Business Models

by Mike Masnick

Filed Under:
business models, free, lotr, mmo


Oh Look, By Making LoTR Free Online, Revenue Shot Up

from the gee,-who-coulda-predicted-that? dept

About a year ago, we highlighted how the online MMO based on Dungeons and Dragons had gone free after trying to charge for a while, and showed how going free didn't mean you lost money, but it could work well as a part of a business model. And, indeed, reports from earlier this year showed that revenue had increased 500% for the "free" game -- once again highlighting how "free" does not mean "no money." In fact, the success of this free effort was so well received that Turbine's owners agreed to let them open up the Lord of the Rings MMO as well.

And, as a whole bunch of you have been submitting, once again, it looks like, by going free, they've been able to make a lot more money. In just a few months, they've doubled their revenue by embracing free. The game is now free to play, and so a lot more people are playing -- and many of them are choosing to then pay for certain additional offerings within the game. Once again, the point is the same, if you recognize where and how free fits into your business model, you can make a lot more money. No one is saying that everything is free or that anyone should stop making money. It's all about understanding the economics of how to use free to create a more efficient market to make more money.

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  1. identicon
    Anonymous Coward, 11 Oct 2010 @ 1:20pm

    Now if only WoW would try this...

    reply to this | link to this | view in thread ]

  2. identicon
    Anonymous Coward, 11 Oct 2010 @ 1:34pm

    I like where you're going with this, but an increase in revenue does not mean an increase in profit.

    What do all the free players cost them in resources? Bandwidth on this scale isn't cheap, not to mention processor power and redundancy.

    show what the impact is to the bottom line of an income statement and maybe more companies will start buying into the idea.

    reply to this | link to this | view in thread ]

  3. identicon
    Jon B., 11 Oct 2010 @ 1:40pm

    I'm not an MMO'er but my MMO-playing friends refer to going free-to-play as a death knell for an MMO. Making the game free to play will change the type of people willing to play the game and therefore alter the dynamics of the community in a way that may scare off the more mature players that have money. Also, giving an an in-game bonus to people who pay extra just means that those who can afford it have a competitive advantage. I've never been a fan of giving a competitive advantage to people just because they have more real-world $.

    The immediate jump in revenue is expected, but I doubt it lasts.

    What's funny here is that the things that aren't scare (copies of the game, in game items) are the things that cost money while the the things that ARE scarce (bandwidth, connections, in-game player space) are the things they're giving away. That sounds lop-sided to me.

    reply to this | link to this | view in thread ]

  4. icon
    Derek Bredensteiner (profile), 11 Oct 2010 @ 1:45pm


    WoW does do free as part of the business model, no? They just insert it at a different point. You pay to play more than 10 days, instead of pay to play with more in game stuff.

    I don't think their small monthly fee is a barrier to entry that prevents people from playing their game. The time to download and install, the system requirements, the learning curve, the time commitment, those are larger barriers that I would think they'd want to focus on first.

    reply to this | link to this | view in thread ]

  5. identicon
    Xythlord, 11 Oct 2010 @ 1:47pm

    Just because it's free....

    doesn't mean it will work, but it still relies on a smart business model. I have played LotRo since it's change to F2p and while it is enjoyable, it doesn't feel like you are missing out by not paying. What they do offer as premium content is game enhancing options to make it easier, faster, etc.

    Another MMO, Everquest II has also recently went to a free-to-play model, with the idea that they exclude as much regular content as they can get away with, and charge for everything else. One is inclusive and one is exclusive, and it will be interesting to watch and see which philosophy will prove to be the more economically viable one.

    reply to this | link to this | view in thread ]

  6. identicon
    Anonymous Coward, 11 Oct 2010 @ 1:50pm

    Still charging monthly fees though

    These guys are still charging their subscription fees, so may be some of that revenue should be reduced to account for cancellation fees coming up.

    reply to this | link to this | view in thread ]

  7. icon
    Murdock (profile), 11 Oct 2010 @ 1:51pm


    Unlike several asian MMOs most use Free2Play MMOs sell items in game that do not give an advantage over another player when it comes to damage, healing, stats, etc. Most everything that you can pay for in-game is a cosmetic or ease of use type of item. New sparkling armor with no stat bonus over non-sparkling armor. More character slots, mounts, etc.

    Very few US MMOs sell "power ups" things like "+42 Sword of Smiting" "Fire resist armor" etc.

    This helps prevent the rich=powerful situation.

    reply to this | link to this | view in thread ]

  8. icon
    Jay (profile), 11 Oct 2010 @ 1:53pm


    LotR isn't the only one to do this. Nexon games has been doing this for years. Maple Story, Dungeon Fighter...

    With the same concepts in those Korean based games, they've come to embrace anyone wanting to play the games and have actually strived in the new markets that they've created. Last I've checked, Nexon now has a 3D game that's free to play that looks quite impressive.

