Pay-to-win can be viable business model, says Gibson

Employing aggressive monetisation strategies and pay-to-win models can lead to commercial success, says Games Investor Consulting director Nick Gibson.

In his latest Develop column, Gibson said that despite a vocal minority in many games objecting to ‘sophisticated’ microtransaction models, most users were actually seemingly indifferent to certain business tactics.

Citing EA’s Battlefield Heroes as an example, he explained that despite an outcry against the publisher’s decision to begin selling gameplay advantages long after its initial release, churn and new registrations remained unaffected.

In fact, he said, pay conversion rates and revenues leapt upwards following the switch, with the game’s user base tripling to ten million as of January 2012.

Gibson also cited other examples such as BioWare’s freemium microtransaction and subscription hybrid for Star Wars: The Old Republic and Aeria Games’ Shaiya MMO as proof pay-to-win can work.

He said the latter game had an average revenue per paying user of $130-to-$150 a month, contributing significantly to Aeria’s annual revenues in the West of more than $150 million.

“It is difficult to escape the fact that numerous freemium developers have failed because they employed overly conservative or tentative models, while almost all of the top grossing freemium developers have flourished using pay-to-win and other comparatively aggressive monetisation strategies,” said Gibson.

“This does not mean that great commercial success cannot be achieved. However, there are plenty of game types for which these models are suitable and I would simply urge developers to overcome their discomfort, look beyond the vocal minority and investigate the commercial practices of the top grossing developers.”

The ethics surrounding aggressive monetisation in free games has long been debated by developers and consumers alike as free-to-play becomes one of the most dominant business models in the industry.

In April the UK Office of Fair Trading announced it would be investigating in-game purchases in games targetted at children, after expressing concerns some titles may use ‘unfair’ practices and pressure users into spending large sums of money.

You can read Nick Gibson’s full Develop column on monetisation strategies here.