A screenshot of Overwatch 2 hero Kiriko.
Image: Blizzard Entertainment

Overwatch 2 highlights the major flaws of free-to-play

Protocol Entertainment

Hello, and welcome to Protocol Entertainment, your guide to the business of the gaming and media industries. This Tuesday, we’re looking at the bumpy launch of Blizzard’s Overwatch 2 as the studio tries a live service reboot, two damning internal memos about Meta’s Horizon Worlds, and CD Projekt Red’s ambitious and also concerning future development plans.

Overwatch’s new economy exposes old problems

Blizzard’s long-awaited Overwatch 2 is not your typical sequel. As I first noted over the summer, the reboot of the once-popular hero shooter has been more about restructuring the game’s business model than about adding more content to justify a new price tag. As such, the game is now free to play.

But now that Overwatch 2 is out in the wild, after a rough launch resulting in multiple days of connection and login problems, players are grappling with a new realization: While the gameplay is near-identical, Overwatch now sports a vastly different in-game economy. And the early sentiment toward this transition underscores some major hurdles facing the game industry and its current love affair with the live service model.

Overwatch’s new economy is familiar, but is it fair? Blizzard’s free-to-play transition means Overwatch 2 must make money through means other than upfront cost. And as you might suspect, those methods now include many of the familiar monetization strategies popularized by Fortnite and its contemporaries.

  • Blizzard now sells a seasonal battle pass, and the studio has dropped its maligned and predatory loot box system for an in-game shop that sells character skins and other cosmetic items directly in exchange for in-game currency.
  • That’s all well and good, and it makes perfect sense for Blizzard to get with the times, especially by dropping support for loot boxes.
  • Randomized item drops have been scrutinized by regulators worldwide, and Blizzard even skipped the Belgian and Dutch markets when launching Diablo Immortal due to loot box restrictions.
  • But in place of Overwatch’s old monetization methods is now a system that feels more geared toward keeping players playing as long as possible and also spending as much money as possible.

Blizzard was never going to be able to avoid this. Many games that have transitioned to a live service model, like Bungie's Destiny 2, have been met with player backlash. This is in part because gamers often compare the way gaming products used to make money with how they do now.

  • The original Overwatch launched in a different era, when very few console games were free-to-play and premium game developers like Blizzard were used to selling products upfront and tacking on light monetization.
  • But the slow creep of mobile monetization — and the financial opportunities it affords — has come to dominate the entire games market.
  • As is the case in other forms of media, selling something once is far less profitable than hooking consumers on reliable, recurring spending over long periods of time, whether that be a monthly subscription or a $1 to $5 microtransaction.
  • Many of the most successful premium free-to-play games — like Fortnite, Valorant, and Apex Legends — have mastered this approach. They’ve also had plenty of time to tinker with how they reward players to ensure the product doesn't feel too exploitative.
  • Blizzard, on the other hand, is asking players to accept its new business model after deciding to throw out the old one. And some players over the last week have said they prefer the way it used to be, even though it meant contending with loot boxes.

Overwatch 2 is stepping into obvious free-to-play pitfalls. One way to avoid enraging your player base is to dole out plenty of free rewards while also giving players something to strive for, be it a high competitive rank or ways to express themselves in the game. Out of the gate, Overwatch 2 isn’t doing either of those very well.

  • Overwatch’s old model used to reward players with free loot boxes, which sometimes dropped rare character skins you couldn’t get elsewhere. Players could also stockpile points to buy flashy gold weapon skins for their favorite heroes and customize their profile screen.
  • Now, however, there’s only a battle pass, and if you don’t pay for that, there’s very little in Overwatch 2 that rewards your time and effort now that the game is free. One player discovered it would take five years of playtime to unlock new hero Kiriko’s cosmetic upgrades if you don’t spend real money.
  • Fortnite, for instance, offers a wide range of free unlockables every season in addition to doling out free currency as part of the battle pass, so savvy players can buy the pass once and then never pay for it again.
  • In this way, Blizzard is falling into the same trap Microsoft-owned 343 Industries did with Halo Infinite, which launched last year to near-constant complaints about its poor progression system, lackluster cosmetics, and troubling delays.
  • When asked why it didn’t see these issues coming, 343 Industries’ community director Brian Jarrard told The Washington Post that the competition had “set an incredibly high bar” and “that’s the bar that a lot of players for every game look at.”
  • In other words, players now expect Fortnite and will be disappointed if a new live service game falls short.

Free-to-play gaming is here to stay. The mobile market accounts for more than half of all revenue in the global games industry, while microtransactions, battle passes, and other forms of recurring spending have proven far too lucrative for the biggest game publishers to abandon them. Regardless of what platform you play on, this is the new reality.

