Piracy and Four Currencies: Pay What You Want and Free-to-Play

Pay What You Want (Pay What You Want)

“I don’t mind choosing my price for downloading,” is an anonymous.



Today I want to apply the “four currencies” model to the “pay what you want” phenomenon. As in the case of piracy, in this case the observed results do not correspond to what the current opinion tells us, and I use the theory of "four currencies" to explain the discrepancy.



A brief introduction for new readers:



In my first article , I explained that although piracy costs 0 “money dollars” ($ D), it still has a price in “temporary dollars” ($ V) and “headache dollars” ($ D), t. e. time and fussing with the search for a torrent, the risk of getting infected with a virus, especially for users with poor computer skills. In addition, there is a price in “honesty dollars” $ h, that is, piracy makes some people feel guilty and adds a little risk of problems with the law. So, despite the zero cost of piracy in money, its price in $ C, $ G and $ H is above zero.

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The more obstacles, the less sales







A legitimate purchase of a product does not have a cost of $ H, and with a quick and friendly buying process it may even be “cheaper” piracy, if we compare it by $ C and $ G, which encourages the buyer to spend $ D. On the other hand, DRM and the treatment of players as criminals increases $ V and $ G and reduces the players guilt in piracy, which reduces its price in $ H.



This is a very brief and simplified presentation of the article, it can be fully read here .

The paradox of "pay as you want"

The existing opinion tells us that buyers who can pay as much as they want will pay as little as possible. This was often stated until RadioHead released their album In Rainbows on the model PWYW , and the first Humble Indie Bundle was not announced yet. In both cases, the prevailing opinion was partially correct - many people actually paid the minimum price. But many paid more, and by any estimate, both sales experiences were a great success.



However, before considering this experience in more detail, let's look at a model in which current opinion also differs from reality - voluntary donations for downloading software.

Donationware not working

Software support model through donations rarely works. There are some exceptions, but basically this is a terrible way to finance a project. But why? Let's apply the four currency model.



When a developer publishes a link to a free download and an optional donation button on his website, he legitimately offers the game at two different minimum “prices”:







“Costs” in the model of four currencies are always individual for everyone, this is just a theoretical example of an “ordinary person”.



The price of donating $ D is nowhere lower - any positive value will do. So why don't most people donate at least 1 cent in total? Because they have already downloaded the product quickly ($ V), without a headache ($ D) and free ($ D). Since the developer himself offers a free option, most people do not even feel guilty about this ($ W).



Get a credit card, enter the number in the Paypal window, etc. - this is too much fuss ($ F + $ B), especially if the developer provides a legitimate opportunity to skip all this.

Lack of obstacles reduces sales

And if you set the minimum price? Let's start with 1 cent. Temporarily ignore the fact that payment of transactions for such a small amount will actually cost the developer money. With a minimum of 1 cent, two “prices” will look like this:







By removing the option "do not pay", we left the choice: to pay any amount or save. Piracy is not worth the money, but it takes time, it causes a headache, and for many people - also a sense of guilt. The only option with a low price of $ H is to buy legally. If the developer makes the purchase process quick and convenient, he will significantly reduce the costs of $ G and $ C and many potential pirates will turn into buyers *.



_{* Some will always pirate, because their personal cost estimate in $ G / $ V / $ H is different from the example. Most likely, such players will not become buyers, so there is no point in thinking about them.}

Small barriers increase sales

Since the ability to download is both legal and free, low prices in $ G and $ In a pay-what-you-want model seem to most people not to be too bad, especially if the payment page is convenient, professional and friendly. Having overcome the initial barrier, such buyers will open their wallets, because the real obstacles were $ G and $ C, not $ D *.



_{* For some people, for example, those who do not have a credit card or live in countries that are not serviced by the payment system, any amount of $ D represents an insurmountable barrier of $ G, because they have no way to send money to the developer.}



There are people for whom money is an obstacle - a group that pays just 1 cent or 1 dollar. However, for those who have something to share, the results speak for themselves - people are more than willing to share part of their $ D, giving away 5, 10, 100, or even more than $ 1,000.

How to make the model work for you

I just showed how, and more importantly, why the Pay What You Want model can work. But this does not mean that it works in all cases.



The most successful variants of this strategy have the following features:

1. Limited time
2. A product with significant value.
3. Stimulates goodwill

Limited time is important because it serves as a call to action - buy now, while the price is incredibly low.



