Virtual World Business Models

Skotos has multiple games in a single base subscription, and a premium games subscription that opens some game-specific options and gives point each month (what we call StoryPoints) that can be spent on specific games.

For example, a player with base subscription of $12.95 can play all the games, but one with a premium subscription of $29.95 can accrue up 50 StoryPoints a month toward special items or special character packages in a specirfic game. These specials range from 10 to 1250 StoryPoints.

Habbo has a pretty extensive combination of above models:

Free download, free play forever, virtual asset and service sales, advertising and sponsorships, subscription to unlock extra status, content and privileges.

Hence I don’t think anything we’re doing is special anymore but out of the above listed models, we probably have a more extensive set than anyone else in the business. Wonder if we could sell a box in addition to being free, that’d complete the series.

I didn’t see “Initial purchase (box or activation) with no recurring fee. (Guild Wars”.

It’s your list. But that “chat room w/ game” competes in the same space as other games listed above and has proven to have quite a successful business model. It seems, to me, a noteworthy model regardless of definition.

Matt -

Is your interest in what is in-use or possible? I think the Guild Wars model is certainly possible (though it almost seems to be a “voluntary subscription” model the way they are doing things with releases moving to every 6 months. Diablo is closest to a pay once, play forever model)

Other possible models:

Gambling - both fixed odds & pari-mutual - some of the virtual horse racing games may be getting “close” to virtual worlds.

Tournaments/Skill-games - making a “cut” of the winnings.

Promotions - Disney has its “Virtual Magic Kingdom” that inter-relates online activities with visits to the park.

http://playnoevil.com/serendipity/index.php?/archives/306-Disneys-Virtual-Magic-Kingdom-1-Million-Member-Marketing-Program-in-8-Months.html

Virtual Real-Estate - Second Life

Virtual Currency - Second Life, Project Entropia - making money on the exchange between a virtual currency for use in a free or otherwise funded virtual world and real currency.

I divide these up into different Chinese menu choices:

1. Free to Purchase vs. Pay

2. Subscription vs. Free to Play vs. (as you note) Tiered Subscription

3. Virtual Asset Purchase (vs. earned virtual assets, not a model)

etc.

Of course another interesting issue is which can work in different markets. Some of the models are really tied to owning a computer and hence not amenable to developing markets where Internet Cafes dominate.

A few notes:

Meridian 59 does not currently have a free trial. The nature of the game (fast advancement and PvP-focus) don’t really lend itself well to free trials; people would create mules to harass other people in the game. We do, however, sometimes have a separate month-long free trial to try out the game.

Personally, I think I would include Guild Wars in this model. Even though the developers say “it’s not an MMO” it often gets mentioned in the same breath as other games. It is also published by NCSoft, which is a large virtual world publisher and developer. I’d classify the business model as “Initial purchase, optional expansion purchases.” People who focus on the “no recurring fee” seem to forget that the game probably wouldn’t stick around if nobody bought the expansions.

Finally, I thought of another category which sometimes overlaps with other categories: tiered subscriptions. This is where players can pay more per month for more goodies/access/whatever. Examples include Skotos, as Christopher Allen mentions above, Simultronics, Runescape (a special case where the lowest tier is “free”), and even the upcoming game Archlord which as generated some discussion on other blogs. This is also a version of what Anarchy Online does, but you have to pay subscription and fees if you want to play with the expansions.

A very nice list, Matt. I was thinking about this myself the other day, so it’s nice to see someone else confirm my thoughts and add some new ones.

Have fun,

What about pay per resource usage?
Back when pay-per-minute was popular I think it was because it was a form of pay per resource usage. SecondLife doesn’t so much charge to sell you virtual assets as it charges you for operating costs. It maps virtual real estate to hardware on the backend and charges users per square foot of land. I think this is a very different model from Iron Realms and I would not put them in the same category (as PlayNoEvil already pointed out). I vaguely remember playing a 90s MUSH that charged people for how much CPU they used with scripting.

Taxation schemes also exist and SecondLife is confusing because it’s merged taxation with pay per resource by binding real estate to resources. Pure taxation schemes just tax virtual assets and/or tax exchanges of good or currency between players.

Another scheme is donation. Mostly seen in hobby MUDs.
For example, you set up prices for things that are not for specific users but for the population as a whole (new areas, new features). Let each player decide if, when and how much he wants to pay. People can “vote with their dollars” on what they want most next etc. I don’t know how well it works for larger projects but who know? Stephen King used it to publish a novel online one chapter at a time, revealing the each chapter only when the price was met in donations.

I guess donation has different flavors:

- Donate to keep it going (”community supported” etc).
- Donate to pay for things (set prices for new features, zones etc).
- Pay to vote (regularly put things up for voting over several days each).

I think pay to vote has the potential to scale beyond hobby MUDs (think of reality shows that use it). Use a IRE credit-like system to allow people who don’t want to pay to obtain voting currency from others in exchange for goods or services. Display periodically updated totals for each option so that people can react to what others are voting for over time. Limit the amount any one person can pledge so that above that they need to convince or bribe other people.

