Virtual goods vs virtual services (how to get RMT right)

RMT (real money transactions) is currently the hot new charging strategy for MMOs which are not WoW but want to take players to the cleaners anyway. By new, what I really mean is not very new, I think EQ2 has had servers where you could buy items for cash for awhile.

So, the idea is that instead of (or as well as) paying for a subscription, you can also buy various items and/or consumables for your characters by paying extra. So you have more choice over how you spend your cash to tailor your in game experience. And you might be able to pay for your game time in more easily manageable lumps also.

Ixobelle sums up neatly some main objections to the scheme. Do players really want to be nickled and dimed all the time, or would they be happier with a flat rate, even if it means paying the same as people who play many more hours?

The upside is that theoretically you only pay for what you use. If you feel that the flat rate is just a way for casuals to subsidise the hardcore, you don’t have to buy in to it. Also, the appeal to companies is that it’s much easier to get people to sign up to a free game, and theory is that 5% who get hardcore and spend through the roof will subsidise those who don’t. So someone still subsidises someone else, just in RMT you actually can be a freeloader. For example, in this interview with the CEO of the company that runs Puzzle Pirates, he notes that only 10% of customers actually pay anything.

Maybe the idea is sound, but they’re using the wrong model

My main problem with the idea is that as a user is that I don’t want to buy bits and pieces for my online gaming as if I was in a supermarket. A virtual shopping basket full of bits of gear, access to extra careers, experience potions, and anything else the company cares to price up is just that bit too much hassle. And I have years of experience of supermarket shopping – years of experience in writing shopping lists in advance and then ignoring them in favour of some really good offer, years of experience in guesstimating how much I need to spend for a week’s shop and weighing up possible items to see if they fit. It’s not an exciting or engaging experience that I’m keen to keep repeating if I don’t have to.

I don’t want to log into the game and feel that I have to check what the hot deals are for RMT every day/ month so that I don’t miss any good bargains, I just don’t think it would add anything to the gameplay. If I want to do that, I can play on the AH.

An online game is simply not a bag of items. However much companies like to pretend that they are selling me virtual goods, I don’t think that’s the case. They’re selling me a virtual good which is tied to a service.

And in my books that means that they are selling an extra frill to an existing service.

So what if we abandon the supermarket model and look instead at … telephones? Mobile phones offer a network based service and there are tons and tons of options as to how you pick and choose which bits you want. Wouldn’t it be better if RMT games used that kind of pricing model? It can be complex, but I think it’s more intuitive for a service based offering.

If you want a high bandwidth monthly subscription with loads of internet usage and instant messages thrown in, you can sign up for that. If you are a very low volume user and prefer to pay as you go, you can buy a PAYG phone instead and pay by the minute. If you want an extra network service, you can add it to your monthly bill. You can even use your phonebill to pay for virtual goods online in some models (ie. buy them, and have it added to the bill).

But what you don’t have to do is keep paying a bit here and a bit there. Because telcos (telephone companies) know that customers find that a hassle. Also, they want you tied into their network. And gaming companies should want players to feel tied into their games – by choice I should add. They should not want you to be deciding at the end of every month whether you want to switch or not.

There are other advantages too which telcos have been quick to offer. Subscriptions where your calls are cheaper if you phone someone else on the same network. Subs where you can name five people and get cheaper calls to them. (ie. encouraging players to refer-a-friend*5 and then play with them, in gaming terms.) There have been deals where you could buy a second phone more cheaply, for a child, or to use as a spare.

The MMO industry could easily adapt those offers to gamers. We’re users on a network which happens to be a game.

And there’s more: what about players who are looking for a new game? Telcos offer bonuses to new subscribers, they’ll help you transfer your address books over, they may even let you transfer your number. And that’s only the start.

The downside is that mobile phone billing can get very complex – BUT once you have picked a deal, it’s easy to understand what you have paid for and what you are committed to if you go for a monthly subscription. I don’t know about you, but I wish devs would stop treating games as if they were supermarkets. They’re not. I don’t want virtual goods, what I want are virtual services.

20 thoughts on “Virtual goods vs virtual services (how to get RMT right)

  1. the advantage for the games companies is that they can generate the same kind of confusopoly that we have for phone deals and air miles, preying on people’s ignorance. The only problem is that many of their hardcore customers are the kind of people who analyse DPS rotations to 3 decimal places 😀

  2. Excellent analysis. I think that because the pay-per-item method is the de facto standard in Asia, Western companies just assume that Western players will warm to it, rather then investigating alternatives such as your teleco example (which I love).