But Blizzard is finding out that there is a vast ocean between what is considered fair, like Fortnite, and what feels gross and predatory, like a pay-to-win or gacha mobile game. While Blizzard may not be able to compete with some of its peers right at launch, it can over time find a sweet spot where it hits its revenue goals while also keeping players content and coming back. That will make the difference between standing next to Fortnite or falling to the level of Halo Infinite.

— Nick Statt


Every great tech product that you rely on each day, from the smartphone in your pocket to your music streaming service and navigational system in the car, shares one important thing: part of its innovative design is protected by intellectual property (IP) laws.

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“Everyone in this organization should make it their mission to fall in love with Horizon Worlds. You can’t do that without using it. Get in there. Organize times to do it with your colleagues or friends, in both internal builds but also the public build so you can interact with our community.” — Vishal Shah, Meta’s VP of Metaverse, chastised employees last month for not logging in frequently enough to the company’s social VR platform Horizon Worlds in a pair of internal memos obtained by The Verge.

“I think going forward we’ll see at least a year between releases on PlayStation and on the PC platform, possibly with the exception of live service games. Live service games are a little bit different in nature because you want to have a strong community, strong engagement right away, right when you go live, so we might in the case of our live service offerings go day and date with PC and the PlayStation platform.” — Hermen Hulst, the chief of Sony’s PlayStation Studios, told YouTuber Julien Chieze about the company’s philosophy around waiting to port exclusive PlayStation games to PC.

In other news

Nintendo’s Mario trailer turns heads. Nintendo released the first look for its long-awaited animated Mario film featuring the voice of Chris Pratt as the titular plumber. The video amassed more than 61 million views across TikTok, Twitter, and YouTube.

Spotify cancels 11 original podcasts. The music streamer laid off close to 5% of its podcasting staff, TechCrunch reported this week.

Platinum CEO apologizes for live service flop. Square Enix-published Babylon's Fall is shutting down early next year in a stunning failure. Now, Atsushi Inaba, CEO of developer Platinum Games, has publicly apologized to fans who bought in.

TwitchCon turns dangerous. The first live meetup of Amazon’s game streaming platform since the pandemic was lambasted for its lack of accessibility and safety measures, and numerous attendees left with serious injuries from poorly run foam pit festivities.

Brazil gives Microsoft's Activision deal the green light. The country’s CADE regulatory body has signed off on the acquisition after saying it found Sony’s arguments against the deal unconvincing.

Bethesda’s longtime marketing chief gets promoted. Pete Hines, a public face for Fallout publisher Bethesda, has been promoted to head of global publishing. Hines has worked in marketing and PR roles for the company since 1999.

Pornhub may have inadvertently ended piracy. To address issues around exploitation and revenge porn, Pornhub introduced mandatory uploader verification in late 2020. The number of DMCA takedown requests the company receives has declined by 98%.

CD Projekt Red’s ambitious decade

The developer behind Cyberpunk 2077 and The Witcher series is gearing up for arguably its most intense period of development and corporate expansion ever.

  • The Poland-based studio last week unveiled plans for seven new games.
  • That includes a Cyberpunk sequel, a new Witcher trilogy, two Witcher spinoffs, and an unnamed new project.
  • CDPR executives also said they planned to release a new entry in the upcoming Witcher trilogy every three years.

The scope of these plans and the aggressive time frame means CDPR will have to hire hundreds of employees to fill positions in Poland and Vancouver, as well as staff an entirely new office in Boston and support third-party studios contracted to lead or help with new projects.

  • One of the most pressing questions now is, after the Cyberpunk mess, whether CDPR will stay true to its word that its days of crunch are over.
  • A tortured development cycle, combined with numerous delays and severe crunch, led to Cyberpunk 2077 releasing unfinished and buggy. The poor launch tanked CDPR’s stock price and tarnished its reputation, though the game has enjoyed a second wind of late thanks to the Netflix anime “Edgerunners.”
  • Fans and critics alike have expressed concern about crunch and toxic work environments since last week’s announcement, especially considering Witcher game director Jason Slama promised in March to eliminate crunch.

CDPR has been making an effort to change, and Cyberpunk developer Patrick Mills chimed in on Twitter to say that “there's been a lot of work done for the past couple of years to try and fix” the studio’s issues. “If I have to eat my words in a few years I'll do so, but really I don't think it will be,” Mills said. “Honestly I've seen bad, I've seen worse, and I've seen better. And right now CDPR is better.”

— Nick Statt


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Thoughts, questions, tips? Send them to entertainment@protocol.com. Enjoy your day, see you Thursday.

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