by Goran Damnjanovic, Gaming Columnist
Published in Gaming on 30th November, 2018
Video games used tried and true revenue model for decades. You would buy a base game and then maybe pay for an eventual expansion pack or two that would bring new content. Multiplayer games would usually offer free map packs or paid expansions that would focus on a set of thematically similar maps but they would too charge just for the base game and (eventually) a couple of new map packs. But then MMO (massively multiplayer online) games came to the market and showed game companies they can make users spend money over long periods of time instead of charging just for the base game and expansion packs.
They would come with a regular monthly subscription on top of the base price, which means much more money for publishers. And about a half decade ago mobile gaming experienced a massive boom in earnings and profit, mostly thanks to free-to-play titles that came with a plethora of microtransactions. The base game would be offered for free with the main source of profit being payments users would make for getting additional resources, costumes, or playing characters.
This made publishers come up with a new revenue business; the one that would generate recurring earnings over time instead simply charging users for the base game and then be done with it. The earliest iteration of the model was the introduction of DLC packs and season passes, but in recent years we saw the rise of a new model with even more potential revenue streams. Games that utilize this recurring revenue model are called games-as-a-service and today, we're living in a world that's filled with them.
The video games market is filled with live services, games that try keeping their user base over long periods of time after the original release, with hopes of earning more money than simply charging just for the base game. They offer regular content updates instead of going with one or a couple of expansions; they offer some sort of (mostly cosmetic) microtransactions that generate additional revenue; and they are usually designed as experiences for gamers to interact on a regular basis instead to spend lots of time over a short period of time (a week or two) and then forget about them. In other words, they are designed in order to be as addictive as possible.
And this relatively new trend in gaming is probably the most hated thing among the hardcore gamer community. The promise of small updates instead of massive expansions or relatively large DLC packs, the presence of microtransactions, and the fact that live service games mean more time between sequels are all understandable reasons to not like the concept of games-as-a-service. But, if done right, even this concept that mainly focuses on better and bigger revenue streams can be good for consumers.
Take for example Ubisoft, the company that was the most aggressive to introduce this live service model to their video game portfolio. The company managed to publish two games that are still highly relevant even though years have passed since their original release dates. The first one is Rainbow Six Siege, a team-based multiplayer shooter that is three years old. Despite the fact the game got released at the end of 2015 it is still one of the most popular multiplayer shooters today, being fourth most played game on Steam right now and having tons of players on Xbox One and PS4.
The reason for such success has to do with the game's quality, of course. But the stream of regular updates to the game along with heavy patching and constant balancing is also a quite important piece of the game's success story. Siege receives regular updates that bring new operators and new maps and each update is completely free. Regular players can earn enough in-game currency to unlock new operators as soon as they become available but the catch is in the fact these operators can also be unlocked by simply shelling out cash. This, in combination with an in-game store that sells tons of cosmetic items for real money, is why Siege is so successful.
The game features multiple sources of recurring revenue that bring loads of money to Ubisoft, which in turn invests part of the money into new content and updates. All this makes the game extremely popular which in turn keeps the base price of the game steady instead making it a bargain bin title (which it would become by now if it wasn't a live service game). Rainbow Six Siege is a perfect example of a game-as-a-service done right. Revenue sources don't break the game and turn it into a pay-to-win title, the game features excellent gameplay, and all new content is completely free for all but parts of it (new operators) can be bought for real money. And finally, microtransactions are completely optional and cannot impact gameplay.
The second Ubisoft game that shows how live service model can be good for gamers is Ghost Recon: Wildlands. This is of course only if you play this one with friends because, as a single player experience, this one is rather uninteresting. Wildlands got released at the start of 2017 and the game received two major story expansions since then but its co-op multiplayer part received regular updates that kept the game fresh and fun to play during the course of the last year and a half.
Free multiplayer events made players to come back and spend more hours inside the game, maybe spend a bit of money in the in-game store (which, again, sells just cosmetic items), and then keep the game on their hard drives instead deleting it, waiting for a new event. Regular interaction plus new content plus multiple recurring revenue sources means more profit to Ubisoft but also means more free content updates to players of the game, which ultimately leads to bigger value the game offers. Another excellent example of live service game done right.
Of course, Ubisoft isn't the only company that perfected games-as-a-service publishing model. Blizzard is also pretty savvy in this craft, with its two titles that generate tens, even hundreds of millions of dollars on a regular basis. And no, we don't talk about WoW (which is a classic MMORPG game that was one of the main reasons for the rise of the whole live service model).
We are talking about Hearthstone and Overwatch, two multiplayer titles that operate in completely different parts of the market but that both bring massive recurring profits to Blizzard. Hearthstone is a free-to-play card game that is the most popular card game out there for more than four years. It managed to stay relevant all these years not just because of its addictive gameplay and regular expansions that introduced new cards. The game also evolved and managed to interest players with regular content updates that added single player game modes on a regular basis. But the game faces a problem of becoming quite expensive for players who want to play it on a competitive level. Once a perfect free game became quite a money eater in recent years thanks to Blizzard and their thirst for higher profits.
