Article published on Friday, July 15th, 2011
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In an interview with The Escapist, Mark Kern, the ex-team lead of World of Warcraft and founder of Red 5 Studios talks about how some online game publishers are "doing it wrong" when implementing the free-to-play model. He also talks about how "incredibly profitable" the F2P model is.

"We felt that with a AAA quality game, a subscription was still the way to go," Mark Kern told Greg Tito from The Escapist. "I was pretty skeptical of free-to-play five years ago. We had observed the phenomenon in China and it seemed like the ’failing’ games were quickly converting to free-to-play out of necessity rather than any new or novel business model."

"Around 2009, when the economy tanked, I started to really worry about people’s ability to pay for games, and a subscription, and new hardware," Kern stated. "Free-to-play was looking like a better way to get the game into people’s hands. I started to look into it in depth, talking to companies in China and Korea, and mining the data I could find from public companies and anecdotal evidence. What I found surprised me; free-to-play wasn’t just a successful model, it was an incredibly profitable one."

"I think they are probably more than a moderate success, but nobody wants to say it publicly. You don’t hear public figures from successful free-to-play companies operating in the West like Nexon, Turbine, Riot, etc.," Kern stated. "I would suspect it’s because they found they are onto a good thing and don’t necessarily want to wake up the larger publishers to the fact."

"You see so many broken models out there. Publishers are charging download fees or whole package prices and then attempting to do item-based sales on top of that. Or they try what I call the ’velvet rope’ model where they restrict content and what parts of the game you can play until you pay up," he said. "You’re trying to say ’look, if you just pay me X dollars, I will let you see what you’re missing.’ The natural response is to say ’But if I don’t see what I’m missing, how do I know it’s worth paying for?’ That limits your sales."

Even so, it was hard to convince the former executives of Red 5 because of the risks and stigma that surrounds the free-to-play industry.

"It was an uphill battle. The then CEO of Red 5 and our CFO both felt that free-to-play wasn’t profitable and even if it were, that we had nobody with expertise to develop it," he said. "That sounded like an opportunity and a challenge to me, but to be honest, it seemed like a huge risk to most everyone else."

This lead to his company almost falling apart, but with his hard work Mark Kern convinced his company and they are now looking to bring AAA quality games like Firefall to the free-to-play game market.

"What we’re trying to do is change the perception out there that free-to-play games are B-games or C-games," Kern said. "We asked ourselves: Why not release a top-quality game under this model? There are free-to-play games out there making hundreds of millions of dollars per year on this model. That is more than enough to support top quality development."

"It was only after we went through a tumultuous time where we nearly closed the company - and we lost the ’baggage’ of prior thinking - that we were able to reinvent ourselves in 2010," he said. "By mid-2010 we were convinced that free-to-play was incredibly profitable when done right, and that we had the chance to bring AAA quality to free-to-play games in a way that hasn’t been done before, especially with shooters."

"I do think it is much better to design your game with free-to-play in mind rather than retro-fitting it to an existing game," he said. "Of course, there will be a stigma if you release a game with a monthly fee and then move to free-to-play. The only reason that is done is when the game is failing as a subscription based game. That’s the only reason you do it, because it’s a very expensive and time-consuming transition."



For more on AAA quality shooter Firefall and Red 5 Studios visit: http://red5studios.com