Filed under: Gaming, Software, Developer, iPhone, App Store
GDC 2010: Ngmoco justifies the freemium model
As popular as Ngmoco and its games are, whenever we seem to post about them, the subject of their business model seems to rise to the top again. While they have emerged as one of the iPhone's top original developers, they've also lost a lot of fans by sticking with a model they call "freemium," even to the detriment of some of their most popular games. They release games for free, and then monetize the games by using microtransactions, selling both virtual items and virtual currency for real money.
We have a lot of questions for the company, and we'll be asking even more of them coming later this week. But first things first: we cornered Ngmoco producer Allen Ma here in their suite at GDC 2010 and asked him to try and tell us why Ngmoco is so insistent on "freemium," and how they feel about some of the adverse customer reactions to their model. Read on to hear why free-to-play, pay-to-play-more is the model that they're betting their business on.
When we post about Ngmoco, the first comment on the post is often "Here's Ngmoco trying to steal our money again." What do you think when you see a reaction like that?
It's very, very odd because it's strange to see those moments when our goal as a company is that we want to give you a full game experience for free. That's really what Eliminate is. You can log into Eliminate any time you want, and play the game against anyone else, for free. And it's Quake 3 on the iPhone! So it's very interesting when people go oh they're scamming us because they want us to pay ten to twenty dollars to play through a game experience. That really is not true. Because you can never pay for the game and get the same exact experience.
Well, it's not the same exact experience.
It is, it just takes longer to get there.
That in itself makes it not the same.
Well does it or doesn't it, right? Because I feel like there's a lot of games out there where you're paying to do something faster than someone else. There's a whole black market that exists in World of Warcraft where you can buy a level 80 character for hundreds of dollars. There's this market where people are willing to do that. We're just doing that in a way where it's legitimate and fair to everyone.
Well, but a lot of players frown on that even in World of Warcraft. A lot of players say if you buy a level 80, that's cheating, because the game is designed to be played the other way.
And in Eliminate, we would never let you buy a fully maxed out character, right? In Eliminate specifically, what we're allowing you to do, we're still allowing you to play the game, but we allow you to earn credits at a higher frequency than other people. You still have to play the same amount of games, you can't cheat your way to max level, but in actual total number of days to get there, you're lowering it.
I think another reason that people have an issue with this is that you guys, Ngmoco, have said that you're not even bothering with paid apps. There are some people who are willing to pay for a good experience, they're even willing to pay ten dollars for a solid, worthwhile, whole unlocked version of the game. And Ngmoco is saying we're not doing that, it's all freemium or nothing. What would you say to that?
We're just finding that, with paid, you can't make any money. There's only a handful of companies that are able to charge more than three dollars for a game. Gameloft, EA, Square Enix. Anyone else, they charge more than two bucks, no one's even going to look at their game. There's no way that we could have built Eliminate, for the cost per install or cost per SKU that we would have sold, to actually be able to make back that money in the timeframe that we wanted to. It's funny, because people are saying that they're willing to pay, but when push comes to shove, they're actually not willing to pay. That person that says they're willing to pay $10, they'll probably wait for it to drop to 99 cents before they actually purchase it. What they really want is a $10 game for 99 cents. What we're giving them is a $50 game for free. That's really our stance right now.
When you set out to make these games, even a game like We Rule, are you still thinking about it in the old model of, the premium experience for this is $50, or the premium experience is $10? Is there a "right amount" of money to spend to get the full game, or are you just saying the sky's the limit on the amount of money you should pay?
I think what freemium allows us to do is continually make the game better. So instead of going, OK, you as the user have to take a gamble to see if this game is worth x amount of dollars to you; instead, why don't you come in and try the game. If you like it, throw us a couple of bucks. When you do that, we know that you like that piece of the game, and we'll give you more of that, so that if you continue to like it, we'll keep designing these things, right? The ones that you don't like, we'll stop doing. For example in Eliminate, people really wanted co-op. So we're going to give them co-op, because they're going to keep playing the game. Some of them will continue to keep paying to play the game, and that's encouraging as a developer to keep making it better and better. And this is why World of Warcraft works, right, because users are willing to continue to pay to play the game. Unfortunately, not every game can be as excellent as World of Warcraft where everyone in the world is willing to pay for it. I could point you to a game like Dungeons and Dragons Online, which used to be a regular MMO and now is a free-to-play MMO, and they're saying that they're making like 60-80% more revenue as a free-to-play game than when it was paid. And they're now updating the game way more frequently than they did when it was paid.
