GDC 2010: Ngmoco justifies the freemium model

We have a lot of questions for the company, and we'll be asking even more of them coming later this week. But first things first: we cornered Ngmoco producer Allen Ma here in their suite at GDC 2010 and asked him to try and tell us why Ngmoco is so insistent on "freemium," and how they feel about some of the adverse customer reactions to their model. Read on to hear why free-to-play, pay-to-play-more is the model that they're betting their business on.

When we post about Ngmoco, the first comment on the post is often "Here's Ngmoco trying to steal our money again." What do you think when you see a reaction like that?

It's very, very odd because it's strange to see those moments when our goal as a company is that we want to give you a full game experience for free. That's really what Eliminate is. You can log into Eliminate any time you want, and play the game against anyone else, for free. And it's Quake 3 on the iPhone! So it's very interesting when people go oh they're scamming us because they want us to pay ten to twenty dollars to play through a game experience. That really is not true. Because you can never pay for the game and get the same exact experience.

Well, it's not the same exact experience.

It is, it just takes longer to get there.

That in itself makes it not the same.

Well does it or doesn't it, right? Because I feel like there's a lot of games out there where you're paying to do something faster than someone else. There's a whole black market that exists in World of Warcraft where you can buy a level 80 character for hundreds of dollars. There's this market where people are willing to do that. We're just doing that in a way where it's legitimate and fair to everyone.

Well, but a lot of players frown on that even in World of Warcraft. A lot of players say if you buy a level 80, that's cheating, because the game is designed to be played the other way.

And in Eliminate, we would never let you buy a fully maxed out character, right? In Eliminate specifically, what we're allowing you to do, we're still allowing you to play the game, but we allow you to earn credits at a higher frequency than other people. You still have to play the same amount of games, you can't cheat your way to max level, but in actual total number of days to get there, you're lowering it.

I think another reason that people have an issue with this is that you guys, Ngmoco, have said that you're not even bothering with paid apps. There are some people who are willing to pay for a good experience, they're even willing to pay ten dollars for a solid, worthwhile, whole unlocked version of the game. And Ngmoco is saying we're not doing that, it's all freemium or nothing. What would you say to that?

We're just finding that, with paid, you can't make any money. There's only a handful of companies that are able to charge more than three dollars for a game. Gameloft, EA, Square Enix. Anyone else, they charge more than two bucks, no one's even going to look at their game. There's no way that we could have built Eliminate, for the cost per install or cost per SKU that we would have sold, to actually be able to make back that money in the timeframe that we wanted to. It's funny, because people are saying that they're willing to pay, but when push comes to shove, they're actually not willing to pay. That person that says they're willing to pay $10, they'll probably wait for it to drop to 99 cents before they actually purchase it. What they really want is a $10 game for 99 cents. What we're giving them is a $50 game for free. That's really our stance right now.

When you set out to make these games, even a game like We Rule, are you still thinking about it in the old model of, the premium experience for this is $50, or the premium experience is $10? Is there a "right amount" of money to spend to get the full game, or are you just saying the sky's the limit on the amount of money you should pay?

I think what freemium allows us to do is continually make the game better. So instead of going, OK, you as the user have to take a gamble to see if this game is worth x amount of dollars to you; instead, why don't you come in and try the game. If you like it, throw us a couple of bucks. When you do that, we know that you like that piece of the game, and we'll give you more of that, so that if you continue to like it, we'll keep designing these things, right? The ones that you don't like, we'll stop doing. For example in Eliminate, people really wanted co-op. So we're going to give them co-op, because they're going to keep playing the game. Some of them will continue to keep paying to play the game, and that's encouraging as a developer to keep making it better and better. And this is why World of Warcraft works, right, because users are willing to continue to pay to play the game. Unfortunately, not every game can be as excellent as World of Warcraft where everyone in the world is willing to pay for it. I could point you to a game like Dungeons and Dragons Online, which used to be a regular MMO and now is a free-to-play MMO, and they're saying that they're making like 60-80% more revenue as a free-to-play game than when it was paid. And they're now updating the game way more frequently than they did when it was paid.

So it sounds like you're not even thinking in the old model of, "here's this experience for this amount of money." You're thinking of it as a dialogue, where you pay us for what you like, and we'll return more content. You're not just investing two bucks to speed up your game, you're investing two bucks in the game and in future content.

Yeah. You're paying to support the game, and you're paying to support all of the free players that weren't willing to pay for the game. So when you think about it that way, you're paying so that we can maintain the servers that allow all of the people to play. So again, going back to Eliminate, our game that's working right now, you're paying for the game, so that you can continue to own people that don't pay for the game.

Great, thanks very much.