I must admit that although I bought the first Humble Bundle, I did not buy some of the latter. The reason is that I simply do not have time to play all these games, and my interests are specific, so they are not always attractive to me.



However, I paid $ 10 for Proun and Sleep is Death on the PWYW model, because they caught my attention and were worth the price paid.



Before I finish, I want to consider another aspect. It seems to me that people are more likely to behave cynically - that is, by paying the minimum amount, they express an impersonal and passionless attitude towards the author. The more they see the author of a real person with real needs, the more they personally become attached to his work and the more likely they are to reward him with a larger amount. That is why it is very important to create a community around the game, and therefore it is so important not to be an “asshole”, otherwise it will be easier for people to justify themselves for piracy.



Humble Indie Bundle encourages goodwill by donating money to charity and offering cross-platform versions of games for sale. In addition, at first, their approach was quite fresh and new.



In addition, everyone who tries to donate less than 1 dollar, the site welcomes before completing the purchase of such a picture:







She is likely to increase the cost in $ H for any transaction below $ 1.



These are my thoughts on PWYW and four currencies. I think the PWYW model will stay with us and can be successful in the future, although its novelty factor has already faded. In other words, PWYW seems like a much better option for earning income than an optional donation.

Free-to-play

Now let's apply the four currency model to Free 2 Play games.



Obviously, F2P will stay with us for a long time. She showed great success in Angry Birds , Team Fortress 2 and the new generation of MMO. However, we have already witnessed the epic failure of Zynga and have seen many articles about the popular, well-received by critics of F2P games that have received low profits.



The debate heated up, so let's retreat, put down the pitchfork and see what happens.

Analysis

First, F2P competes well with piracy, because the entry barrier cannot be lower. Downloading a F2P game costs $ 0 D, a little $ B, $ 0 G, and $ 0H (for those who feel guilty for piracy).







Although F2P does not cost anything in $ D, it inserts $ C and $ G costs into the game to encourage players to spend $ D instead. This is the opposite of the traditional games, in which there is no additional spending of $ C, $ G and $ D after purchase (except for annoying DRM, DLC and poor design).



According to the F2P design guidelines , developers must deliberately insert inconveniences into the game that players can get rid of with money. This means the creation of barriers, time-consuming and “two currency” systems in which players can pay for rewards with real money or, instead, grind for hours.







In this sense, the traditional games are similar to laser printers: the roads when buying, cheap and easy to work. F2P games are like inkjackets: cheap when buying, but expensive and sometimes difficult to work with, especially if the software company uses questionable business tactics .



On the one hand, F2P gives the player a choice. Many have no money, but a lot of time and / or high tolerance for headaches. Moreover, these games allow players to buy “on a price list” if they want to select only certain aspects of the game. This is a good side.



On the other hand, F2P adds inconvenience and destroys the "magic circle", constantly begging the player for money. It is for this strategy that some designers call F2P “evil” and not just because they are Luddites * and are afraid of change, as some claim . If you like, F2P is the same return to the past as a step into the future. We have already passed this, then it was called “arcade machine” .



Despite my concerns and the overall ominous aura, I believe that F2P can promote great projects - just look at Team Fortress 2 , League of Legends and Triple Town . But this model should still be considered critically.



* I will add in brackets that the image of historical Luddites has suffered greatly from industrialist propaganda and (erroneous) associations with religious fundamentalism. I highly recommend reading the book Rebels Against the Future of Kirkpatrick Sale as an alternative point of view.

When (and why) F2P fails

Let's take a look at some of the failed F2P games and find out if the four currency theory can explain the reasons for failure.



The developers of Punch Quest and MonkeyDrums have suggested that their games failed because they are too good. They used F2P, but the authors still held the idea that players could be encouraged to pay in order to enjoy themselves. I sympathize with the development teams and applaud their desire to talk openly about such a painful experience. So let's see what we can learn from them.



As I mentioned in the section on the Pay What You Want model, simply by making the game free, you make a zero cost of $ H, i.e. the players feel guilty without paying anything. That's why donationware does not work - no one pays, because you allowed them not to do it . If you make too much content easily available or free, then buyers will not feel the obligation to pay. But if you ask them to buy, then there is a good chance that you will force them to pay, especially if there is a free “sampler”.







The design of traditional games has taught us to give players the maximum value for their money, receive one payment and end it. F2P requires a completely new look, in which it is impossible to provide all the “goods” in one big package. It seems that these developers have long chosen between F2P and traditional design. Well, let's look at the tradition.