So it sounds like you're not even thinking in the old model of, "here's this experience for this amount of money." You're thinking of it as a dialogue, where you pay us for what you like, and we'll return more content. You're not just investing two bucks to speed up your game, you're investing two bucks in the game and in future content.
Yeah. You're paying to support the game, and you're paying to support all of the free players that weren't willing to pay for the game. So when you think about it that way, you're paying so that we can maintain the servers that allow all of the people to play. So again, going back to Eliminate, our game that's working right now, you're paying for the game, so that you can continue to own people that don't pay for the game.
Great, thanks very much.
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Reader Comments (Page 1 of 1)
Sinecure Industries said 3:12PM on 3-10-2010
I find their model to be questionable but adequate. People will struggle not to pay anything, and will complain when they want something now but ultimately have to wait.
People on the iPhone are inherently spoiled, thinking that all games should be free or $0.99 - which is not necessarily what a lot of games are worth. On any other platform no game is that cheap, heck, most games are over $20, easily. If you put a game as that expensive on the iPhone it will be laughed out of there. Of course, exceptions such as GTA exist, but they are a strongly established brand.
I think the iPad will cause a schism of sorts, with higher prices coming with the higher quality the device is capable of putting out. Of course people will have to be dragged kicking and screaming into this business model.
Good on Ngmoco for figuring out a way to have people pay, a way to give away a game for free, and a business model that merits talking about all the time - free publicity, more users, more money. If only all developers could be so lucky, no? We have a game coming out in a month or so but we're going the cheap route because no one knows who we are. Even so, we're also working on an iPad game that we will be charging more for when it releases. We'll see what happens, eh?
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Urbz said 10:54AM on 3-11-2010
I just want to put something out there:
How much something is worth depends on how much people are willing to pay for it. You can't say "a $0.99 app is worth $4.99" if no one is willing to pay $4.99. If it started out at $4.99 and no one bought it and the price was subsequently dropped to, say, $1.99, and it is successful, then it is worth $1.99.
What sucks for developers is that for most people on the app store, consumers are only willing to spend a few dollars on a game, and this is (as someone below said) due to the crapware that fills the app store, lowering both expectations and the maximum price that someone is willing to spend.
On topic, though, I agree with you 100%.
"I find their model to be questionable but adequate," is exactly what I thought while I was reading the article! The company has found a way to monetize their products, and IMO you can't fault them for that if they are at once making them successful and still offering an initially free (potentially always free) product for users.
Dave said 3:26PM on 3-10-2010
I think that the developers need to take a close look at themselves here. I am totally willing to pay for a good solid game. The problem is that it is very hard to find a good solid game. 99% of the games I get are not worth 99c let alone $5. The feedback is skewed as people are given product for a 5 start review... I know it has happened with me. I was given gift certificates to purchase an app with the promise I would give a 5 star review.
So perhaps this model will work.... I get the game for free and if it turns into one of those rare gems then I pay for it...
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josh said 3:36PM on 3-10-2010
I don't see why anyone has a problem with the model at all - like Allen said, paying for additional content for a game which you *know* you like is preferable to paying the same amount of money before you know if you are ever going to play the game more than once.
Well done Ngmoco, and here's hoping more developers decide to adopt this strategy.
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Fred O said 4:18PM on 3-10-2010
Like it or hate it, it does give you the opportunity to play a game before you buy it. Everyone says they'd pay more for quality, but if that was true, life would be a lot different.
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Dave said 4:36PM on 3-10-2010
I think it is true, but finding that quality is not so easy. I have spent hundreds of dollars (maybe over $1000) on games for my iphone.... I'd say that I have spent less then $100 on games that I play more then a couple of times. It makes me leery to buy games at this point. Most likely the game will be a bust... at least that is my perception. I love the games that I love (of course) and would pay as much as $10 or more for those games, but it costs money to find those games.
Harkonian said 5:48PM on 3-10-2010
@Dave:
May I suggest these awesome games (in no particular order):
1) Plants vs Zombies
2) Angry Birds
3) Glyder
4) Harbor Master
5) Airport (or Airport Lite)
6) Field Runners
7) I Dig It
8) Spider
9) Flight Control
10) Canabalt
11) Tower Bloxx
These are all super games that were worth the price for me :).
Ryan said 7:46PM on 3-10-2010
I have been trying to wrap my head around this topic and why I generally dislike this model in gaming.
On one hand the model makes sense regarding low or no entrance cost and charging for further pieces or enhancements. At its core I understand and its logically sound.
