Freemium: Is it evil?

Every conference has its hot-button topics, and at Develop it was unquestionably the proliferation of the Freemium business model.

It seemed that, in any given room at any given hour, some designer, programmer, producer or CEO was discussing the monetisation of products that are ostensibly given away for nothing. Some were tales of triumph, some were tales of woe.

Clearly, success is possible with Freemium, but it's far from simple, and the difficulties involved have led to a glut of games and products that have been branded - by no less a figure than Braid-designer Jonathan Blow - as "evil".

The veracity of that claim was the subject of an interesting debate between Dan Keegan, general manager at OpenFeint, Tracy Erickson, developer relations manager at Unity, Jas Purewal, a commercial lawyer at Osborne Clarke, and James Parker, a freelance designer working with Mobile Pie.

Erickson, in particular, showed no hesitation in agreeing with the sentiment. Prior to joining Unity he was an editor for the iOS section of mobile and social games website PocketGamer, and he claimed that many games he encountered were "borderline predatory" in the way they coaxed the player into spending money.

"In terms of some of the content I've seen, [Freemium] has been a little evil," he said. "I think there's a number of games - a number of publishers, to be quite frank - that have used the Freemium business model to essentially manipulate gamers into buying content that they're not necessarily enjoying."

"One game I can think of in particular that really irked me was Star Wars Imperial Academy from ngmoco. It was a particularly bad title from a gameplay perspective, but also...in the way that the freemium elements were integrated into the game."

"Every few rounds you had to purchase energy to get back into the game. It was a complete disconnect with the the license, and also it was at odds with the style of gameplay."

When you're embarking on a project you've got to ask yourself, 'Would this would better as a Freemium title?'

James Parker, Mobile Pie

The problem is that developers have started to view Freemium as a design philosophy, and not just a business model. For Mobile Pie's James Parker the potential benefits of Freemium are self-evident, but he warns that it needs to be the bedrock of the design, and not just a way to generate revenue.

"You can't just click the Freemium button," he said, "When you're embarking on a project you've got to ask yourself, 'Would this would better as a Freemium title?' Because if you don't ask yourself that question you're as foolish as the people who say all games should be Freemium. It's not an assumption. It's a decision you have to make."

Erickson agreed. Every project should begin with the desire to create a good experience, and if the idea supports a Freemium model then it can be a valid creative choice.

"But if you're going out of the gate with the objective of making a Freemium game, that causes me a little bit of heartburn," he added. "Because I wonder if you're in it just to make a bunch of money. There has to be a creative aspect that drives the design process."

The problems aren't limited to design. In the view of Osborne Clarke's Jas Purewal, the Freemium model is "powering some tensions" in the industry that have yet to be addressed. The first relates specifically to micro-transactions: ownership.

"Consumers really think they own these things," he said. "They buy a cow in Farmville they really think it's theirs; they purhcase Facebook credits they think it's theirs. The only reason that they're purchasing these things is because the business model is set up in that way... but what happens if a business decision is taken to shut one game down and focus on the other?"

"Using Zynga as an example, their business strategy involves choosing which games are doing well, and the ones that aren't doing well get cut down or are removed altogether. So someone loses all of their virtual goods... People who are buying virtual goods think they own them - that's a tension, and we don't quite know yet how it's going to be resolved."

The other problematic area is data, which is one of the key drivers behind the astronomical valuations of social game companies. A large player base is now every bit as important as revenue or product quality in dictating perceived value.

"It means you've got data, you've got metrics, you know things about your customers that you can work with, but again there's a disconnect because players don't really understand that everything they do is being monitored. All of the details are being used in some way, shape or form to make a better game, which then indirectly leads to more sales of virtual goods and more money."

You can get people to buy loads of virtual goods by monitoring their bahaviour, then shut the game down and shuffle them off to something else

Jas Purewal, Osborne Clarke

Purewal beleives that many players don't understand the way their data is being used to influence future behaviour, and a lack of transparency about the process on the part of many companies leaves them in ethically shady territory.

"That's why [Freemium] sometimes gets branded as 'evil' - if you can get people to buy loads of virtual goods by monitoring their bahaviour, then shut the game down and shuffle them off to something else."

Parker agrees that social games, in particular, tap into powerful forces that require a greater degree of moral responsibility on the part of the developer. To some extent, Freemium games rely on a small handful of players to spend a large amount of money - both to fund the game and make the game world a more attractive place - but designers should be aware of how damaging an absence of limits can be.

"One of the greatest compliments you can pay a game designer is to say that their game is addictive, so when you combine that with the possibility of someone spending money effectively in an unlimited way, then you start to get quite a complex issue of responsibility there," he said.

"You need to know from the get-go where your social and moral responsibility is on that. You need to put in limits on people's spending to make sure they're not running wild, because at that point you are the bad guy - you're doing something remiss."

Openfeint's Dan Keegan was the panel's one unwaveringly positive voice. Ultimately, Freemium has empowered a new generation of developers, and will play a vital role in how a significant number of games will work in the future.

"What's being described here are just natural growing pains that occur at the start of any new business model," he said. "Coming from a mobile perspective I think that, as an industry, we self regulate now. Maybe there have been some mistakes, but I would encourage any developer right now to embrace Freemium stratight away."