Some argue that free-to-play games exploit their customers, but Machine Zone CEO Gabriel Leydon says it's the console industry that's exploitive, and that it will soon be taken over completely by free-to-play games.
Some argue that free-to-play games exploit their customers, but Machine Zone (formerly Addmired) CEO Gabriel Leydon says it's the console industry that's exploitive, and disrespectful of its clientele. Machine Zone is finding success with its mobile games, such as iMob and Global War, and Leydon doesn't just think free-to-play games are a possible future. He thinks they will be the entire industry. He argues further that games might eventually pay you to play them. With the Facebook free model, where you the consumer are essentially the product (via metrics and ad data), he might not be far off. Though this author strongly resists the idea that paying for a product outright will go away forever, with indie game developers especially thriving on the pay once model, Leydon makes a compelling case. If China never had a retail model for games, and never will, and is predicted to be one of the largest game markets in the world in the short term, what does that say about the future of the single-pay model? Free-to-play is clearly the way to make money on the mobile platforms right now, but some have argued it may be the future of consoles, as well. What do you think? I think it's the only way to make money in video games. There's a lot of backlash against free-to-play, especially from the traditional game industry, because they don't understand it. They feel like free-to-play is somehow tricking consumers or some people are spending too much money. But the way I look at it is the console industry is actually the abusive industry. Not free-to-play. Console treats its customers like they're their enemy. They are angry at them for selling games they don't like back to Gamestop. Gamestop won't help the video game industry make money on used games. It's like this big warzone against the customer as if the customer is doing something wrong by buying a $70 game that they end up not liking the next day. And you can kind of see this phenomenon when a game like Call Of Duty comes out, and the next the day the used section is nothing but Call Of Duty. So, what you have is a very large percentage of the Call Of Duty buyers who don't like the game and they spent $70 on it and they can only get so much retail value because they use that online pass and the used game, the Gamestop guy is saying, "Hey, this game is only worth $20 now." So, what happened to that consumer? Nobody is feeling bad for them. Nobody is saying, "Hey, they just wasted $50 on something they don't like." The console industry celebrates that. They're happy about that. Well, I wouldn't say they're happy about it. And besides, the console industry is also doing digital downloadable stuff which is sold at one price. You could also argue that the traditional console industry is moving in a player-friendly direction. That's not true. There's rumors of the next Xbox not even being able to play a used game. I remember when I used to be able to return a game. It used to be possible to return a video game. People forget that. If you didn't like something you could take it right back to Toys 'R' Us and get your money back. The video-game industry should be encouraging used sales. They should be encouraging refunds. But they're so locked into this model of selling people sequels year after year after year that they feel like, "Well, if the player doesn't like it, that's their problem." I don't know that they'd want to encourage returns, though, because you can't go see the new Mission Impossible and be like, " I didn't like that movie! I'm gonna take my time back." No, that's great that you bring that up because the movie industry is having the exact same problem. They have movies that are available for free online through piracy and they're saying, "Well, we can't compete with free so what we're going to do is we're going to put everything in IMAX and 3D, and it's going to be higher quality and that's going to be why you're going to pay $20 instead of $5 like you used to." It's not working. The music industry had the same problem. With MP3s, remember Napster? MP3 quality sucked. It was terrible! But yet it was destroying the CD industry. The quality didn’t matter. It was just the fact that it was free. It was a lower-quality version of the same media but it was still free. And now if you listen to an MP3 it sounds just as good a CD. You can't tell the difference. So, free-to-play is the MP3 of the video game business. It is right now a lower quality than console but it's making money and it's growing like crazy and consumers are liking the fact that they can play a game for months at a time without ever spending a dime. So, the economic model is far superior to console, which just can't compete. But the last thing console can hold onto is the quality, but the quality is also ratcheting up pretty fast on the free-to-play with games like League Of Legends and now CryEngine is being used for free-to-play. There's no room for a paid upfront game anymore. I kind of disagree with that -- well, indies for instance have had great success with that, and bundles are huge right now. Sure, sure. Because of deflation, right? They're paying less up front. Sometimes. Some people are and some people aren't. Well, Minecraft is much cheaper than a console game. The trend is still headed towards zero. I think there are going to continue to be people who want to have an experience that isn't related to in-game monetization. I just don't think so because there's this idea that the way free-to-play is how it's going to be forever. Of course it's going to change. If you look at it just three years ago, how much different it is from three years ago to now? It's much better than it was three years ago, that whole SMS scam that Zynga was caught up with. Free-to-play is already significantly better from where it was three years ago, and where it's going to be three years from now is going to be much better than where it is today. I think there's a lot of projection as if what's happening is how it's going to be forever. That's not true. Obviously it's been changing for a long time because it really started in 1999 in Korea and it's certainly not now where it was then. A country like China will never have a paid market. Sure, because they never did. And they never will. So, to say that the largest consumer country, in the near future, in the world, will never have pay-to-play market – that's pretty important. That's really important. If you have companies chasing worldwide markets because the Internet allows you to make a game for every culture, every country, and to say one of the biggest ones is only free to play and that won't happen everywhere else? I don't think that's true. I think it's going to happen everywhere. It's hard for me to think that paying once for a game is going to disappear entirely. I think you'll play games that you'll never pay for. I think you're going to be playing games where the game pays you to play. So, this idea that it's stopping at zero is also wrong. So, you have things like Tapjoy, where people are downloading apps – there's a small amount of work – but they're not paying anything. The other games are literally paying that player just to try out their game. So, I think we're going negative. I think we're going below zero in the future.
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