The Evolution of Free-to-Play Games

Games have revolved around a simple concept for decades: players paid for complete games upfront. However, the last 15 years have seen a shifting model that allows players to access games that allow them access without spending a cent. Free-to-play (F2P) games were a new kind of monetization strategy that also benefited players who didn’t want to pay upfront.

Most games were sold at fixed prices before the F2P era, especially on PC and consoles. Players who spent money buying the complete game often didn’t have to spend more money during the game, leaving developers with little iteration potential after the launch.

Games like Halo and Super Mario 64 are perfect examples of one-time purchase games.  Discover how F2P games have evolved the gaming industry since.

Similar Concepts Used in Sweepstake Casinos

Many players didn’t realize that the F2P concept has emerged in another form of digital entertainment and gameplay: online sweepstake casinos. Sweepstake casinos, like those found here, allow players to access casino-style games for free by using virtual currencies, unlike traditional online casinos that require upfront deposits of real value.

Promotional sweepstakes then enable players to win prizes and cash equivalents with real monetary value, mirroring the concept behind F2P games. The engagement is free, but the rewards are genuine. These promotional sweepstakes casinos have become wildly popular in the US, particularly where other online gambling is restricted.

A Seed of Change

Key changes occurred in the gaming industry in the late 2000s, with Facebook’s launch of third-party APIs that allowed developers to create games like Happy Pets and Farmville in 2007. The social games used in-game purchases to monetize engagement. Meanwhile, the Apple App Store and Google Play Store streamlined global distribution in 2008 and 2012.

Developers could suddenly launch games to millions of players quickly, update them frequently, and gather real-time user data. Touchscreen games took off as soon as smartphones became more powerful, and games like Temple Run, Angry Birds, and Jetpack Joyride introduced the F2P model with optional purchases to mainstream gamers.

A New Framework Called the ARM Model

The ARM funnel classification technique soon guided the strategies developers used to implement an ongoing revenue model when creating new games. The core features of the ARM model are acquisition, retention, and monetization. Developers realized that using the model allowed them to continuously monetize games without relying on once-off payments.

Developers sell F2P games to massive audiences, not small groups who pay once. The objective is to retain a group of players over time and convert them to paying customers who spend money often through in-app purchases. Developers use key performance indicators like Conversion Rates and the Day 30 Retention method to track performance.

Developers also began creating hooks to encourage daily gameplay, frequent updates, social sharing, and progress tracking to keep players “hooked.” Some famous examples of these social F2P games include Candy Crush, Clash of Clans, and Hay Day. These puzzle and farming games drive millions in revenue after being created with the ARM model.

F2P Enables Developer Wealth

Various Nintendo mobile games have earned $1 billion in lifetime spending, with titles like Super Mario Run, Dragalia Lost, Animal Crossing: Pocket Camp, and Fire Emblem Heroes contributing millions of dollars each. Players enjoy the freedom to access these games for free, but seasoned players spend money on these games, driving massive revenues.

More innovative developers drive higher revenues, too. For example, Pokémon GO was simply a novelty AR title, but now exceeds $7.8 billion in revenue. Another example is open-world games like GTA V that sold 180 million copies, generating an astronomical $8 billion from the initial sales. Imagine the ongoing sales players still generate.

Games-as-a-Service Enters the Market

F2P game models only captured about 50% of the market by 2015, but the launch of Games-as-a-Service (GaaS) enhanced the market share quickly. These games offered continuous updates to live games with new content, challenges, and seasons to entice players to stay engaged. Fresh content entices players rather than sequels.

Legendary games like Fortnite made the GaaS strategy popular on a global scale, engaging players with its cross-platform accessibility, Battle Royale, and cosmetic-based monetization initiatives. The game generated over $2.4 billion in 2018 alone. The Battle Pass tiered rewards system became a roadmap for other games like PUBG Mobile and Roblox.

Freemium Models Appeal to More Players Than Expected

One of the challenges in the F2P model is that it relies on a freemium reward system, allowing players to access games for free, but they must often pay for upgrades, limited skins, and faster progression. F2P players can enjoy the benefits of free-play, but only seasoned players or “whales” will truly experience the benefits through frequent spending.

Some players enjoy spending money upfront. However, many players are engaging in these F2P strategies while using the in-app purchase capabilities to outshine competitors. Video game spending statistics show that the average US household spends $435 per month on video games. Many of these players must buy assets and upgrades to justify the budget.

What the Future Holds for Free-to-Play

F2P games now account for 80% of the market, generating around $170 billion per year. The F2P rise is expected to continue, with some projecting a market saturation of 95% by the end of this year. The 5G rollout, cloud gaming, and AI-powered personalization certainly ensure continued growth for the F2P gaming sector.

Developers are even using AI to transform the development of 3D game assets that players can earn or purchase. The industry may also see continued crossovers between different genres. For example, strategy titles, sports games, and educational platforms have implemented the F2P model, with Udemy offering courses free but certificates at a cost.

Conclusion

F2P games are a revolution that empowers developers to monetize gameplay for longer and players to progress faster when willing to purchase in-app items. The transformation marks one of the most significant in gaming history, including the social media experiments to the development of personalized in-game assets using AI and other advanced technologies. Developers may monetize games in the long run, but players have redefined entertainment at their fingertips and the ability to choose whether they upgrade or not.