Free-to-play has reached its limits - Analyst

The free-to-play trend may be cooling off, according to SuperData CEO Joost van Dreunen. Speaking today at the GameON: Finance conference in Toronto, the head of the research firm said the monetization model seems to be on the decline in some genres, while demand for premium-priced offerings like the latest World of Warcraft expansion, Warlords of Draenor, show there's still a healthy market for those willing to pay.

In his presentation, van Dreunen made comparisons to TV and film, where plenty of people will pay $15 a ticket to enjoy an IMAX movie, but there's also a market for free fare like soap operas.

"I think games are splitting up the same way," van Dreunen said. "You have the free-to-play, social/mobile experience, and then you have the blockbuster, super-produced fantastic stuff. And there are really different audiences here.

"So I think what's really happening is on the one hand you have the free-to-play audience, and I think that's reached its limits, to some degree. And then there's the premium audience saying, 'Yes, I want to buy a game. I don't want to deal with the ads and in-game items. I want premium.' While in the mobile market, three-quarters of stuff is built with free-to-play as its dominant monetization model, you see somewhat of a backlash."

He noted Apple recently changing its terms so free-to-play games could no longer be advertised as free, saying, "there's definitely this sort of moment of a plateau." He then pointed to a recent SuperData study on kids and their preferences on spending models.

"They prefer premium. So like Minecraft, you buy it for $6 on tablets and that's all you need. Sure, you can buy an expansion, but the experience is there. And I think that works well for kids as well as for parents, and game companies have kind of figured that out. Certainly platforms have figured it out by saying, 'We don't want people advertising in-game spending to little children.' Because that borders on the unethical."