On the other hand I think something is lost by going this route, and it bugs me. Games for me are enhanced by the shared experience of playing the game with others. Either actually with others in a multiplayer game or around the same time as others in a single player game. Having the same experience or at least put against the same set of game design and rules is important I believe in having a great shared experience.
Each layer of micro-transactions added too the mix and the deeper the micro-transactions get into the design of the game the more I think it detracts from the experience of playing.
Thoughts?
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Vertigo said 9:54PM on 3-10-2010
I agree with him that it's crummy how undervalued games are on the iPhone, but this isn't a good solution, in my mind.
I absolutely loved Rolando, but I'm not going to be playing any of their games going forward, because I hate the freemium model. I'm not saying it has no merit, I just don't like it and refuse to participate.
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Athzar said 10:20PM on 3-10-2010
Magic Mouse works lovely with my older white Bluetooth keyboard (the thick one with a numeric keypad). No battery issues. Fingers crossed for those who're having them.
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Athzar said 10:22PM on 3-10-2010
^^^^^Stupid 1Password, downrank please ;)
I have nothing personal against the freemium model in and of itself. I just wish they hadn't cancelled Rolando 3; Rolando 1 & 2 were really solid, probably some of the best games on my iPod touch.
We Rule is just bad though.
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duke said 12:07AM on 3-11-2010
I was cool with their little "freemium" experiment until they axed Rolando 3. I hope somebody else makes a blatant copy of it and also blows them away. Gameloft is usually good to go for that sort of thing.
Why can't they release Rolando 3 for free, first world only, each world after that $3? Then release extra world packs every month or so. I'd keep buying them!! $3/mo isn't too bad and they'll make a ton of cash.
I feel like a world without future Rolandos isn't a world I want to live in. When it first came out, Touch Arcade compared it to being the "Mario of the iPhone." Imagine if Nintendo, one day, said there will never be another Mario game. How sad would that be? And nothing could be done about it because they own the rights. Lame!
I feel like a piece of gaming history is being casually tossed aside so they can make an extra couple bucks. Rolando was revolutionary and helped jumpstart a brand new gaming platform. It will always be remembered. Sleep sweetly, my little Rolandos. Finger will always love you! RIP.
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oli said 3:12AM on 3-11-2010
Well this is a great article and well done on asking such good questions and really pressing them on the matter. Many of the questions you asked were exactly what i was hoping you would.
I now feel that i understand their angle a great deal more.
My problem is though that in the early freemium models, potentially great games like Touch Pets Dogs were ruined by an unbalanced system. You could barely play with your dog without having to purchase new credits. This is what got peoples backs up and as much as i really wanted to enjoy Touch Pets and Eliminate i couldn't. I also haven't even bothered to see if they have updated or improved the balance.
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TriangleJuice said 4:54AM on 3-11-2010
From Ngmoco's perspective: I get the fact that they want to introduce a new business model; a model that in their eyes is better for them ánd for their customers. They should, however, keep listening to the latter: if too much customers are complaining and they really care about them they should "adjust" their business model a bit - or at least on some occasions (Rolando, anyone?).
From their customer's perspective: I get the fact that some are complaining. E.g. I bought Rolando 1 and 2 from the app store. It was a great experience and well worth the money. However, since the freemium model was introduced, these "old" games were COMPLETELY left in the dust. The Plus+ network does remind me of my junk email box. They literally abandoned these games, which makes the fun part (getting to #1 ranking) not funny anymore. I used to hold #1. Now there are 2902 "better" players, if you know what I mean - kind of defeats the purpose.
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andrew said 8:19PM on 3-11-2010
Free apps can definitely generate revenue in the long run, espcially if it's a trial version that leads to higher premium priced apps.
Check out http://www.AppsFreelancer.com if you have an iPhone app idea, you can get a bunch of quotes completely free. Cool website.
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Nmaster said 12:51AM on 3-12-2010
I generally HATE this model.
For a while I was really, really, like REALLY into the game League of Legends. Then the retail release hit and out comes the freemium model. Prices were of course so jacked up that your options were either A) Obsessively play the game for months, spending hundreds of hours to unlock things; or B) Pay over $60 (it goes up with every new character added) for a game that should be $30. And that's just for things like characters, if you were to buy non-gameplay stuff like skins you'd be paying well into the hundreds.
I haven't played this game I once loved for months now. It's a "casual players pay double, obsessed players pay nothing" model. Sorry, I've got more games in my collection than I can play as is, YOUR game doesn't deserve hundreds of my hours no matter how good it is.
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