Still, Hearthstone is an example of a free live service game done right; at least during its first three years. Overwatch, on the other hand, is a full priced game that is super popular among gamers on all three major platforms (PC, PS4, and Xbox One) and that generates a major part of its profit with its loot box system; players pay to open loot boxes that contain random skins for Overwatch characters. There isn't a way to just buy character skin you want meaning that there's a high chance you will spend additional money on opening loot boxes if you really want to get some new skins.
These two revenue streams (base game price and loot boxes) proved to be massively lucrative for Blizzard because Overwatch is one of the highest grossing games on any platform and the introduction of the Overwatch Esports league means even bigger popularity along with the perfect way to make its player base engage with the game on a regular basis. In turn for receiving massive profits, Blizzard is regularly releasing new maps and characters, which are free for all players.
While Hearthstone showed that a free-to-play game can become a massive source of profit the game lost its free-to-play status in recent years because of the fact that you simply have to pay money in case you want to get all new cards, or at least most of them. On the other side, we have two titles that showed how free-to-play games can be perfect live services without reaching for ways to charge players a dime for items that can affect gameplay. We are talking about Fortnite and Warframe, the two most popular examples of how games-as-a-service can be massively profitable while providing incredible value for players, who don't have to pay a dime in order to enjoy the games in all of their glory.
Fortnite was the biggest gaming phenomenon of 2017. The game was imagined as a co-op open world shooter but it wasn't very popular it that form. And then, it suddenly jumped on the Battle Royale wave and it rides it with extreme success ever since. The game offered a new form of Battle Royale experience, a form that is iterative and evolving, with its map playing the main role in the game's narrative. This was something completely new; giving the way for players to enjoy the game's story while playing its multiplayer game mode.
Fortnite map is constantly changing, with new elements appearing, transforming, and disappearing with each new season of the game. This is an excellent way to keep the game interesting over longer periods of time and with the addition of the ingenious (from the recurring revenue standpoint) Battle Pass system, Epic managed to turn Fortnite into an extremely addictive game for its player base.
Add to that seamless switch between platforms - you can play Fortnite while commute to work on your smartphone, then go to a friend's place and fire up the game on their console, and finally return home and play a couple of matches on your PC - and the plethora of cosmetic items available for real money and you got yourself a behemoth of an earner that at the same time provides tremendous value to its player base. You can play Fortnite and enjoy the game without giving it a single cent, but most people will spend some money on it and since there are literally hundreds of millions of people who regularly play Fortnite it means that the game will earn massive amounts of money over long periods of time.
The other free title, Warframe, took a bit different approach. This one went for a persistent multiplayer universe that offers a ton of missions to play, regular events players can participate in, and co-op and competitive multiplayer game modes. All these mods combined provide hundreds of hours of content that can be enjoyed on a daily basis. The game receives a regular stream of new content in form of free expansions and all weapons and items can be obtained simply by playing the game.
You can buy all weapons and items with the game's premium currency along with some enhancements like additional weapon slots and a plethora of cosmetic items but at its core, Warframe is far from being a pay-to-win game. This is one of the main reasons for the game's massive success and extremely positive feedback coming from its player base. The game has multiple sources of recurring revenue, it earns massive amounts of money on regular basis, and is super popular even though it is six years old, making it the second most successful free to play live service, just behind Fortnite. In return, players receive a staggering amount of value in terms of new content they can play on a daily basis. Warframe is a free Destiny that is better than both Destiny games, and that's a huge achievement because Activision pumped hundreds of millions of dollars - the company spent $500 million on Destiny alone - into development and promotion of Destiny and Destiny 2.
All these player-friendly games-as-a-service platforms are multiplayer based so a question arises: is there a successful single player live service? Well, Ubisoft tried to turn Assassin's Creed Origins into a live service but the game ended up being a classic single player game, with regular DLC packs and not being able to keep a massive player base over long period of time.
The main reason for it being unable to stay in the focus of gamers is the fact Ubisoft launched Assassin's Creed Odyssey just a year after Origins got released. And if all goes according to play Odyssey can become the first truly successful live service that exclusively relies on its single-player element. First of all, the game is set to receive two massive expansions (Legacy of the First Blade and The Fate of Atlantis) in form of regular monthly episodes that should keep the majority of player base occupied for at least eight months, creating long-term interaction pattern for the game.
It also features a massive map with enough content for 150 hours of playtime, which offers tremendous value for players. Next, the game should feature regular live events that should increase engagement rates (but they didn't launch according to plan, with a couple of cancelations of the game's Mercenary events before finally launching the first one a couple of weeks ago) and its in-game store offers lots of items for real money, giving the game long-term monetization stream.
Some of the items available in store are could affect gameplay, like the infamous XP boost but as a whole, Assassin's Creed Oddysey is a live service that's pretty generous to players, offering them a massive amount of content in the base game, regular live events, and a stream of new content in months to come. All this should keep its players base from scattering at least until spring of 2019 when we expect announcement detailing Season 2 expansions that should increase the game's longevity and enable it to bring long-term profit.
