Study: the global future of online games is the 'virtual good'
Certain online games have a dedicated fan base that will keep paying a monthly subscription to access content and maintain their characters--the easy example being Blizzard's World of Warcraft MMORPG. That said, many games have found difficulty attracting and maintaining a deep player base when they charge a subscription and have been forced to experiment with other means to drive revenue. New statistics provided by international research firm Parks Associates in their report "Online Gaming: Global Outlook” indicate that the percentage of gamers who pay for subscriptions has dropped from 35 percent (2008) to 28 percent (2010). In other words, twenty percent of gamers who gladly paid for subscriptions two years ago no longer do. While the video game industry has experienced flat to negative growth in many sectors over the same time period, this decrease is far worse than any other segment.
Across the same time period, the percentage of gamers who have purchased in-game virtual items has risen from about fifteen percent in 2008 to nineteen percent in 2010. The authors of the report note that gamers are becoming invested in their gaming, and purchase in-game items to enhance and personalize their experience with the game. Unfortunately, while it's notable that such a high percentage of gamers pay money for items that have no existence outside of the particular game world, the study doesn't break down what percentage of virtual goods were purchased in any particular category, i.e., social games (Facebook), free-to-play MMO games (like the recently transformed Lord of the Rings Online, and the frequent purchasing of online items within the traditional subscription MMOG.
The fashionable interpretation of any increase in virtual goods purchase rates is that companies like the social gaming giant Zynga are the future. At the same time, while no one can deny the financial clout of the successful Facebook publisher, the percentage of gamers who buy any kind of virtual item is still smaller than those who pay for subscriptions. Despite the trend for each spending category, until data emerges to determine how exclusive spending on subscription games (whether the subscription themselves, or in-game microtransactions) is from totally subscription-free microtransactions, any particular conclusion is difficult to draw.
The recent success of MMORPGs like Dungeons and Dragons Online and Lord of the Rings Online with a transition from subscriptions to free-to-play/microtransaction is well-documented, but the market has a long evolution ahead of it before subscriptions can ever be considered "dead". Moreover, at least two high-profile MMORPGs will launch in 2011 that are decidedly not "free to play". BioWare's Star Wars: The Old Republic will be funded with subscriptions. ArenaNet's Guild Wars 2 won't have subscriptions, but the game will be funded will the retail sales of the game and its planned expansions.
As more data becomes available, we'll be sure to pass it on!