Canadian Finance Blog

Posted: 29 Jun 2011 02:00 AM PDT

Earlier this week, Valve (a major gaming company), confirmed a major trend in online gaming by releasing one of their most popular games, Team Fortress 2, for free. TF2 was never a particularly expensive game, and could often be found on Valve’s Steam service for 5 or 10 dollars. It also isn’t a very new game, as TF2 was released in October of 2007, and its predecessor came out in 1999. Why would Valve suddenly give a game away for free, especially one that has proven that it will consistently make the company money? Well, besides the fact that they now have added a large number of users to its game service, Steam, Valve continues to make money on micro-transactions within the game – a staple of free to play games (F2P).

Free to play games are a relatively new concept in the online gaming world. Games are created and released completely free of charge, allowing gamers to access new games they might not otherwise try. Instead of standard revenue from game sales, developers release additional content or items within the game that are sold to players who desire for in-game recognition or rewards. Most of the time, these purchases are not necessary to enjoy the game, and those who do purchase are not given an unfair advantage. They are simply there for style or as a means for gamers to support the games that they love.

For example, in TF2 you can download and play the game free of charge. As you play the game, you will discover that you can equip your character with different items. There is the standard items, items that you find as you play, and items that you can purchase. Some simply change the style of your character or the way that the character plays – but for every advantage the item often has a corresponding disadvantage. Others are there purely for changing the way that the character looks – giving you no more of a competitive advantage over gamers who have not invested any money.

Another free to play game, League of Legends (LoL), is similar. As you play, you earn points which you can use to purchase new characters to play with. If you want, you can instead purchase additional points and bypass having to wait to earn new characters. Or, you can use your actual money to purchase skins for your character. Again, buying new characters and skins will not give you a competitive advantage, but it may change the style of gameplay, and how your character looks.

F2P games are theoretically cheaper than purchased games, as they don’t necessarily cost anything. However, the problem comes when you start to actually invest into these free to play games. In League of Legends, for example, if you were to invest enough money in order to purchase all the characters and all the skins for the characters, you would literally be investing thousands of dollars. Other games you get the entire game for a mere $60, but in some free to play games, in order to own “everything” about the game, you have to invest hundreds of dollars. Even if you loved LoL so much you did purchase/earn everything, the developers release a new character and new skins every week or two, meaning you have to be constantly investing in the game in order to “own” the whole game.

This might seem a bit crazy, but it works. The video game generation has grown up and now has a lot of money on their hands. Free to play games lower the bar of entry and draw the gamer in, relying on the fact that enough of them will stick around and enjoy the game enough to make a few small purchases.

Now, if you compare the cost per hour of entertainment of F2P games against other games, including the cost of MMORPGs, you might be surprised to find out just how much that free game is costing you. Don’t assume that because it is “free” that it won’t cost you anything – especially if you have more money than time. There is absolutely nothing wrong with investing in games and companies that you want to play and support, just don’t assume that it is a “cheap” or “free” game just because the developer made the cost of entry low.

Do you play F2P games? Have you ever made a purchase in a F2P game? Why or why not?

The Cost of Online Gaming: Free to Play originally appeared on Canadian Finance Blog on June 29, 2011.

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