Over the last few years, video games have experienced a constant growth in the market, as shown by the number of competitions and the E3 (Electronics Entertainment Expo), which bring together many video game enthusiasts every year.
This growth has intensified with the Covid-19 pandemic and the numerous containments. In 2020, the video game industry is estimated to have reached a turnover of nearly $180 billion, roughly equivalent to all the wealth created in New Zealand during the year.
But behind this market there are two main categories P2P (Pay to Play), which are most games, especially on consoles. The business model is based on a payment at purchase, then a content generally free where you just have to play to unlock it. The second category is F2P (Free to Play), which arrived on the market in the early 2010s, and are based on a free-to-play business model, so there is no cost of entry. However, there is a monetisation of in-game elements, i.e. optional purchases to enhance the player’s experience, which are presented in the form of micro-transactions rarely exceeding €20 but it is their numbers that allow the company to be profitable. The phenomenon started with mobile games such as Angry Bird and Clash of Clan, but has since developed into the best examples being Fortnite and League Legends, which are behemoths in this market.
Analysis of mobile F2P:
More and more players are using their mobile devices to access video games. In France, the mobile ecosystem has increased its revenue by 16% compared to 2019, this means that more and more users have access to free video games without having to invest in a console and can pay for the items that give them more satisfaction thanks to micro-transactions.
Titles such as Candy Crush, Clash of Clans or Angry Birds are some of the most popular free download games on the mobile and tablet market. Mobile F2P games reinforce their economic profitability through numerous advertisements. This is perfectly profitable because, given the free nature of the game, the number of users is naturally higher than P2P, and therefore more interesting for the companies generating the ads.
We can see that currently on the mobile market, there is a majority of F2P, for a limited number of P2P, should we worry for the future of P2P?
Analysis of F2P on PC/Console
To analyse F2P, we will take the example of the game Fortnite which is the caricature of a successful F2P. Indeed, this new game has had the effect of a bomb on the video game market, with, since November 2017, about 45 million players and a turnover reaching 285 million USD during the month of April. The game is free to play, although the purchase of special items or “season passes” is possible once the game is downloaded. The business model and popularity of the game Fortnite is surprisingly exponential. In less than 6 months, Fortnite’s fan base has surpassed that of many pay-to-play games, reinvigorating discussions about the viability of traditional P2P games. However, we observe that this game has not been detrimental to P2P, on the contrary, Blake Jorgensen, EA’s vice president of finance, mentions in an interview that in the first quarter of 2018, revenues from P2P games have even increased. He explains that “the arrival of Fortnite on the different platforms has even helped our business. The game brings new players who will and can be interested in other games, other companies, like ours. So we have benefited from this game. EA even saw its share price recently (April 2018) close up 16% compared to the beginning of 2018
In conclusion we can say that the F2P strategy is very viable. In the global games industry it will become dominant and crush P2P, where in console/PC games a balance will be formed
https://www.digitaltrends.com/gaming/best-free-strategy-games-for-pc/
https://hbr.org/1997/09/strategy-and-the-new-economics-of-information