007, there was a lot of skepticism about this type of game.
People didn’t agree that this free-to-play model would work, even though it was working amazingly in places like Korea.
These days, of course, we have numerous huge free-to-play games like Team Fortress and League of Legends and the rest.
It’s been really interesting to see how these perceptions have changed. Really without realising it, the west now has this incredibly popular and new way of playing games.
Would you agree that the frontrunners of the free-to-play business model are of a certain genre? Can freemium be applied to many more game types?
Well ultimately it’s a business model that is separate from the platforms they’re hosted on. Social games, or Facebook games, are one variety. Then you have other games like League of Legends, and freemium on mobile is becoming a big business too.
It’s true that the headline-grabbing free-to-play games are the ones that you see on Facebook, but there is a whole industry behind this model.
The only platform where freemium isn’t making a huge impact is on the consoles and that’s because the console holders, as I understand it, are scared of it. They don’t want to get involved in free-to-play because it could break their business model.
There is the argument that free-to-play builds direct communication lines between players and developers, and so it takes the platform owners out of the equation, which is something they want to avoid.
Yes it’s a very dangerous attitude for them, I think. There will be a perception within these companies, because they are very inexperienced in this area, that they will be thinking that if they allow a high-quality free-to-play experience on their console it will eat into sales of premium games.
They will be thinking they make more money, from a licensing fees standpoint, from packaged goods than from virtual currency.
I think that’s misunderstanding the way the business model works, to be honest.
Perhaps at some stage they’ll have to adopt to this model, if it continues to grow in popularity and, perhaps, allure more of the core market.
Yes it will be ‘adopt or die’ for the console holders. I spoke at GDC about the challenges that the traditional platform holders face as the likes of Google and Apple and Facebook – which are really wealthy companies – move into their territory.
These new competitors have already opened up their platforms. I’m not sure anyone at Apple really wanted iPads and iPhones to be so closely linked to games systems, but they opened the platform and the business model and it thrived. I mean, I think about half of App Store revenues last year were from free-to-play games.
I think the most recent study claimed it was 70% of all revenues.
And I think that number will only get higher. I think it will get to ninety per cent and rise even further. This is essentially a economics principal known as reduction to marginal cost, which theorises that if something costs nothing to distribute then someone in the marketplace will try and sell it for nothing to gain customers.
Maybe that’s what the platform holders are scared of. Maybe they think that if someone creates a Call of Duty game that’s free-to-play then they’ll lose all the licensing fees associated with sales of the premium edition.
There is still a market desire for premium content, though, and surely certain freemium models can distort that?
I don’t think so, no. I can give you many examples of freemium games in Asia that now have made more than a billion dollars in lifetime revenue.
I would guess that League of Legends will be a billion dollars in lifetime revenue as well. As soon as people crack the code in terms of making money from free-to-play, then you’ll once again get this arms race for quality much like we have now.
I think there is a good chance in ten years time that freemium games of incredibly high production values will be the norm.
Do you see this as the predominant model for all games?
Certainly the PC games space is already accepting it, and freemium is already dominating the mobile space too.
This trend will continue on all platforms that are open, and the console holders will have to ask themselves serious questions. Do consoles become the only place where you get that kind of experience, or do people start moving away from consoles onto other platforms because they aren’t adapting, and if that were to happen, will games consoles even be a viable business model?
There’s a very interesting few years ahead of us.
What interests Develop in particular is the re-education of the game development workforce. You can see it in the UK right now; there are so many traditional triple-A developers now suddenly running small independent start-ups discussing ARPU and player retention tactics. They used to be obsessed with feature lists and multiplayer.
I was talking about this recently. The UK is in a really funny position. Sweden never really had much of a packaged goods industry. DICE is a big studio and Avalanche is fairly sized, but there is now a big workforce building games because of non-console platforms.
What the UK games industry tends to not have is a vast entrepreneurial culture, with established ties to venture capital firms. So Britain’s almost stuck between the old and new, and you wonder how it’s going to get out of this glut.
I mean there aren’t any huge start-ups in the mobile and social scene in the UK -
Well there’s Bossa, there’s Mind Candy, there’s Ustwo, Makie Labs, Inensu-
-I remember people were saying Runescape was going to be the next big thing, but they haven’t really hit the heights of what, say, Bigpoint has. There hasn’t been that social or mobile games sensation in the UK, and I just hope that happens.
But going back to the re-education of games developers, as you call it, there is a trend in any business sector that goes through a revolution where the most senior people stick to what they know and the young people are quicker to adopt to a new model.
I think it’s a shame, really, that a lot of people in the traditional gaming industry seem very resistant, almost aggressively resistant, to making free-to-play games.
There was only a few companies that successfully transitioned from the arcade to console business. Nintendo did it, Sega did okay, and then you have the likes of Midway and Atari who never got in their stride.
Did you see Iwata’s speech at GDC last year?
Some of the things he says makes me really fear for the future of Nintendo.
I think there is a cognitive dissonance at Nintendo in terms of getting their heads around what’s actually happening to the industry, which is such a shame because they make such fantastic games.
With the App Store, what tends to happen is the good games rise to the top. Under Nintendo’s system there is more negotiation and arranging marketing and promotion.
From a user-perspective, when you go on the App Store and you look at the top selling games, most of them are good quality and good value for money.
I actually feel more optimistic about the future of PC games than the consoles, to be honest.
Because the new platforms are moving directly onto the console’s market. One of the reason why consoles sell 170 million units is because of the many causal players who buy just one or two games per year.
Those casual players, who are the kind of engine room of the console economy, are now interested in social or mobile games.
I just think the platform holders’ billion dollar investments in new hardware is no longer sustainable.