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Investing In Video Games: Pay To Play Or Free To Play?

Investing In Video Games: Pay To Play Or Free To Play?

The video game industry in the US and Europe seems to have reached its climax. Millions of gamers are looking forward to purchasing their own copy of another bestseller. They are ready to pay monthly fees for playing online and to buy various artifacts and items to take advantage over their enemies. Investors now seem to be more willing to invest millions in the industry.

The video game market of the CIS states is not as developed as the western one. Consequently, it presents special interest to the giants of the global video game industry. Pay to play and free to play are the 2 basic business approaches to earning on MMORPGs.


What are the essential differences between these two business approaches?

 

 

 



Pay To Play Or Free To Play: Which Is Better For Investors?


According to Vladislav Tsarenko, Masterforex-V Academy’s video game expert, pay to play (PTP) and free to play (FTP) are essentially different approaches. PTP implies monthly or annual fees for playing a certain MMORPG while a free-to-play MMORPG speaks for itself: no fee is charged unless a gamer wants to buy some artifacts or to upgrade his/her character to get an edge in the game.  


Free to play. FTP is more popular among developers. Its major advantage is that a gamer can test it for free without any limitations. That is why such games are more popular and widespread. Everybody likes freebies. If a free-to-play game is really awesome, then sooner or later some gamers will want to upgrade their characters or simply to get an edge over their enemies. A gamer’s desire to become stronger, faster and better than opponents seems to be the major market driver. It makes more and more video game developers start their free-to-play MMORPGs, with millions invested in these projects.  Such upgrade fees are usually small for an average gamer – $5 to $10. Of course not all the gamers who play FTP MMORPGs pay such fees. Moreover, when a game’s rules and conditions are really tough, most gamers will start leaving the game. In this case, others won’t upgrade because this just won’t make any sense. So when creating a successful FTP game, a developer should focus on the balance between the paying minority and the “we like freebies” majority. Numerous bonuses and promotions should help developers encourage their clients to pay.

There are many free-to-play games on the net, including Perfect World, Allods Online, Land Of Chaos, Granado Espada etc.

Pay to play. Unlike FTP, a gamer, who wants to play a PTP game, has to pay a monthly fee to get an access to it. This approach is often used for the industry’s coolest, high-budget games created by the world’s best developers. Considerable funds are spent on advertising campaigns and beta-testing to make such a game extremely popular and highly anticipated even before the official release. World Of Warcraft (WoW) may serve as a striking example of a play-to-play MMORPG.  This game was highly anticipated because it was a sequel to the famous WarCraft series created by Blizzard, a video game giant (for more details read the article “Tips For Investors: Blizzard Conquers Video Game Industry”). As a result, over 13 million gamers around the world keep paying monthly fees ($10 - $15) to play this MMORPG.

However, developing a pay-to-play game is always risky. Such a game should be really good to interest gamers so much that they would want to pay regularly for playing it. That is why developers always start beta-testing before the official release of a PTP game.  During the period of beta-testing gamers get a free access to the game in order to decide whether to continue playing it after the official release.

The biggest advantage of this approach is that EVERYONE PAYS. Another plus is that all the gamers are equal in rights and cannot buy an edge over their opponents, like it is done in a free-to-play game. The major drawback is that a PTP game can fail to come up to gamers’ expectations. In this case, the game is doomed to become unprofitable because nobody (or very few gamers) will pay. The Russian version of Warhammer Online is a striking example. The developers ignored the fact that the CIS’s gaming community is far less willing to pay for games, thus preferring free-to-play MMORPGs.


These are some of the most popular pay-to-play games : World of Warcraft, The Lord of the Rings Online, Warhammer Online, Star Wars: The Old Republic.
 

 

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Hybrid approaches. To tell the truth, these days there are very few games that are 100% PTP or FTP. Most pay-to-play games are modified so as to provide free-to-play options up to a certain level. Later a gamer will have to switch to the paid mode if he/she wants to continue playing and developing his/her character. Moreover, some PTP games offer some items a gamer can buy for his/her character. Fortunately, they don’t give gamers an edge over their opponents. On the other hand, free-to-play game projects offer their clients an opportunity to get a premium/VIP account. This is a set of certain bonuses and VIP services for those clients who have paid a certain monthly fee.

Therefore, developers strive to utilize the strong sides of both the approaches to make as much money as possible. Once again, WoW can be cited as a striking example here. The developers have recently allowed their clients to play WoW for free until they reach level 20. Moreover, the gamers can pay to change the name of their clans or to purchase pets. Blizzard has recently confessed that by rendering these “small” services the company earns big money. For example, a pet costs up to $25.

The bottom line:
When investing in a MMORPG it is necessary to determine which business approach it will be based on.


If it is a pay-per-play game, an investor should find out if the advertising campaign is good enough to make the game highly anticipated and to attract an army of devoted fans who will be paying monthly fees.


If it is a free-to-play game, everything is simpler. The only thing an investor should do prior to investing is to evaluate the quality of the game, i.e. whether it is good and interesting enough to make gamers pay for various items that will make their characters better, stronger and faster than their opponents. Once again, make sure that both the paying minority and the “we like freebies” majority will get what they want. The former will pay only when they want to get an edge over the latter.