  3. I’m a huge fan of the model offered by Wizard101, which I play once a week (or less) with my godson.

    The game has couple options:

    1. Flat monthly rate for access to everything (except RMT vanity items).
    2. Pay-by-the zone…. a one time fee for non-starter zones in the neighborhood of $1-2.
    3. Pay-for-PvP/Pay-for-frills. Vanity items and PvP can be purchased, and do not affect the main game.

    It’s sooooo nice not to have to pay a sub for a game I only play a few times a month.

  4. I’m definitely sympathetic to the desire for a more customized playing option, but if they priced MMO service like cell phone service what would end up happening is specific pricing schemes designed get you to go over your allotted time and then gouging you when you do. Oh, and lets not forget having to be contractually locked in paying for your service 2 years in advance with a fat penalty for breaking the contract.

    Or how about a special fee every time you need to contact a GM?

    Somehow I think Spinks and I have had very different experience with our Mobile providers ^_~

  5. There’s also something kind of unpleasant about thinking that more money = more gear/power etc. There’s something wondefully equalizing about advancing in games like WoW: you know that aside from those who pay to have their toon leveled or buy gold from farmers, you have exactly the same opportunity as everyone else does to get what you need.

    Sure, some of us have more or less time to grind ore or mobs than others, but it feels nice to know that *everyone* who has that Netherdrake had to go through the hours of rep building that I did.

    It would feel like cheating to just pay actual cash for those extra mats, items, etc. Almost against the point of the game?

    • Ah, but while everyone put those hours in for the Netherdrake, the amount of money isn’t the same, if someone plays for half the hours per month. That’s the problem with the sub model, in a nutshell. The opportunity *isn’t* the same if you include time in the equation, and charging for access rather than *time played* will inevitably be severely imbalanced to those with a bounty of time.

      I’m a huge fan of monetizing by content, like W101’s “access pass” model or Guild Wars.

      If that isn’t acceptable for some reason, paying a flat rate of $15 for *a month’s worth of time played* would be better, and that time could be spread out however the patron felt like. Twenty hours a week is tossed around as average for a WoW player, so let that $15 pay for 80 hours of game time, consumed only when logged in, in a finely grained manner, say a minute tally. The player who plays over 80 hours in a month doesn’t pay more, that’s just a bonus for them. The player who only manages to swing twenty hours a month gets four “months” for their $15, but the same amount of *play time*.

      Then, the Netherdrake grind makes sense.

  6. It’s only a problem if you measure ‘a month’s worth of fun in the game’ purely in terms of hours. I like Ix’s example of the sunday paper. I never read the sports pages but I don’t especially feel done by paying for the whole lot.

    The sub model isn’t a problem because people absolutely do understand what they are paying for.

    That doesn’t mean that there isn’t scope for different types of sub but I do think people can decide for themselves if they are getting value for money independently of what others are doing. Ultimately, if you aren’t using your phone tariff well, you can switch to a lower use tariff, for example. I’d envisage something like that.

    I’m not really sure about charging by the hour, although I don’t oppose it as an option. Maybe a game could make this work but I suspect that the networking effects of encouraging everyone to monetise their time would be pretty poor. Who would go smell the roses when they know they are paying by the hour? I can’t help feeling it would hinder more relaxed playstyles more than it helps.

    • Well, sure, the sub model works for some. The point is that a flat rate is not fair (if that matters), and that it *doesn’t* work for everyone. That’s why I keep harping on segmenting the market to capture those people who would spend money if there were an option that offered fair value to them.

      I’m not sold on charging by the hour either, but again, some people might get more out of it, especially if it can cross the monthly borders like I describe in a “prepaid card” sort of way. It’s another *option*, not a replacement for a sub.

      I still think that charging for content, as many RMT models do, is ideal. That say, the whole “rep grind” validation really is up to the player, and you can have those relaxed playstyles.

      • One thing that comes clearer to me is that no model is ‘fair’. In RMT as described by the gamasutra article, 10% of players are paying for the rest. That isn’t really fair either.

        But let’s define fair here as meaning that you get a deal with which you are happy. And it’s independent of what anyone else is doing or paying except that you know they got offered the same deal.

        So is your main issue with subs in general, or just with the current pricing? If you pay a one off fee for a year, is it really that different from paying for access on a zone by zone basis if it works out at the same amount?

        I rather dislike charging for content on principle because it leaves ownership a bit vague. You don’t own the content (at least, not in any current game). You are paying for access to the content as part of network-based service – it is not the same as buying an offline game and shouldn’t be sold as if it is – and I’d be happier with a charging scheme that reflected that. I’m also not so sure if it makes sense to sell content as if the games were actually permanent because in many cases, they aren’t.

