Monday, January 27, 2014

Gaming Profit Models

It's starting to feel like our wallets won't be getting much of a break in the near future, right? Let's face it, everything is expensive, and the economy is very low. So, let's consider how gaming companies make their money, shall we?

Let's start with some of the older models. The Subscription Model.

The subscription model is one we are all accustomed to. Even if you aren't aware of it. You pay a small monthly fee, and get to play as much as you want. The company takes the money, and provides content, and works to bring new content such as new quests, character models, armor, weapons, explorable areas, etc. So many new things they could bring you!
So where does this break?
There are a few different ways. The first, some hardcore players quickly run out of available content. This can happen at very various speeds, due to players interactions within the game. There are also players who will create their own server, and play there for free.

Admittedly, this is an old model, but it worked for a long time. Let's go over some of the math, just so we can get a good idea of how much money comes in from this.

14.95 per person per month, so $179.40 per player per year. That's a pretty fair amount of money, though I'm sure many people can spend that on one outfit for a night out. The issue, therefore, is the cost to the company for the server and content. Let's pretend, for just a minute, that the game is already fully developed. Additions may or may not come, but the game is playable, and the company wants to have 100 servers ready for players to enjoy. Running a server can get very costly. One of the best looking I could find was Singlehop, which costs $1,908 a year to run.

Your game, however, is awesome, and 5000 people sign up with a yearly subscription, paying the full year up front. This gives the company about $89,700 for the year. The costs of running the game is about 1900, so 87,800 is profit for the company. Bonza!

But, making more money requires people to continue signing up, and they will want more content eventually. So it adds up, but you can see where lots of money can be made here.

Then, Facebook games started hitting the market, giving players the ability to play for free, and get upgrades that they can buy with just a small amount of money. This is called micro transactions, and they can get very irritating very quickly. This is a new model, and my personal opinion is that it hasn't been fully fleshed out yet.

Recently, there have been multiple incidents involving micro transactions, such as Apple refunding money from children's in-app purchasesEve's recent micro transaction controversy, and even GTA online. All of these revolve around micro transactions and people being willing to buy these things.

The micro transaction model isn't something entirely new. It's newer, having been established more recently than others, but it continues to grow purely because we let it.

How can we get our games back? There are a few ways, and right now it's important to take a good hard look at them.

Don't pay for in app additions. It's that simple, but it's also that hard. App developers make sure to make you want to pay them. The games can take months to play without shelling out a few coins, or be really lame. Developers do this so you feel you don't have much choice. Stop buying into it. I don't care if you get 100 gems for 9.99. These gems have no real value.

Demand full games. Open your mouth and be vocal. Players have won multiple battles with companies recently. Look at the Xbox One controversy and how it played out. WE CAN DO IT AGAIN!

I'll be posting about net neutrality later this month, and that's going to have a serious impact on gamers, and how we respond to some of these models, so stay tuned for that!

This was a long post, and very thinky, and I thank you for sticking with it!

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