July 19th, 2012
Author: Steve “Skuax” George
Payment structures and the competitive nature of MOBA games in the market, can Riot be beaten by Valve?
Over the past few years, payment structures in the games industry have changed dramatically, from the rise of digital distribution through platforms such as Valve’s Steam, to the growth of DLC and episodic content. The rise in the popularity of the MMO genre provided developers with the chance to test the market with free-to-play, micro-transaction based payment structures. These have now largely matured from being a “Pay-to-Win” strategy to simply allowing players to customise their characters and unlock content faster than others for a small price.
The micro-transaction model has various benefits for developers, not only does it offer a continuous revenue stream when compared to one-off payments, but it also dramatically aids player retention as customers are reluctant to leave behind all of the funds they have invested in the game. When you are in a market that needs to defend itself from the entry of new competitors the advantages of this are clear.
Even Blizzard eventually got involved in the sale of cosmetic items for World of Warcraft.
Riot Games’ League of Legends now stands to show just how successful this model can be. Through the sale of cosmetic skins and instant champion unlocks, Riot has made a great deal of money, allowing them to keep adding on more and more content and invest very heavily in their game’s advancement as an eSport. As their game controls such a large slice of the MOBA market, this allows them to essentially dictate how business is done in that market. For example, it would be extremely hard for a competitor to come along and want to charge players to play their game, when the market leader, Riot Games, provides their core product for free.
As a result of this, it was no surprise to see Valve confirming that their much anticipated MOBA Dota 2 would launch as a free-to-play title. However, despite still opting for a model that revolves around micro-transactions, Valve is mixing up the format in some different and exciting ways that could offer them a competitive advantage. Cosmetic items will be available for instant purchase from the Dota 2 store, however players also have the chance to randomly gain the same items (occasionally with some visual variance) through simply playing the game.
Millions of players are more than happy to part with some cash to customise their favourite champions.
Valve has recently spent an extensive period of time strengthening their infrastructure surrounding free-to-play games. Giving them their own promoted section in the Steam store and giving them integration with the Steam trading and Steam wallet systems for ease of purchasing and swapping items with friends. The ability to gain items for free will certainly incentivise players to keep on playing, and the option to swap their unwanted items with other players from around the world is something we have not yet seen in the MOBA market, but should be very well received by players.
In addition to this, Valve is also breaking new ground by offering all of the games’ heroes as free-to-play forever. This is very different than Riot’s method of offering a rotation of free champions paired with gradual or cash unlocks to permanently keep champions. This will likely entice players in and get them trying many different play styles, increasing the chances that they may find something that really appeals to them. However I will admit that in my own experience the selection can be somewhat overwhelming to a new player.
If you want your Nature’s Prophet to look like this you can buy the items instantly or just keep playing and see if you are lucky enough to get them for free.
For Valve, this is already well explored territory as it is nearly identical to the system they use for their popular first-person shooter, Team Fortress 2. The company has enjoyed great success with this system and should now be expecting to see that success mirrored when Dota 2 launches to the general public later this year. However, with all of that being said, very little would stand in Riot’s way, if they wanted to offer their players similar services in response to Valve’s new structure.
Competition is a great breeder of innovation and all of this could potentially lead to additional services and features for players, regardless of which game they prefer. If you look back to a decade ago, the concept of free-to-play games would have seemed highly unsustainable, but now we see them as one of the most successful long-term payment structures. This goes to show that only time will tell what direction developers will take when seeking a unique competitive advantage in the future.