  7. I really like your concept of charging for services rather than goods, Spinks. I’m against the microtransactions business model because it leaves the player too exposed. What’s to stop the developers introducing the next best must-have item and making it RMT only? I don’t necessary believe it diminishes what we accomplish in game but it certainly diminishes the immersion and escapism factors.

    Anarchy Online is actually a game which IMO has a very good business model. The basic game is free so you can try it out and play it as much as you want but then if you want the expansions and extra content, you have to subscribe.

  8. I agree with Tarsus above; mobile phone contracts, at least in the U.S. are designed to have you pay more than you want. Either you get hit by overages or you pay more for a base rate but never quite use all your minutes. I think it’s a terrible model to want to copy.

    I agree it’s really easy to do microtransactions in games poorly. The more I read, the more I think the recently announced changes to DDO are going to fuel a lot of rants against the business model, unfortunately. A good microtransaction system has to make it feel like the game is offering the players conveniences, instead of charging a nickel here or a dime there for more content. The core game still has to be good and fun, because the free players are still contributing to the community. If the core game is too thin, then people may get frustrated and leave instead of opening wallets like some hope.

    We Fly Spitfires wrote:
    What’s to stop the developers introducing the next best must-have item and making it RMT only?

    What’s to stop developers from introducing the next best must-have item and putting it behind months-long faction grinds? The same thing. Some people don’t mind doing daily quests for a few months to get the reputation needed, while others don’t mind spending $15 for the same thing. Some people could do either one, and some wouldn’t want to do either.

    Microtransactions aren’t going to make everyone happy. But, the business model appeals to different people than the subscription model does, which is good. People can go play subscription games, while others can play microtransaction/free to play games and everyone can have fun. One game doesn’t have to fit all. 🙂

    • @Psychochild:
      You said that “some people don’t mind doing daily quests for a few months to get the reputation needed [for an item], while others don’t mind spending $15 for the same thing”.

      The difference between these two cases is at the heart of role-playing games, and the difference between a character and the player who role-plays that character. In the first case, the character did the grinding (of course, taking up the player’s time). In the second case, the character did nothing to deserve the item.

      If we are to find an RPG immersive, we have to believe the fantasy world we are in. We have to believe in the characters we encounter. When characters get something in-game for no apparent in-game reason, it just becomes less believeable. That’s why Blizzard are against gold-sellers. And that’s why I am, too.

    • I think we’re a couple of years ahead here (Europe) in terms of the mobile phone market — it’s because we standardised and adopted GSM really early on. One of the cases where standardisation really worked. Also more competition due to geography.

      But basically, MMO companies have similar goals to mobile phone telcos. Their business has a network effect. They want to reduce churn while simultaneously attracting users from other networks. They want to keep people on their network.

      So I dunno how US networks trick you into going over your limits, but the general idea is that you pick the sub that matches your usage pattern, and pick one that gives you a wee bit of headroom if you think you’ll need it.

  9. @ Tesh It’s true that you can’t find everyone’s reservation price with a flat rate, and that segmenting by price would capture those players who avoid the game because of cost. But I think the quesiton is also how would the game suffer?

    I’m not sure that simply increasing the number of players would optimize the game context (obviously, this is from player not producer perspective). As Spinks points out, there is a network effect – the more players, the more value in the game. But the $14 a month or so seems to attract enough players to satisfy that.

    • It sounds like you want a country club. I’ve seen it argued more than once that the “clientele” should be limited to those who are agreeable, and that sub fees regulate that.

      I’ve always thought that Barrens Chat was a good counter to that stance.

      The whole point of market segmentation is to make more money by making more people happy. More isn’t always better, but the enemy of “excellent” is “enough”.

    • I think there’s scope for someone brave to go and find out whether general channels in F2P games are better or worse than barrens chat. For SCIENCE!

      I like the idea of making more money by making more people happy, but the F2P model actually seems based on having fewer people pay, just they pay enough to cover the rest. I suppose the guys who play for free are happier, but does the model actually make more money I wonder?

      • Smart microtransaction games are built to spread around the appeal and get everyone in on the balance sheet, it’s just that 90% of users don’t want to spend money. Modran made a comment over at my place that such a number eerily parallels the 90% pirating rate of World of Goo.

        In other words, it’s not something inherent to the “F2P” model, it’s just what people *do*. I think that’s a critical point, and I’m golas Modran made it.

        As for making money, Puzzle Pirates makes more money on their MT servers than on their sub servers. They posted the numbers for public consumption; the link is over at my place. It won’t work for every game, but it’s demonstrably profitable.

  10. Pingback: Why we need killers to show us how to have fun « Welcome to Spinksville!

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