According to market researcher SuperData’s 2018 year-end report, the digital gaming (and related media) industry experienced an all-time high of $119.6B in revenue. Of this staggering amount, $87.7B comes from free-to-play (F2P) titles, which is pretty amazing when just a few years ago F2P could not even come close in competing with premium upfront cost games.
The rise of Fortnite largely contributed to the success of F2P in 2018, as it alone was responsible for $2.4B. However, we also learned from the data that Asia, and not North America or Europe, was the one leading with 62% of the overall free-to-play revenue. Western markets still have a large audience for premium games, attributed to the fact that we are still very much accustomed to purchasing consoles where premium games traditionally have thrived. With that said, the reason we are seeing this shift from premium to F2P is due to the rise of mobile gaming which mostly uses the F2P monetization model.
F2P games are free to download, but they make money through microtransactions of in-game purchases. This means consumers pick and choose what they would like to spend their money on, whether that be for weapons, stat boosts, or cosmetic items. This model works because developers have an easier way to entice consumers to try out a game and also gives consumers a sense customizing their gameplay. This, in turn, generates more revenue because consumers naturally forget about the total cost they spend over a period of time versus a one-time upfront cost.
For 2019, Superdata forecasts the F2P market will continue to grow at a rapid rate as more developers adopt this model to keep their players engaged. It is hard to say, however, if F2P will ever overrun premium games any time soon in Western countries, but this new competition leaves a lot for game developers and publishers to consider moving forward to make sure they stay relevant.