Platform holders ‘running scared of free-to-play’

The free-to-play model is not being pursued by console manufacturers due to deep-rooted fears that it would empty traditional revenue streams, a director at Ngmoco has said.

Ben Cousins told Develop that consoles are “the only platform where freemium isn’t making a huge impact because the console holders, as I understand it, are scared of it”.

Cousins’s theory – that Microsoft, Nintendo and Sony suffer from anxieties over a freemium revolution – is outlined in a new interview with Develop, published one day before his keynote speech at the inaugural free-to-play conference in London.

“There will be a perception within these companies, because they are very inexperienced in this area, that if they allow a high-quality free-to-play experience on their console it will eat into sales of premium games,” he said.

“They will be thinking they make more money, from a licensing fees standpoint, from packaged goods than from virtual currency.

“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.”

Chief executives at the three platform holders rarely disclose their position on the freemium business model, where games are distributed gratis and revenues come from the sale of in-game items.

Sony appears to be more willing than Nintendo and Microsoft to embrace freemium games, hosting several such titles on PlayStation 3.

But Cousins says more needs to be done: “It will be ‘adopt or die’ for the console holders”, he said.

Cousins is particularly critical of Nintendo.

In reference to Satoru Iwata’s speech at GDC last year, where the Nintendo president warned of mobile and social damaging the value of premium games, Cousins stated: “Some of the things Iwata 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,” he claimed.

Freemium ‘the future’

Cousins, who started working on free-to-play projects back in 2006, believes “there is a good chance that freemium games of incredibly high production values will be the norm” by 2020.

“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 premium 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?”

Change is inevitable, according to Cousins. In the interview he referenced previous business shifts that the games industry was subjected to, claiming that it was the most adaptable that survived on.

“There was only a few companies that successfully transitioned from the arcade to console business,” he said.

“Nintendo did it, Sega did okay, and then you have the likes of Midway and Atari who never got in their stride.

“I actually feel more optimistic about the future of PC games than the consoles, to be honest. New platforms are moving directly onto the console’s market.

“One of the reasons 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 are no longer sustainable.”