Comparing MMO ARPU for major free-to-play titles

Here’s an idea: people vote with their dollars. In the traditional retail market this meant that the game with most boxed sold, generally speaking, was the most popular one. But now that free-to-play games are a standard in the games market, the underlying economics are a lot less obvious.

Spending ranges differ, even within the same genre

If we compare Team Fortress 2, Planetside 2, Combat Arms and Crossfire, we immediately notice that spending per player can differ wildly. In our example here, the MMO ARPU ranges from a low of $1.58 to a high of $4.50. Specifically, Western publishers tend to try and maximize the value per user. Of course, so do Asian publishers. But these companies operate in a vastly different market, where broadband is abundant (Korea) and disposable income and PC ownership are not. A big part of the success that Nexon and SmileGate enjoy comes from their expertise in regular in-game offerings and ongoing specials, and helps to offset the relatively low conversion rate.

DotA2 and League of Legends, arguably the two most visible titles in the MOBA genre, are close in terms of average revenue per user. But it’s important to keep in mind that for every DotA2 player there are nine people playing League of Legends. Because it’s slightly less accessible, DotA2 has more ‘core’ gamers as its audience, which translates into 20% higher spending per user.

MMO ARPU table

Quantity versus quality

It is somewhat of a loaded strategic question: do you target a large audience and aim for low conversion rates and spending, or do you go after die-hard fans and hope to make more per user. In the current free-to-play market two dominating titles show different answers to that question. There’s World of Tanks, which has a monthly active user base of around 9.1 million and makes $4.51 per month per user. And there’s League of Legends, with 58.5 million average monthly actives over the past twelve months, and a $1.32 spend per user. Five times the audience, but less than third of the earnings per player.

With an average revenue per user of $1.58, mammoth earner Crossfire, which generated over a billion in revenue last year, clearly relies on attracting a large crowd. The game has well over 50 million monthly active players. Nexon’s Combat Arms, counts approximately 1.6 million monthly actives but makes almost double the amount per user ($2.81).

Shooter games earn more per user than MOBAs

Despite the recent trend toward so-called MOBAs, we see a distinct difference in earnings per player within even a single company. Take Valve. Despite being on the same digital platform (Steam) and likely relying on the same in-house experience with regards to sales tactics, Team Fortress 2 earns almost three times more per player than DotA2. One explanation is the growing trend toward user-generated content: letting players share in the riches stimulates both the production of and demand for in-game items.

Things to keep in mind

The average revenue per user can vary drastically, even within a single game’s user base, from one geography to the next. Generally speaking, successful titles are those that develop and localize their game to accommodate specific markets. This entails everything from setting up local servers to reduce latency to offering country-specific payment methods and customer support.

You must deduct the cost of acquiring a player from their spend. The cost per install for free-to-play MMOs has been consistently going up, as the market has started to mature. Last month the average cost per install for a free-to-play MMO in the US was about $8 dollars. Having a clear sense of marketing cost helps build a user base more effectively.

Focus on user experience, not revenue. Sure, we’ve all heard the arguments about the exploitative aspects for free-to-play. But if it all it ever did was suck the life out of customers, there would be none. Instead, we see an audience of dedicated gamers growing across genres. Take your audience serious by providing a rewarding experience, and they will reward you in turn.