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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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U.S. Energy Revolution Announced by Trump Threatens Russia

Donald Trump’s speech about starting a new energy revolution together is now discussed by the international community. It seems that the USA is going to start a new policy regarding commodities. The changes are expected to take place within the next 10 years.
 

 

Apparently, America’s new energy policy is aimed at dominating the global markets over time. That’s why Trump and his administration are now betting big on the local oil and gas production. The thing is, the sources of the so-called green energy are not capable of replacing hydrocarbons for now, which is why they still have to rely mostly on conventional energy carriers, especially as shale oil and gas production has been booming over the last few years.
Publication date: 18 August 06:50 AM

Trump’s Policies Make USA Lose Their Leading Position in the West

More and more international experts are concerned about Donald Trump’s policies. Some of them are concerned that because of him and his actions, the USA may lose their leading role in the Western world.  

 

 

According to Fareed Zakaria, political expert, CNN host and columnist for The Washington Post, Trump’s recent political decisions have made the European Union so united that Putin could never have dreamed of. Even though he is not going to make the Western world collapse, the USA may still lose the number-one status in the Western world.

Publication date: 31 July 12:09 PM

Does China Oust Russia From Central Asia?

As the situation in Afghanistan is getting worse, this is raising a lot of concerns in the international expert community. The Islamic terrorist threat may spread from there to Russian and China, they say.

 

 
According to a Norwegian observer for Dagbladet, there exist 5 countries in Central Asia that can be seen as potential threats to Russia and China. The thing is, the Islamic terrorism may well spread from those countries to their neighbors. They say that Afghanistan is now the biggest potential threat since the amount of armed conflicts in the country are getting more and more frequent and tough. As Taliban (the local terrorist organization) is said to be sponsored and suppled with arm and ammo, the USA seems to be putting the blame for this on Russia.
Publication date: 29 July 11:53 AM

China Invests Heavily In Africa

You probably know that has been investing in a number of countries of strategical importance. There is a lot of African countries on the list. According to several observers, Chinese banks have given such countries over 77 billion euros since 2000.

 

 
Not so long ago, there was a documentary broadcast on the national TV. The documentary is about a railway line in Kenya built by China Road and Bridge Corporation. It praises Chinese engineers and tells the viewer that the Chinese government is ready to support African countries on their way to economic growth.
Publication date: 24 July 11:46 PM

Chinese Economy Is Way Stronger Than Trump Thinks

The Chinese economy has got much stronger. It can now even be compared to the American one, which is viewed to be the world’s strongest economy. Washington clearly underestimates Beijing when saying that the China has been flourishing in the international markets exclusively at the expense of unfair trade.

 

 
Publication date: 23 July 10:48 AM

British Start Getting Disappointed with Brexit, Soros Says

Last year’s Brexit referendum has become a major challenge for the British government, George Soros says. He says that more and more British citizens start getting disappointed with the Brexit.

 

 
The world-famous financier and CEO of Soros Fund Management assumes that now the economic reality starts revealing the real state of affairs and debunk their delusions related to the happy living outside of the European Union. More than 12 months ago, the advocates of the Brexit scenario were trying to persuade people that this choice won’t affect people’s standards of living. Well, since then, the government has been trying to implement this promise at the expense of increasing the internal debt.
Publication date: 14 July 02:40 AM

Two Reasons Why Russia Keeps Losing Influence Over Post-Soviet States

After the USSR ceased to exist, the Kremlin was counting on retaining their influence in the region. However, the truth is that Russia as the major successor to the USSR has been losing its influence over the remaining post-soviet states. There are 2 reasons for that.

 

 
According to the related report recently published by private American analytic company Stratfor, there is a range of new tendencies making it difficult for Russia to stay influential in the post-soviet region, especially when it comes to Ukraine. The two major reasons for that are believed to be the declining role of the Russian language in the region as well as the existing threats of mass protest inside Russia itself.
Publication date: 06 July 01:42 PM

Business with China: New Reality after Blocking Yandex and VK in Ukraine

Ukrainian President Petr Poroshenko has expanded the list of sanctions against individuals and legal entities from Russia. To be more specific, Ukraine imposed sanctions on several Russian online companies, including Yandex, which is Russia’s biggest IT company, as well as some other popular web services like VK, Odnoklassniki, and Mail.ru Group. According to the presidential decree, Ukrainian Internet providers are forbidden to grant access to those blacklisted websites.

Publication date: 06 July 01:13 AM

China Doesn’t Need Russian Gas and Pipelines

Don’t you remember how a couple of years ago Gazprom cut natural gas supplies to Ukraine a number of times. By the way, Ukraine alone used to buy 55 billion cubic meters of natural gas back then. Now Ukraine buys no natural gas form Russia at all. Apparently, Moscow keeps on looking for other outlets. There has been a lot of buzz about China as a new big outlet for Russian natural gas and crude oil. It turns out that two new pipelines should have transferred to China some 38 billion cubic meters of natural gas every year. Yet, this was the maximum amount, and it couldn’t clearly make up for the export of natural gas to Ukraine.

Publication date: 05 July 11:15 AM

Mass Media on Forthcoming Trump-Putin Meeting

For those of you who don’t know, the first official meeting between Donald trump and Vladimir Putin has been confirmed. It’s planned for July 7, during the G20 summit in Hamburg, Germany.

 

 
Some observers say that the White House did the Kremlin a favor by being the first one confirming the official meeting during the G20 summit. This announcement helped the sided to get of the rumors around the situation and helped Moscow to save face in the Russian media space.
Publication date: 05 July 06:24 AM