Evolving "traditional" model

In the past, video games were sold in retail stores as packaged goods that you could not appreciate. Naturally, retail sales are falling , but those who use this fact to blame fixed prices * actually attack the straw stuffed animal. “Progress” does not occur only in one direction, and the traditional model has evolved along with the rest.



* In fairness, Dan is right to make the TripleTown price equal to 99 cents would be insane, and I'm a big fan of his approach to F2P design. However, I see a lot of indie developers using the prepayment model, without relying on megahits.





Tradi-i-tion!



I use our team as an example of the “neo-traditional *” model. To increase the sales of Defender's Quest, we relied on a long and exciting browser demo . This allowed us to get a good profit without the help of such large portals as GOG and Steam, although as a result we managed to attract their attention. We survived by selling the game directly from our own website and free Flash portals like Kongregate, on which we used our microtransaction engine to sell the online version of the game .



* Definitely worth a better name.



Moreover, although the price was indicated in advance, it was by no means “fixed”. After the release in January 2012, we started with $ 6.99, but released a lot of coupons, on which anyone interested could buy the game for $ 4.99. At the same time, we distributed free promotional codes to the right and left.



Later, with the release of the gold edition, we increased the price to $ 14.99, but started with a “sale after release” with a price of 9.99 during the first week on Steam. As everyone knows, Steam and GOG love periodic sales with great discounts, and we will participate in any events to which we are invited. By the way, players know that the games are often sales, so they can exchange $ D for $ B, waiting for the price reduction.



The opportunity to sell the game all year round at different prices, while leaving yourself a large part of the income can not be compared with one month of sales on the shelves of retail and receiving only a few fractions of a percentage as royalties ( if you are lucky ). This is an old traditional model, and I am glad of her death.



However, the advantage of the new traditional model is that it eliminates the preliminary financial costs and allows developers to focus exclusively on the gameplay, and not suffer from selling the game to publishers. Moreover, it avoids the division of the general cultural experience into levels of few and many paying users. I realize that the traditional model could potentially narrow the player base and reduce the income from “real fans” and “whales”, but I have some thoughts on this . And, more importantly, I have no doubt that this model will evolve in order to adapt to the solution of such problems.



The most important thing: it seems to me that the traditional model and F2P have something to learn from each other. These are parts of one spectrum, not fixed opposites. The “neo-traditional” model uses many aspects of both approaches, but it went in a different direction, different from the standard iPhone game or console game on sale at GameStop.

F2P: sum up

F2P gives us new opportunities, audiences and markets, but this is not magic. Simply put, instead of the initially set price of $ D, this model adds an extra $ G and $ C to the entire gameplay to make the player pay $ D.

Pros F2P

• Increases single player cost ceiling
• Almost completely lowers the entrance barrier
• Opens new genres and attracts new audiences

Cons F2P

• Poorly suited for many genres (especially for those in which the narrative is important)
• Inserts financial motivation right into the game.
• Annoying players
• May spoil the design (see Zynga example)

Finally

Moreover, those who are obsessed with growth * as the only metric that speaks about the health of various sectors of the industry should be spanked on the face with a huge wet trout. Facebook, mobile platforms and other emerging trends, of course, will remain with us, but reports of the decline of the traditional industry are greatly exaggerated, especially because the NPD reports are very confusing . And as opposed to popular opinion, the explosive growth of mobile platforms did not condemn the market for portable consoles Nintendo , although the same cannot be said about PSVita.







It seems that retail sales of console games will continue to fall, but the slowdown in PC sales cannot be considered a sign that PC software developers have problems. For example, sooner or later the time comes when everyone who wanted a car will buy it, so although it is more difficult to sell new cars, a huge number of cars drive through the streets. Similarly, with the sales of new PCs: they have reached their peak, because computers are powerful enough and with a little maintenance a good machine can serve you for most of the decade. This is bad for companies like Dell that need to sell equipment. but for those who sell games running on these machines, now is the best time.



Mobile platforms will sooner or later reach a point of saturation, and then experts will start screaming about the death of mobile, and eyePhone will become the new hot platform.



So do yourself a favor: play one or two Free2Play games. And then in some great traditional games created by friendly indie developers . And then give the "experts" a fish slap.



* Second note in parentheses: one-sided focus on "growth" is a serious misconception of modern economic thought. See an alternate point of view in Tim Jackson’s book Prosperity Without Growth .



Game: watch CNBC and have a drink every time another professional mentions “growth.”