1. Nicholas Lovell
GAMESbrief
Edinburgh Interactive Entertainment Festival
August 11th 2011
NEW BUSINESS MODELSHow to make money giving your game away for free

2. Nicholas Lovell, GAMESbrief
Author, How to Publish a Game
Director, GAMESbrief
Clients include Atari, Channel 4, Channelflip, Firefly, IPC, nDreams, Rebellion and Square Enix
@nicholaslovell / @gamesbrief
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5. Free It WORKS
6. Free has been hugely successful
Zynga:
filed its S-1
$600m + in revenues
Valuation expected >$10bn
Tiny Tower:
2 men, four months
Currently #12 in the top grossing chart
Conservative estimate: $3m revenue in first 12 months
(PS: # 1, 3, 4, 5, 6 are free too)
Bigpoint
200 million in revenue
650 million valuation
7. Free is a marketing technique
Free means you have a lower barrier to entry
Free means more people try your game
Free gives you players; players are potential customers
Its all about the conversion from free users to revenue generating users
If you are not free, you are competing with free
Advertising-funded
Pirated
Free from someone else
8. Why does free work?
9. The price/demand curve
In an era of physical distribution, you need to set a single price
For games, around $40
PRICE
Its great
value, Id have paid much more
Thats too expensive for me
Demand
10. Now we let users set the price
Hypothesis: Allow users to choose how much they spend on your product, and your revenues will go up
PRICE

DDO revenues up 500%

11. LOTRO and Everquest II showed a similar story$3
$5
$5
$1
$5
$3
$10 MMO subscription
$3
$3
$3
$1
$5
Demand
12. WRONG!
13. Allowing users to choose how little to pay is not the secret
We all knew that 95% of users played for free
We now know that 80-90% of revenues come from 0.5% of users
PRICE

Spending $50 - $10,000 or more

Demand
Free: 95%
Paying: 5%
80-90% of revenue from 0.5% of users
14. Find the whales
15. An iOS example: Pocket Frogs
16. An iOS example: Pocket Frogs
17. Content is the hardest thing to sell
18. Its deeper than that
19. People pay for status, for emotions, for feelings, for progress
People will pay to:
Fit in: everyone else has got a Santa Hat, I want one too
Stand out: Look at me with my twin flaming swords of Poinsettia
Fit in AND stand out: Hey, were the guild where everyone wears purple
Build friendships: Here, let me give you some flowers as a sign of our friendship
Flirt: Its the Internet. Of course its about sex.
20. Some basic rules of free
21. ARM yourself
Hoping for the best is not good enough, you need to ARM yourself
ACQUISITION: How do I get people through the door cost-effectively?
RETENTION:How do I keep people coming back for more?
MONETISATION: How do I build money-making strategies into gameplay
Most developers focus on one of these
All three are really important
22. The rule of 0-1-100
Make it enjoyable for people to play for free for ever
Make it easy for people to spend $1
Make it possible for people to spend $100 per month
23. Be generous
Give, and it shall be given unto you Luke 6:38
24. Youre not making films anymore
25. Free is flexible
26. Are free / freemium / F2P games evil?
27. NO
28. F2P = evil (or not)
The business model is designed to take money from you
So is the coin-op, or the MMO, or the DLC
Some people spend lots of money on it
You get lots of content for free
Instead of paying for access, you pay for the experience that you VALUE
Theyre not real games
Grow up.
Oh, and the games will grow up too
They dont have enough skill / fairness / challenge
Well dont play them then
Just because you dont like them, doesnt mean they are evil
29. Some valid concerns
How much money is it ethical to take from a single player, in a single month?
Are microtransactions appropriate for children?
Are there certain games that arent suited to free-to-play
I say no
There may be some players who arent suited to microtransactions
Free games require certain infrastructure and expertise that may challenge the indie developer
Will it stop working?
30. Morph a thought experiment
Business model 1
Make an iPhone App
Offer a Lite version and a 99 game
Business model 2

Make a free iPhone App

31. Incorporate ads for a limited edition, 1,000-only print of the original Morph, framed for your wall for $999 32. Conversion rate of 0.1% = same revenue(oh, no 30% to Apple)