Casual Biz Models No. 4 – Try Before You Buy

In a nutshell
Free-to-play downloadable games are distributed with restrictions such as time limits or cut-down features, with the aim of enticing consumers to pay to unlock the full version.

Pioneers
Time- or feature-limited trial PC software existed for years as shareware, but it is PopCap and its smash puzzle hit Bejewelled that’s credited with bringing the model to casual games.

PopCap’s game, initially a browser-based production called Diamond Mine, was originally set to be funded by advertising revenue share from Internet portals. But at the time of its release – 2001 – the dotcom bubble had burst and advertising money was evaporating. The start-up developer decided to experiment instead, creating a souped-up version of its free offering, for which it charged $20. More than 10 million copies have been sold.

Today the Try Before You Buy model (also called ‘Trial to Purchase’) is the standard method of monetising casual games, on the Web and increasingly on console. There are dozens of Try Before You Buy portals; the leaders include Big Fish Games, PlayFirst, RealArcade and its GameHouse subsidiary, EA’s Pogo.com, and sites run by Oberon Media, as well as Microsoft’s Xbox Live Arcade service.

In detail
There are three key components to a Try Before You Buy game: initial distribution, the trial version, and the full game.

Clearly the game needs to be seen by consumers if they’re to buy it. This typically means releasing it for free download via one of the big casual games portals, where it will usually be given a few days in the spotlight to prove itself. (Interestingly, getting prime space on these portals is now so competitive that some developers are returning to the industry’s roots of hosting their own Try Before You Buy games on their own servers.)

The demo version is all-important, since it must be compelling enough to play, and ideally be recommended on by word-of-mouth, yet not be so satisfying that the gamer doesn’t desire the full experience. Developers usually limit the trial with a timer, enabling 30 to 60 minutes of play before requiring the gamer to pay to continue; others offer unlimited play but restricted features, or restrict game starts or levels. Sometimes gamers can continue to play after the expiry of the trial but are subjected to advertising or frequent nag screens.

Conversion to the full game entails unlocking the download the consumer installed on their PC to play the trial version. Casual games are usually protected by a DRM wrapper from a company such as Macrovision, generally added by the publisher or distributor. Some games have protection built-in.

The cost of buying a full casual game ranges from $10 to $30. Most games convert less than 1 per cent of trials, with anything over 2 per cent considered a hit.

Advantages

• No risk to consumers of trying a game (except their time).

• Proven business model with clear value chain in place, which means developers, publishers and distributors can concentrate on improving their performance rather than reinventing the wheel.

• Casual games consumers are now well-acquainted with Try Before You Buy downloads, and a sufficient number are comfortable making credit card payments.

• Relatively level playing field – with a sufficiently great title, any developer can gain access to the established market.

• Good for viral spread if compared to a model requiring purchase before any play, since word-of-mouth recommendation from friends easily leads to more risk-free trials.

• The conversion rate of trials to sales is low, with less than 1% typical.

• The huge number of free trial versions of games now available means game-hopping consumers get to enjoy lots of content for free, without the developers seeing a penny for the unconverted play.

• Saturation means gamers have less time to try new games.

• The hit-driven nature of the model means publishers and developers have poor earnings visibility. (Portals/retailers win whatever is being downloaded).

• Some casual consumers remain wary of installing software downloaded from the Internet onto their PCs.

• Full purchase requires a credit card, ruling out sales to younger consumers.

• The dominance of portals means they can dictate the terms.

Future developments
Try Before You Buy portals tend to look similar and have historically offered the same games. The former complaint isn’t really a concern (most bookshops and supermarkets look similar, too) and the latter is changing, with portals increasingly distributing only their own and/or a limited range of partners’ games, or trying to broker temporary exclusive deals with developers.

Market saturation and the persistence of low conversion rates means the model will be tweaked further. Some games portals now also run advertising on-site, for instance, and some are incorporating video ads into downloadable games.

The bottom line
Along with advertising and subscriptions, the Try Before You Buy model is a lynchpin of the casual gaming economy. But while it has provided billions of dollars in revenues and fuelled the growth of the industry, hits are rare and most games make very little money due to conversion rates of less than 1 per cent.