The Value of Gaming Intellectual Property

Former Senior Director at NCSOFT and Take-Two Interactive Software

Why is this interview interesting?

  • Why mobile-first companies like Zynga have an advantage in a free-to-play world
  • How the traditional publishers can adapt intellectual property for mobile free-to-play
  • How the barriers to entry are lower but barriers to success higher for free-to-play games
  • The comparison of Fortnite and PUBG intellectual property versus traditional publishers
  • How the Chinese work with Western publishers and risks of West losing power in the gaming industry

Executive Bio

Chong Ahn

Former Senior Director at NCSOFT and Take-Two Interactive Software

Chong has 20 years of experience in building and publishing free-to-play games across all platforms. He is the Former Senior Director of Mobile at NCSOFT, one of the largest gaming publishers in Korea. Chong previously worked as an Executive Producer at Scopely, a leading mobile game publisher, and Ubisoft where he was responsible for bringing AAA free-to-play games to market. Read more

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Interview Transcript

Chong, maybe a good place to start would be to take a step back and just provide some context as to how you’ve been looking at this shift to free-to-play games?

What’s really interesting about the shift to free-to-play is the explosive growth and adoption of this business model. The reason it’s super interesting is because, if you were to go on Reddit or any gaming forum and you hear this group of people talking about free-to-play, it almost sounds as if it’s a negative thing. But in reality, the data and the numbers don’t lie and the majority of products that are now coming out from the gaming side, particularly for mobile – and you are now seeing a lot more of this on HD and PC products as well – is that there is some form of microtransaction or free-to-play business model, built in.

If you take a look back at the introduction of free-to-play or microtransaction based products, to where it’s at now, gaming is taking up anywhere from 60% to almost 70% of total revenue in the app stores today, whether it’s iOS or Android. That is eclipsing social media, lifestyle, entertainment and all these different categories. The data doesn’t lie. It just shows that, while there might be a vocal minority complaining about the woes of free-to-play, users have adopted it because there’s a key distinction. Unlike standard boxed products or any consumer products, free-to-play allows you to download and engage with that content, with no upfront commitment. It’s totally up to you to decide whether you want to stick with it or not and whether you want to provide that product with a revenue. I think that opened it up, which allowed for so many different people to come in and become gamers. To me, that’s really the key distinction that I see.

How would you describe the differences in the monetization features, between a mobile and PC free-to-play game?

If you look at a traditional PC or HD product, there is a set price point. You go to your local retailer, you pay your £60 and you have an expectation of what that experience is going to be, for your platform. While there’s a variety of different vehicles to showcase the product before you buy it, through various trailers, marketing assets, in addition to short demos, if it’s available, the consumer doesn’t really know what they’re getting, until they actually make that purchase. Assuming a purchase has been made, over time, the studio, usually on a quarterly basis, will release additional, downloadable content, what we call DLC, to supplement that initial purchase of the product. That allows that particular game to have added revenue streams and continue the longevity of that product.

For free-to-play products, because of the inherent nature of being free to download, free to acquire, their revenue model is completely nuanced, is very different and the velocity of that new content is changing at a rapid pace, with daily, weekly and monthly injections of new content, promos and events. By doing all of that, it affords the studios, within the mobile free-to-play or PC free-to-play side, to have more shots on goal, to potentially get users to convert, to generate revenue.

If you compare boxed products, on one side, with free-to-play products, on the other, both in terms of longevity and the revenue generated, the free-to-play side, whether it’s PC or mobile, it wins. The data shows that, across the board. I think that’s the key difference, in monetization.

How have you seen the development process evolve, for free-to-play games, versus the boxed products?

For boxed products or standard, traditional development, a lot of that was really driven through vision and creative aspirations. You have your producers, creative directors and these creative think tanks, coming up with ideas. They would take that creative vision and it gets distilled into all these different facets that build the production pipeline. At the end of the day, they’re focused more on providing the user with a very engaging experience. Typically, in your living room, on your big screen TV, they want that immersion. They’re almost asking you to play a movie or get so involved in creating that journey. A lot of effort in the development process is built on that total immersion.

For free-to-play games, whether it’s PC or mobile, it’s a little different. The appetite and the duration of play is different. If I were to take a look at a mobile product, you’re not on your mobile device for two, three, four hours at a time, playing some really deep, immersive product. You’re probably playing for five, 10, 15 minutes at a time. You can’t really get super immersed when you’re playing these snack-sized games. That’s where the development process has to change, because now, mentally, as well as team composition, you have to figure out how to get players to come back to a free-to-play product and play multiple sessions, throughout the day, while also inserting ways that I can get these users to, potentially, monetize my product.

On the free-to-play development side, now you have consumer psychologists, you have product managers, you have lifecycle managers that are part of the development team because you have to think through all these different ways to potentially develop value within the product that you’re making, because you’re giving it away for free. To me, that’s a really key distinction because if you look at the traditional team, versus the free-to-play team, the kind of people, the kind of stakeholders that are surrounding the free-to-play side are quite different, because of the needs of that product.

So the studio, effectively, becomes much closer to the players, on an ongoing basis, versus the old boxed games?

Yes, to some degree. Let’s take an example of a big franchise, like Call of Duty or Battlefield, on the boxed product side, they do do a good job of trying to cultivate their community, because they have the big brands and IPs, they try to create that dialogue with their players, on an ongoing basis. But if you look at the touchpoints, it’s probably infrequent. Going back to what we were talking about earlier, if a boxed product comes out and there’s this fervor of activity in the first month, there will probably be a lot of ongoing engagement between the publisher and the community. But that then dies down until three months later, they drop their first downloadable content and then you have a spike in engagement and you see that pattern repeating.

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The Value of Gaming Intellectual Property(July 3, 2020)

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