As we reported at the end of June, the head of one of Europe’s most important gaming destinations, Klaas Kersting delivered his keynote speech yesterday at the GDC Europe event. Titled, “Changes in the Games Industry – Free-to-play vs. Payment Models,” Kersting shared his thoughts, advice, and experience when dealing with the free-to-play business model.
As reported by Mike Rose from Gamasutra, one of Kersting’s key takeaway points was that “free-to-play will dominate [the gaming industry] soon.” Obviously, coming from Europe’s largest developer of free-to-play browser and client based MMO games in Europe, Kersting has a bit more insight than the average Joe. His reasoning and philosophy come down to experience. He readily acknowledges that full-priced retail (i.e. in the box) games are still the defacto choice for a number of publishers, but a number of problems including piracy, market competition and overcrowding, and the “one time earning” factor are forcing traditional sales methods and resulting revenue numbers to drop. Eyeballing both Ubisoft and EA, Kersting pointed out that both manufacturers have seen a 51 and 20 percent (respectively) drop in sales numbers.
Stating his antithesis to this ‘traditional’ method of distribution, Kersting states that Online distribution is really a no brainer. Making points to appeal to both producer and consumer, Kersting says that an online distribution method has “close to zero” overhead operating costs, while at the same time the consumer, “wants to get what he is looking for as easy and fast as possible.” In other words….why should I go to the store, or order via amazon, and then wait? Providing a digital distribution method quenches consumers’ gaming thirst then and there, not a few hours or days later.
Talking to his own company’s methods, Kersting says, “give the game away for free. Why not?” Once this game is given away for free, producers then have a captive audience ripe for the sale. “Then give the player an opportunity to buy something,” he says.
However, Kersting and company aren’t living between the clouds. Driving a company to the top of the free-to-play destinations has taken some clever maneuvering and some smart business. To this end, Kersting comments that, “Free is not a business model – of course price matters. But free is the beginning of other business models.”
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