INTRODUCTION

While free-to-play games dominate mobile gaming and are hugely successful on PC, they are still relatively new to console gamers. Almost not present on last-gen consoles for a long time, Microsoft, Sony and Nintendo changed their strategies with the current generation and opened their platforms to free-to-play titles. But what does the future hold for freemium games on consoles? Are they going to be as successful as they are on other systems? And are console gamers ready to change their spending habits? Mothership examines the development and gives an outlook on what to expect for the future.

In 2012, when freemium games were already marching on the road to victory on mobile and PC, console gamers were still used to traditional retail models. Buying a game to own without any additional cost (DLCs excluded, of course) was the rule. This all started to change in in March 2012, when Sony announced three free-to-play titles for Playstation Home. Another seven month later Microsoft joined the trend and launched its first micro transaction-based game Happy Wars for the Xbox 360. The experiments were hugely successful: one year later it was announced that Happy Wars alone had gained six million players.

Freemium on Consoles is Growing Steadily
With these numbers it is no wonder, the companies continued to expand the freemium sector. Today, the list of freemium games on consoles is still pretty straightforward and does not come close to the about 280 free games Valve is offering its players on Steam, for example. But it is clear the development shows an unmistakeably tendency towards freemium business models.

But high player numbers do not necessarily result in high revenues. Are console gamers willing to spent money in-game? Or are they just enjoying free games while sticking to their habit of buy-to-own? Apparently, they are more than willing to enhance their gaming experiences with micro transactions.

The Free2play ARPU is significantly higher on consoles.

In 2013, John Smedley, president of Sony Online Entertainment, now Daybreak Game Company, said that 70 percent of revenue of their multi-platform title DC Universe Online was generated by PlayStation players. In an interview two years later, he stated that their PlayStation 4 free-to-play games had a monetization rate that is between 3 and 3.5 times higher than on PC.

More insights on payment reserves with console gamers were shared by executives from Sony, Wargaming, Daybreak Game Company and Gaijin Entertainment at 2015’s GDC in March 2015. While Anton Yudintsev, CEO of Gaijin Entertainment, stated that consoles are responsible for 18 percent of their annual sales, Laura Naviaux (Daybreak Game Company) declared that their average revenue per user for DC Universe is twice as high as it is on PC.

Consoles offer considerable advantages over PC.
But why is it that freemium games monetize better on consoles compared to PC? One reason surely is the lower barrier to spend money. Consoles already have built-in payment systems that allow for uncomplicated purchases. Another reason could lie in the purpose of the console itself: while a PC is used for many other things besides gaming, consoles are almost solely built for that and are therefore used by people that are willing to spend money on games – be it pay-to-play or free-to-play titles.

Conclusion and Outlook

While it seems that free-to-play games have a bright future on consoles ahead and players are willing to spend money on them, it depends on both developers and publishers whether this business model will succeed on a large scale. Nintendo, for example, only just released their first freemium game Steel Diver: Sub Wars a year ago in February 2014. And in a recent interview Nintendo CEO Satoru Iwata told TIME that he is not exactly against freemium but he also does not believe that the business model is suited for every kind of game.

Players looking for free games on Xbox also face Microsoft’s subscription model Xbox Live that is mandatory in order to play freemium games. Another obstacle in the mass distribution of no-cost games lies in the closed systems of consoles. Every company has its own processes implemented that developers must follow when patching and updating a game.

On the other hand, many developers have accepted consoles for their free-to-play titles and will continue developing or porting their games for and to these platforms. Among others, Crytek, Capcom, Perfect World, Blueside, Valkyrie Entertainment or Bethesda all have plans to release more freemium games for consoles in 2015.

Free-to-play titles might not replace traditional retail models on consoles, but they surely will have a big slice of the pie. And with players willing to invest in freemium games, well-made game will become financially successful on consoles, too.