• by Shankar Gupta , August 26, 2011

Free to Play, F2P, Freemium - however you describe it, the business model where consumers get the cow for free, but they need to pay for the milk, the bucket, the stool and the barn, is taking over the Games category of the iTunes app store, as well as the world of online PC gaming. Team Fortress 2, World of Warcraft, and League of Legends are just a few of the examples of PC luminaries that either began as free-to-play or who have recently incorporated free-to-play elements into their business models.

The shift from "Lite" versions of games (which are free, but incomplete or ad-supported) to free-to-play has been a major trend on the iTunes store. Casual game dev Paul O'Connor, writing for Gamasutra,, removed his last Lite title from the app store this week, saying "The problem with free apps is that they are too expensive." 'Lite' has come to represent "incomplete" or 'advertising!' in the minds of most players, and download and advertising numbers have declined as a result," O'Connor explained.

So, rather than creating free versions of games that are in some way lesser than their paid siblings, the approach developers and publishers are taking now is to create additional content for paying customers who want more options or more content. Some of those consumers are known as "whales" in industry parlance - according to stats from mobile analytics firm Flurry, more than half of revenue for freemium mobile games come from players who spend more than $20 per transaction, even though the make up only 13% of transactions overall. In a sense, these players are subsidizing everyone else's gameplay experience out of their desire to have as full-featured a play experience as possible.

To me, this raises the question: Could this freemium model work elsewhere in the entertainment industry? Television and movie studios are facing a great deal of competition for consumers' entertainment time and dollars, and it increasingly seems that the most acceptable price point for video content is free. Could, rather than investing in more and more arcane copyright protection technology and legislation, entertainment producers instead create additional content for "whales" to subscribe to, thus subsidizing the experiences of non-paying viewers?