Velan Studios, the New York-based developer behind competitive dodgeball video game Knockout City, made an announcement last month that just a few years ago would have made the company an extreme outlier. Knockout City, the studio said, is going free-to-play in the spring, roughly one year after launching with a price tag of $20. The company is also splitting with publishing partner Electronic Arts to self-publish the game going forward.
In today’s game industry, that decision makes Knockout City part of a growing cohort of premium games with shifting business models, in response to a hypercompetitive market for online gaming that increasingly prioritizes a price tag of zero to reach a maximum number of players. Alongside Knockout City are massive hits like Psyonix’s Rocket League, PlayerUnknown’s Battlegrounds, Bungie’s Destiny 2 and Valve’s Counter-Strike: Global Offensive, all of which shifted to free-to-play in the last four years.
The logic is simple. In today’s gaming climate, developers are competing for an ever-shrinking slice of a player’s attention, and online games now live or die depending on whether they can hook players and keep them invested for months to years at a time, with games evolving into live services as opposed to one-off products. Paramount to keeping players around is making it easy for new ones to pick the game up and start playing with friends. Putting up a barrier of $20 or $40 or $60 can mean the difference between a small audience and a colossal one.
“Players may have churned out, more rivals have popped up. Now is the time they [might] want to broaden their audience and bring more players in,” said Craig Chapple, an analyst with gaming analytics firm Sensor Tower. “With free-to-play, you get rid of all barriers to playing your game. You make it accessible to the widest possible audience, and it all comes down to: Is the game fun, and do you want to keep playing the game?”
The free-to-play business model was once more exclusively the strategy of mobile games, which have become the fastest-growing and most lucrative sector of the $180 billion global game industry by tapping into massive international smartphone audiences. Mobile games have hit unprecedented scale and can generate billions in annual revenue because they are free and monetize through microtransactions, and because smartphones are far more ubiquitous than special-purpose gaming hardware.
A number of popular PC games began shifting to free-to-play over a decade ago, including competitive hits like Riot’s League of Legends. But console gaming has lagged far behind. Arguably not until Epic’s Fortnite released in 2017 did console game publishers start to see the potential in releasing cross-platform, free-to-play games that earn revenue over a long arc of time using in-game items and other microtransactions. (Fortnite also popularized the battle season subscription, which has been widely copied by other live service games.)
This shift to free-to-play often is accompanied by a switch in publisher or parent company, and reflects the ever-changing attitudes around how games should be funded during development and how to make that money back after launch. For instance, Rocket League only went free-to-play after Epic Games purchased Psyonix, and Bungie only shifted Destiny 2 to a free-to-play model after it split with publishing partner Activision.
“We’re really excited to bring our game to millions of new players around the world, by removing the price tag entirely,” Velan Studios said in a statement. “We couldn’t have introduced Knockout City to the world without the incredible support of EA Originals, but now as we switch to free-to-play, the natural next step is for us to take over publishing responsibilities and work even more closely with our community.”
For much of the last decade, developers have tried a hybrid approach, to mixed success. Electronic Arts is infamous for tarnishing paid games like Star Wars Battlefront II and the recently released Battlefield 2042 with messy in-game monetization. Meanwhile, a number of widely celebrated premium games like Blizzard’s Overwatch ran afoul of both consumers and overseas regulators by insisting on selling loot boxes, even after charging players an upfront cost to play.
“A lot of premium games do this, especially when they’re working on a live service. The ambition is to make it last for years, and they try to have the best of both worlds,” Chapple said. “Some do it successfully and players are fine with it, but some don’t.”
PUBG is perhaps the best example of a game that relied on a hybrid business model and managed to skirt controversy. From launch in 2017, PUBG on consoles and PC carried a price tag of $30, though the game also included loot boxes and other microtransactions. On mobile, however, the creators of PUBG partnered with Tencent to create an independent, free-to-play version of the game that has since become one of the most popular titles on the planet, earning nearly $3 billion last year alone and close to $8 billion in lifetime revenue.
Meanwhile, the console and PC versions of PUBG sold over 70 million copies, making it the fifth best-selling game of all time before publisher Krafton announced the game would shift to a free-to-play back in January. In the first week after going free, Krafton said PUBG saw a nearly 500% increase in new players, outpacing the game’s explosive growth at launch back in 2017.
Very few games can pull off what PUBG did, and the timeline for shifting to free-to-play for online multiplayer games appears to have accelerated greatly. Nowadays, it’s difficult to find success in the mobile market as a premium paid game unless you’re bundled as part of Apple’s Arcade subscription service or the competing Google Play Pass, Chapple said.
On console and PC, premium games with a price tag either tend to be new releases in major, established franchises, like FromSoftware’s Elden Ring or Sony’s Horizon Forbidden West, or they happen to be a breakout indie success story, like Sloclap’s martial arts brawler Sifu. Other indie games, like Acid Nerve’s Death’s Door and Drinkbox Studios’ Nobody Saves the World, have been finding success by partnering with Microsoft to either release on Xbox Game Pass at launch or join the subscription service after a brief period of selling the game at full price.
For online-only games, and especially ones like Knockout City that follow the Fortnite-like seasonal model with a steady update cycle of new features and content, it seems increasingly the case that the live service model is the only viable path to growing an audience and making money. “With live service multiplayer games, there is an argument to be made: ‘Why isn’t this free-to-play?’ If you’ve built up this microtransaction ecosystem, why not try to focus on that?” Chapple said.
“The reason I left [2K Games] and went to Amazon is because I want to do live service games. Because I actually believe it’s the future,” Amazon Games chief Christoph Hartmann told Protocol in a recent interview. “It is very hard to do single-player games that have a high chance of commercial success because the production costs, as we know, with every generation of consoles or PCs, goes higher and higher.”
Hartmann said he’s a firm believer that down the line, “every game is going to be a live service game” in one way or another. “When you look at the development cost and you look at what you pay for a game, you clearly see the development costs going [up], and then the game price is [staying flat],” he added. “That's why you have fewer and fewer games, and that's why you also have so many franchises.”
Games like Knockout City and Rocket League will of course continue to exist, and some may still try to launch with hybrid models. EA and Velan Studios knew from the get-go that free-to-play was a viable strategy; Knockout City amassed 2 million players in its first three days last year by letting anyone play it for free up until they reached a certain in-game level. The studio also inked a deal with Sony to give it away for free through PlayStation Plus for the entirety of 2021.
But it ultimately took a breakup with EA for Velan to take the plunge, and the studio now says it’s better prepared to “to fully realize our vision for the long-term future of this game.” And as live service gaming continues its broad takeover of the industry, Knockout City won’t be the last premium console and PC game to remove its price tag or forgo it from the onset.