Are there any other games that follow the model described in point 2? As far as Puzzle Pirates goes, that generalization is somewhat inaccurate; Y!PP is more along the lines of a 6/7 hybrid, with some servers (Subscription Oceans) having subscriptions unlock additional content, and others (Doubloon Oceans) allowing the purchase of individual items using virtual sales. Our retail box is more in ’support’ of the game’s free download, rather than being the be-all, end-all. Thus, unless there’s any other better examples out there, a model like point 2 may not really exist just yet.

At least, not until we really start seeing the Xbox 360 pump out the virtual asset sales and whatnot, but I suppose nine times out of ten an online multiplayer Xbox 360 game wouldn’t count as a ‘virtual world’. Heh.

Mmmm. Semantics.

(Aside: How would the sales of services, such as UO/EQ/WoW’s character transfers and UO’s advanced character service, count in this list? Would it be rolled wholesale under ‘initial purchase (box or activation) with recurring fee’, or would it be another entry entirely?)

Hermes beat me to it; the box for PP is pretty much irrelevant. We’re free download, free play -> subscription and free download, free play -> virtual sales pretty much all the way.

I think there’s a model to do with purchasing real life stuff (not CDs in boxes) out there, but I can’t think of anyone that’s done it, yet. Well, Neopets? Didn’t work so well for them, I believe.

I wouldn’t exclude Guild Wars etc. myself.

Something a bit related to other business models: merchandise. This is what Kingdom of Loathing used for a while, where you could buy their CafePress stuff to keep the game going. Now they use a donation system to get in-game goodies.

We also did something similar the first few months of M59. We sold and shipped CDs with the client on them and gave people a guaranteed minimum 2 months of free play. This was before we got the billing system in place, so it was a way for us to get a bit of money before we could properly bill people. We also gave people an extra character slot as well.

When a guy at work did this as an exercise a year or so ago, he ended up not doing a list, but a grid, because it was clearer. Individual business model pieces (box or not) along the top, games down the side. Sort the games by territory and you get an interesting picture, of course.

I wonder how well that merchandise really does, especially for text MUDs. Anyone have an idea, or even better some actual figures?

This is like a mud-dev who’s who… Matt, are you now the keeper of the flame for discourse on online games?

Would Kingdom of Loathing fall into the same category as IRE?
It’s hard to tell, since it’s technically free download (since it’s browser based), free to play forever, and you can get items for ‘donations’.

An interesting “twist” on virtual real estate is purchasing additional character slots as Guild Wars now allows (if this was listed before, I missed it). Also, virtual assets may be divided into: unique/custom (see Cherry Pie entry in this blog), permanent (Iron Lore, I think), aging(where items wear out or break - Project Entropia), and consumables (some charge ups in Kart Rider).

“Transaction Agent” should also be possible and is effectively what happens in Second Life for non-real-estate transactions where the site operator takes a percent of the transaction (this probably needs a better name!).

By the way, has mud-dev come back to life? I tried to re-enroll from the email recently, but I don’t think it worked.

It’s not popular amongst professionals, but you might want to include the brokerage model pursued by spoiler sites (or maybe they considered infomediaries), but also the contract agent model of levelling services for players. In one case you have external third parties compiling and repackaging information of a provider’s IP and selling access to it, and in the other you have a direct service model of player’s outsourcing their efforts to professional players. Something to consider at least.

MUD-Dev has had technical problems, and the moderator has been dealing with that whole “earning a living by working all the time at a tech company” thing.

Anyway, someone had a post about business models for websites. Thought it was vaguely similar to what is talked about here and might be interesting for comparison. http://www.brianoberkirch.com/?p=114

Found via Diggdot.us.

At the very least, I like the term “freemium” to describe the business model of a free trial and paid “premium” access.

FINALLY. Someone mentions Guild Wars. I was starting to get worried that I was playing a game that didn’t really exist 0_o. Yeah, the “expansions” are expensive when you’re not getting a good deal, but I much prefer shelling out the $100 or so it has cost me so far as opposed to the conservative estimate of $400 to play for about two years of WoW. I understand a little more now when seeing it called a chat room with games attached why it hasn’t been mentioned previously, but though it’s not as hardcore-driven like EQ1/2 and WoW (Evercrack and Waste of Wages to us poor people) I think it has solid storyline, good replay value, and still has RP potential. I don’t personally RP my GW characters, but I have thought about side stories for book writing, and I’ve met some RPers in-game. GW is not as huge of a virtural world as some of the new MMOG’s, but does that matter when there are good solid servers that almost never go down, ime? D2 went down all the time for me. I hear horror stories about WoW servers. I know I’ve gotten off topic, but the pay once - free forever is my favorite model. Pay for CDs and videos and you “own” it forever, can use it forever or until it breaks (because nothing earthly is eternal)… why can’t the same be said for all games? I understand that there is a difference in staffing for long term game play versus staffing for a single-instance movie or CD and that people have to be paid, but monthy fees seem like such a hassle. I don’t want to lose all my in-game virtual assets because I had to choose between gaming and rent for a few months. There has to be a better way.