Market Leader and Masterforex-V Academy would appreciate if you could participate in a survey. Please, visit the Academy’s forum for traders and investors and answer the following question:


In your opinion, what kind of MMORPG is better to invest in?
 

 

You are free to discuss this article here:   forum for traders and investors

 

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Soros, Rockefeller and Other Billionaires Ask U.S. Government to Raise Taxes for Them

The State of New York’s richest citizens – including some of the world’s richest families such as Soros, Rockefeller, Disney and others – have signed a petition to ask the local authorities to raise the taxes for the super-rich.

 

 
The extra money allocated as the result of those tax hikes are offered to be spend on schools, infrastructure, support for the homeless and other important things. The billionaires say that it’s time to invest in the long-term economic attractiveness of New York.
Publication date: 25 March 06:02 AM

Polish Defense Minister Calls Donald Tusk a Traitor

Not so long ago, Poland found itself in the middle of another political scandal. The thing is that the Polish Minister of Defense accused President of the European Council Donald Tusk in a diplomatic betrayal. For those of you who don’t know, Donald Tusk used to be the Prime Minister of Poland.
 
To be more specific, Donald Tusk was allegedly cooperating with Vladimir Putin when he was the Prime Minister of Poland. They Defense Minister claims that the aim of this cooperation was to undermine Poland’s national interests after the Polish President’s airplane crashed in Russia in 2010. Apart from the President, there were 95 people on board, including a lot of high-ranking Polish politicians. Unfortunately, nobody survived the crash.
 
Publication date: 24 March 09:48 AM

Candidate Macron Is Against Tighter Relations with Russia

Emmanuel Macron is a former French Minister of Economy and one of the candidates of the post of the President of France.  He thinks that France should be moving forward to tighter relations with the Russian Federation.
 

 

During the pre-election debates broadcast by TF1, Emmanuel Macron showed that he wouldn’t make friends with Moscow if he elected President of France. He thinks that France needs independence and tighter cooperation with fellow EU countries. He wants to make France stronger and more independent based on responsibility and real European policies.
 
Publication date: 24 March 12:49 AM

Russia's Become More Influential in the Middle East, Stratfor Says

According to Stratfor, a US-based private analytic company, Russia has really become more influential in the Middle East.
 
According to the recent report released by Stratfor the other day, since the Russian federation has deployed its troops in Syria, it has been increasing its role in the entire region. Apart from helping Iran (shipping weapons) and Egypt (investing through Russian tourists), Russia has been actively participating in several regional disputes at the same time.
Publication date: 23 March 09:32 AM

Evgeny Kiselev on 3 Years of Russia's Crimean Shame

For those of you who don’t know, a couple of days ago, Russia celebrated the 3rd anniversary of getting back the Crimea, which was essentially annexation. Evgeny Kiselev, a famous Russian journalist who later got the Ukrainian citizenship, decided to comment on the results of Russia’s annexation of the Crimea that took place 3 years ago.
 
Publication date: 23 March 04:27 AM

Europe Looks Helpless Under the Treat Coming from Russia, Experts Say

According to several experts, including Mikhail Samous, a military expert from Ukraine, at this point the entire Europe looks helpless when it comes to any possible threat coming from Russia.
 

 

To be more specific, Mikhail and his fellow experts assume that Europe has still failed to come up with efficient ways of resisting the kind of a hybrid war Russia has been waging in Ukraine, and even some other places around the world.

Publication date: 22 March 08:43 AM

Trump's in Search of Peaceful Conflict Resolution in Donbass

Donald Trump met with Angela Merkel. There are reported to have spent a lot of time discussing the situation in Ukraine.
 

 

Having talked to Angela Merkel, Donald Trump agreed with the idea of peaceful resolution of the Donbass conflict. However, he also gave everyone to understand that some other scenarios are possible as well. He said that ideally they are looking for the ways and means to resolve the conflict in a peaceful way.
Publication date: 22 March 02:54 AM

Queen Stats Brexit

From now on, the British government is allowed to start the so-called Brexit, i.e. the process of quitting the European Union for good. The thing is that the previously approved document aimed at starting the Brexit procedure is now signed by Queen Elizabeth II. This means that the British government has got a green light to implement the people’s will expressed during the corresponding referendum on June 23rd, 2016. From now on, there is no stopping Theresa may from starting the Brexit.

Publication date: 20 March 11:28 AM

It’s Necessary to Prevent Russia from Influencing the Balkans, Theresa May Says

According to British Prime Minister Theresa May, the Balkan states are in jeopardy. This threat is coming from Russia. That’s why she thinks that European leaders should establish tighter cooperation with those Balkan states that are not EU members to avoid letting Russia spread their influence over those states.

Publication date: 20 March 06:12 AM

Angela Merkel's Gonna Shed Some Light on the Situation in Ukraine for Donald Trump

Several Western online sources report that Angela Merkel is willing to tell Donald Trump all the truth about what’s really going on in Ukraine. The thing is that German observers assume that Donald Trump knows relatively little about the situation in Ukraine in general and the East of Ukraine in particular. That’s why they assume that their Chancellor seems to think that it’s now here responsibility as a European leader to shed some light on the situation and help the U.S. President understand the real state of affairs in the region, especially in the Crimea and Donbass.

Publication date: 20 March 05:35 AM