    (No, I'm not a rep for them, but I have played their games and found them to be just as addicting as WoW can be.

    reply to this | link to this | view in thread ]

  9. identicon
    Del Boy, 11 Oct 2010 @ 2:04pm

    Re: Jon B.

    I agree with most of what Jon said, except it sounded a bit off at the start:

    My MMO-playing friends refer to going free-to-play as a death knell for an MMO. Making the game free to play will change the type of people willing to play the game and therefore alter the dynamics of the community in a way that may scare off the more mature players that have money.

    That statement kinda contradicts the rest of his post... but I get where he is coming from.

    Me as a player:
    Look at Guild Wars as a model: Free to play online. With the addition of yearly additions to the game which you buy. Worked so well that there is going to be a free to play sequel.
    As an early EQ player I'm used to pay n play & I have done the whole guild wars thing, They feel different not because of quality in gaming or the free versus pay options.
    Its the grind of pay as you play... these games are always targeted at monotonous leveling, kill, med, repeat. Its community is based on status on how well you manage the toil it also keeps you hooked into those pesky monthly payments.
    Guild wars caters for a broader level of player & rewards you based on tactical & team abilities.

    I've tried WOW & its EQ (Everquest)all over again - I doubt now with hindsight that I would want to put so much time into a game just so you can flash off a shiney rare armour set in the community. I have seen marriages destroyed by the pay n play pay so you will play & progress is slow (Makes more cash long term) - so a death siren on pay to play MMO is maybe not such a bad thing.
    Short term making the pay to play mmo's free will increase revenue but long term it won't work out so well I reckon ... not without some other method of topping up the income - Like Guild Wars model.
    Money doesn't make a quality community - it makes snobs.

    reply to this | link to this | view in thread ]

  10. identicon
    Anonymous Coward, 11 Oct 2010 @ 2:21pm

    No ones mentioned the real elephant in the room...Eve.
    Pay to play, and they pay and pay and pay. most serious players have more than one account. They spend ungodly amounts of money. (and every once in awhile a good scam will net someone ungodly amounts of real world currency).
    Granted, it's a special case, nearly a special psychosis all its own. Wow breaks up marriages? Eve has people in the bushes outside someones home, ready to cut the power on demand, so that the enemy titan is floating free for the ambush.

    reply to this | link to this | view in thread ]

  11. identicon
    Anonymous Coward, 11 Oct 2010 @ 3:03pm

    Re: Re:

    WoW had relatively low system requirements for a long time (that may have changed). The learning curve is the game.

    The barrier for me (and many other former WoW players) to play WoW again is the monthly fee. LoTR and other MMOs are slowly finding this out.

    However, I've tried several similar F2P games. I want to have an MMO on the backburner, but I don't have enough play time to justify $15/month. But a F2P system that lets me play as I go works great. When the time comes for me to pay, I don't mind, since I've enjoyed the game for so long for free.

    The best part is that even free players add value, since they increase the enjoyment for the paying players.

    reply to this | link to this | view in thread ]

  12. icon
    R. Miles (profile), 11 Oct 2010 @ 3:18pm

    Not surprised.

    This is what happens when people stop treating content like it's the product.

    When will people learn: content sells products.

    Not the other way around.

    Nina, a cartoon please. ;)

    reply to this | link to this | view in thread ]

  13. identicon
    TDR, 11 Oct 2010 @ 3:54pm

    Just to clarify, Del, GW isn't truly F2P because you have the buy the game initially (and its other campaigns/expansion if you want them) before you can play it. After that, yes it's free to play as much as you want, which is one of the many things I like about it. It's the only MMO I've ever played. At least until GW2 comes out. That game is going to pwn everything else in sight. Seriously. Looks to literally turn MMO conventions upside down and inside out. Which is cool. :D

    reply to this | link to this | view in thread ]

  14. icon
    Yeebok (profile), 11 Oct 2010 @ 11:16pm

    Re: Re:

    insofar as MMOs go, I would argue that Guild Wars has it right. Pay for the game, play for free (for ever). Addons, extra storage etc cost. You can play quite well without them, but for some players, they feel they need the extras. I won't play WoW -because- of the monthly fee, and it's not because I can't afford it.

    reply to this | link to this | view in thread ]

  15. identicon
    Old EQ Player, 12 Oct 2010 @ 3:51am

    Pay model still exists, madness.

    I have stopped playing Everquest when the level cap was 70.
    Several years ago.
    I had a level 70 Wizard & Beastlord. It took me 3 years to build these characters up, the leveling was so slow & I had only a limited amount of time in which to play, Family, Friends & work always came first.
    I quit because I realised just how little I was getting from the game in terms of real life advantages in the real world.

    I still have 1 friend who still plays it. His hours of play are about 5 YEARS out of the 8 or so EQ has been around.
    No surprises then that hes single - no job, 37 & lives with his mum.