While there are many successful live service stories showing that this new way of making money from video games can be positive for players of said games some games failed to offer competitive games-as-a-service models, either turning them into subpar offerings for players that still rely on heavy monetization practices or simply trying to take huge amounts of money from players without giving them anything in return.
A perfect example for the first claim are Destiny games. Both games started slow instead immediately delivering upon their promise of the unmatched combination of PvE, PvP, and single player game modes inside massive "shared worlds" that took best parts of single player, multiplayer, and MMO games, and blended them into perfection.
The first Destiny cared more about creating an addictive gameplay environment that used behavioral principles of positive reinforcement based on variable ratio rewards, pioneered by famous psychologist B. F. Skinner, principles on which slot machines and other gambling machines are based on. If you want to learn more about it just watch this amazing video by legendary Danny O'Dwyer.
The design behind mission rewards in Destiny is created in such a way to maximize addictive behavior and to hook players to a game, manipulating them with XP, loot, and currency rewards that make them beg for more.
And while that part worked (and still works in Destiny 2) flawlessly gameplay and story issues along with lack of content made Destiny look like an unfinished game that charged players extra in the form of season pass just to deliver content that should've been part of the base game in the first place. Not to talk about constant grind needed in order to keep up your level for new missions and raids, and to be able to play with friends. The grindy nature of Destiny made many players feel like doing a job and not like having fun while playing it.
The game finally became what Bungie promised once its first major expansion, The Taken King, got released but it was too little too late. The majority of player base left the game and soon after the release of the last major expansion for the game titled Rise of Iron promises made by Jonty Barnes, Bungie Director of Production where he stated that We're going to continuously update the game from now until the end of time.
That's always going to be part of the philosophy of Destiny. We always wanted to build a new universe but keep building upon it, rather than to do a complete and utter restart periodically, were broken because Bungie announced Destiny 2. As both live service and a video game Destiny failed to deliver, offering poor value to players and asking them to pay just too much money in order to receive new content.
Destiny 2 followed a similar path to its predecessor, with the base game offering subpar experience plagued with microtransactions and underwhelming end-game content. This time player base shrank even faster so by the time Forsaken got out, which noticeably improved the game on many fronts, player numbers declined and the game was left by many casual players because, again, Bungie failed to create a live service capable of capturing casual players.
The game is simply too big a work for many people who cannot spend hours upon hours each day in order to get the equipment needed for end-game content. Yes, Forsaken turned Destiny 2 into one great multiplayer game but that game isn't suited for casual players, who make the majority of the gaming market. Again, Bungie failed to create a value-rich live service capable of capturing players and making them return to the game on a regular basis.
On the other hand, we have GTA Online, a live service that was extremely lucrative to Take-Two, but that offered poor value to players. Because of its success, we failed to see promised GTA V single player expansions, which were planned back in 2013 just after the game came out. GTA Online proved to be "the gift that keeps on giving" in terms of profit and that meant that all future expansions would be strictly made for the online component of the game.
GTA Online is by far the most profitable live service because it focused on players spending major money in order to be able to afford new content, which gradually became more and more expensive with each content update. From giving players new stuff for free Rockstar created a live service that required players to spend lots of additional money on the game's infamous Shark Cards in order to be able to enjoy the game's many updates. GTA Online shows just how much live services can be profitable but it also shows that poor value for players doesn't have to mean failure.
GTA Online is one of the most microtransaction ridden game-as-a-service of them all but at the same time, it is the most successful one. Sure, it offers great experience but at cost of players having to either play the game so much it basically becomes a part-time job or to simply pay for Shark Cards in order to afford to buy new content, which is part of "free updates."
And the final example shows a game that both failed to offer value to players and to become successful live service. Star Wars Battlefront 2 made a huge mess with its microtransaction model that affected gameplay instead of being used just to buy cosmetic items. Star Cards gave players edge over their competitors and they could only be found inside loot boxes found inside the game. And unlockable heroes were put behind paywalls many players would be unable to unlock by simply playing the game.
In other words, EA expected players to pay real-world money on top of the full $60 price of the game in order to stay competitive and in order to play with Star Wars heroes they love. And that was just too much. The whole gaming community stood up and complained about these nefarious practices so EA removed pay-to-win mechanic from the game and offered heroes for free but it was too little too late. Star Wars Battlefront 2 was dead on arrival, a stunning example of a live service designed in all the wrong ways. Poor value for players, a full $60 price, pay-to-win systems built on top of the premium price, and a complete PR mess prior to the game being released.
As you can see live service games don't have to be a bad thing. The market is filled with games that offer great value to players over huge stretches of time and that are still pretty successful. The thing we have to be careful about is to not allow publishers to go too far, which EA tried to do with Star Wars Battlefront 2. GTA Online did something similar but the main difference is that GTA Online was a separate product to GTA V, which wasn't plagued by microtransactions.
On the other hand, the success of GTA online meant we won't see single player expansions for GTA V. It also meant that Red Dead Redemption 2 Online will probably also include an in-game economy focused on microtransactions. In the end, we can only advise you to pick carefully which live service games you want to play. Not all are bad for gamers, but there are plenty of those that will first make you addicted and then make you shell hundreds of dollars in order to be able to continue enjoying your favorite digital drug.