Subscription model works, but free-to-play will dominate

Frogster COO Dirk Weyel has told GamesIndustry.biz that he believes that the western MMO market will be dominated by the free-to-play model, although subscription-based titles will always have their place.

Weyel, who's company is launching the subscription-based MMO, TERA in Europe this year, also revealed that he sees TERA as the premium product in Frogster's portfolio, a fact which justifies the monthly price-tag, but doesn't see think free-to-play games should be of any lower quality - something which he doesn't think many journalists appreciate.

"It was difficult at the beginning because the opinion of many games journalists was that free-to-play means lower quality," Weyel told GamesIndustry.biz as part of today's interview.

"We tried to show them that it's just another business model. So we started to market the game with a premium branding approach. So we think that in order to be successful in the long run we need to build brands and have a clear positioning and a clear brand philosophy to build up the game.

"We generally believe that free-to-play system will be the model for most of the MMOs in the future, but we also believe that the subscription model does still work. There will be subscription models in the future, and also hybrid models. We believe that TERA is the most premium title of all the games we have at the moment. In terms of production budget and quality in-game it's certainly the premium product for this year.

"That's why we're convinced that the subscription model can work for a title like TERA. I think free-to-play will be a model which will dominate the West, but I think there will also be a few subscription titles which can be successful."

Over the course of the last 18 months, a number of large scale MMOs have switched payment models from subscription to free-to-play, with varying degrees of success. For some, such as Lord of the Rings Online, it's been a masterstroke, with revenues trebling after the change.

There's a very big acid-test on the horizon for the survival of the subscription model, in the shape of EA and Lucasarts' Star Wars: The Old Republic - but does Weyel believe that game can take a bite out of World of Warcraft's audience, and would that be a good thing for the industry as a whole?

"I would say that the good thing about it would be that it's a non-fantasy title. If it can prove that a non-fantasy title can regain a big consumer base and user base. I think if you ask industry people about their opinions about the chances of success though, they'll be very diverse.

"I would say it would be a good sign. I think it would show that there are a lot of users out there willing to pay a certain amount of money each month for a good game.

"Basically, it's going to be interesting. There's Eve Online, but apart from that, the subscription-based model is dominated by fantasy role-playing games."

It's not something which Bigpoint CEO, and Frogster rival, Heiko Hubertz thinks is likely to happen - he told press last October that he can't see the MMO becoming profitable at all, despite his chairman Simon Guild's belief that the future will include subscription-based games.

"If you look at a game like Star Wars from EA and BioWare, they estimated a development budget of more than $100 million. This is an online game for many million of subscribers, so a big publisher does not understand that a subscription model is not the future," said Hubertz.

"With micro-transactions and longer lifetime maybe I see a chance for this game but I don't think that EA or BioWare will be profitable with this game. Ever."

Dirk Weyel was talking to GamesIndustry.biz as part of the build-up to this year's Game Connection@GDC 2011 event, taking place in San Francisco from March 1-3.