Explaining the Freemium Model

Jul 27, 2015 | 1 Votes by Aethyna 8 rate Your vote
You've heard of the words free-to-play and freemium... are they different? What is actually freemium? If you're interested to, well, read on to find out! WWGDB - Explaining the Freemium Model

If you have not heard of the terms free-to-play or freemium before, well, you’re probably not much of a gamer. These two terms refers to the revolution that games, particularly online and mobile games, have experienced over the past few years. It is very impressive that this particular type of pricing strategy has managed to take hold and spread so rapidly, but what does “freemium” actually refers to and what does it truly mean?

Let’s start off with a quick definition of the word “freemium”. Freemium comes from both “free” and “premium”, which some may consider as contradicting words. But somehow, by providing a core product for free, game developing companies can then generate revenue to cover back their expenses and more by selling premium items to just a small percentage of the free users. With such a business model, it’s kind of a win-win for both the developers and the players.

Freemium is often considered as a subset of the free-to-play genre, and can be grouped alongside demos or sharewares. However, there’s a big difference between “freemium” and “free-to-play”. For freemium, as mentioned above, players are given a full functional game to enjoy, but will have to pay microtransactions to access extra content. A prime example of this is Candy Crush Saga.

However, for free-to-play games, the full games are completely and truly free and you can have access to everything in the game without needing to spend a cent. Even if you want to pay to progress faster in the game, you can’t since the game doesn’t support microtransaction and doesn’t provide a cash shop. One such example is Track Racing Online.

Runescape


Now that you understand the difference between the two, perhaps you might enjoy reading about the history of “freemium”. The one of the first games that utilizes the freemium models are mostly browser-based games. Some prominent examples include the hugely popular, browser-based MMORPGs, MapleStory and Runescape. Back then, freemium was almost unheard of and the release of these games has attracted plenty of gamers, particularly those from South Korea, Japan and China, to the games. After all, who doesn’t want to play in a free game while having fun with a whole lot of other players? Servers were frequently full and paying members will usually get priority queuing or access to a private VIP-only server that is not that congested. As an avid free-to-play player of Runescape back in the days, I can personally attest to this.

Despite being free to play, these games have managed to rack up millions in profit and that has elevated this unique business model into the spotlight. More companies are experimenting with the model, and larger and well-established companies and games are starting to realize the potential of this model. In the late 2000s, many subscription-based MMOs started the shift to the “freemium” model... for better or worse. Some famous examples include Lord of the Rings Online, Champions Online and Age of Conan. Companies like Valve also went ahead and made their MMO shooter, Team Fortress 2 , into a freemium game and this is one of the reasons why it is still, despite the years, one of the top MMO shooters of all time.

In addition to the increase in profits, going “freemium” is often considered a great way to counter piracy. After all, the game is free-to-play... what’s the point of pirating the game now? Though, in return, the freemium model has given rise to a whole new and pretty profitable industry that “farms” in-game items for you or trading your real cash for in-game cash. If you play MMOs frequently, you’ll definitely have encountered these oddly named “players” (they are probably bots), who are spamming adverts for these sites.

Lord of the Rings Online


Freemium may also be the saviour of a couple of older and deteriorating games as well. This is because, by making the poorly-performing (not due to bad gameplay but mainly due to age) games free-to-play, it’ll be like giving the game a new breath of fresh air. New players will flock to the game and give it a go... since it’s free and all.

Due to the advantages that freemium brings, many games have adopted the model. Even games that are previously standalone have had freemium versions of the game made just so the company can cash in on the profits and also give their games more exposure. The success of freemium is placing quite a lot of stress on the few remaining subscription-based games, such as World of Warcraft, though they are still doing quite fine as of current.

So, if you’re interested in reading more about “freemium” in detail, there might be a follow-up article that will describe this incredible business model more in depth and explain how it works – i.e. how a small percentage of the “spenders” can not only cover the costs of a plethora of free-to-play players and also earn the company more profit. As usual, don’t forget to vote for the article and do check in regularly if you’re interested to learn more!

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