    When I visit him he is always on a raid & has very little time for me while I'm there.

    So I re-activated my account for a month just to see if the game still had any interest to me. My friend invited me into his guild which lead me to a raid that night.
    I arrived at the raid meeting point then spent 3 hrs waiting on everyone showing up, getting ready etc...
    I sat there numb watching everyone floating up & down in levitate spells. It all came back to me in a rush.

    It was like watching a film you have seen a million times but never really liked. I found the blank wall next to my monitor more interesting to stare at.

    Finally the raid got underway... 10mins later 60+ dead people & a promise of another 3 hr wait while everyone recovers....

    I logged off. Deleted the EQ folder, snapped the disks & felt so much better for it.

    Never ever ever ever again. NeverQuest.

    Guild wars rocked as I could log in play a good game no matter what level I was, then not play it again for months without falling behind my friends so badly that it was a problem.

    Guild wars 2 - promises a blend of the original GW & current style MMO's like WOW. Free to play - and most importantly no need to get 30hrs a week in just to be cool.

    reply to this | link to this | view in thread ]

  16. identicon
    tuna, 12 Oct 2010 @ 5:31am


    The D&D online basic game is free to download. We game as a family and have been enjoying the game without spending a penny.

    If we get to a certain level we may buy the expansions but I think the basic game will probably take us a year or so to get through.

    I canceled my WOW account almost immediately after downloading this.

    reply to this | link to this | view in thread ]

  17. identicon
    TDR, 12 Oct 2010 @ 6:32am

    Just a thought, but how would one put an MMO into the public domain? Since it's continually in use year after year, how would that work? I was just wondering, that's all.

    reply to this | link to this | view in thread ]

  18. identicon
    Magnificent Nobody, 12 Oct 2010 @ 9:15am

    MMO Addiction.

    I'm surprised no one has mentioned the increased correlation we're beginning to see between MMORPG's and the drug trade. People were already starting to complain about the addictiveness of video games, MMO's in particular. Giving away "free samples" in the hopes of creating buzz around your product is nothing new. Give the masses something to become addicted to, then profit from that addition down the road. It's a smart, proven tactic. If Blizzard had done this back in 2005, the wife and I probably would have stayed with WoW for much longer.

    reply to this | link to this | view in thread ]

  19. identicon
    Bengie, 12 Oct 2010 @ 10:24am

    Re: Eve

    I only played Eve for a bit, but in Eve you can buy game time in game.

    Several people that I met who only played for a year or two were able to create enough in game currency in 5 days to purchase 30 days of game time for all 3+ of their accounts. 3 seems to be a magic minimum number. One toon to mine, one to move stuff and one to defend.

    reply to this | link to this | view in thread ]

  20. icon
    Jay (profile), 12 Oct 2010 @ 3:22pm

    Re: MMO Addiction.

    reply to this | link to this | view in thread ]

  21. identicon
    Magnificent Nobody, 13 Oct 2010 @ 4:07am

    Re: Re: MMO Addiction.

    Not exactly what I was trying to get across, but interesting nonetheless.

    After reading the comments, I went and did some research on D&D Online and Guild Wars. The free to play aspect is definitely tempting. If Fallout New Vegas wasn't coming out next week, I'd probably give D&D a try.

    reply to this | link to this | view in thread ]

  22. icon
    jsf (profile), 13 Oct 2010 @ 7:44am

    Re: Re: Eve

    I have played Eve off and on since shortly after it's launch, and yes most serious players do not spend a dime on the game. Eve has a mechanic where you can purchase Game Time Codes from other players using in game money.

    If you have the time, knack, luck or combination of all three you can easily make enough in game money to pay for 2+ accounts.

    I know a couple people that got lucky enough early on that have 4+ accounts that they have not paid for in over 4 years. Even as a relatively casual player I was able to pay for one of my two accounts with in game money after about 4 months of setting up my money making scheme in game.

    reply to this | link to this | view in thread ]

  23. identicon
    Ilfar, 24 Oct 2010 @ 1:02pm

    Re: Re: Re: Eve

    With my setup I can pay for 14 accounts with just over 20 hours of play time. I prefer to pay for my accounts with cash and use the ISK to buy new toys in game though.

    reply to this | link to this | view in thread ]

  24. identicon
    Maxwell Evans, 3 Feb 2011 @ 3:52pm

    Re: Re: Re: Re: Eve

    EVE's player base is reason enough to play the game, to be honest. I'd probably pay my subscription even if EVE was little more than a chat room.

    Of course, if it was just a chat room, the player base wouldn't be nearly so excellent.

    EVE weeds out the young and the socially inept with a certain iron ruthlessness. You must make friends in the game to survive, let alone progress, and experienced CEOs and Executors have information nets that ensure they'll know pretty much everything you've ever done on the day you apply to join their ranks.

    reply to this | link to this | view in thread ]

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