View from the Road: No Such Thing as a Free Lunch

There’s an oft-repeated acronym in one of my favorite novels, Heinlein’s The Moon Is a Harsh Mistress: TANSTAAFL – There Ain’t No Such Thing as a Free Lunch. It’s a common saying both in and out of the book, and one that you’ve probably heard before. Its meaning is twofold: Literally, it means that somebody is paying for everything, even if you aren’t. If you’re being treated to lunch, the money is coming out of somebody’s pocket. Even if it’s on the house, they’re taking a loss by using ingredients and manpower that they could be using to make money, but aren’t.

It also has a figurative meaning: If you aren’t paying with cash, you’re expected to pay in some other way. Maybe I’m buying you lunch because I want to make you think more favorably of me. Maybe this is a business transaction and I want you to go with my company. Maybe I just want you to owe me a lunch later.

This saying also applies even if we’re talking about, say, games instead of food. Between Friday’s announcement that Turbine would be taking yet another of its formerly subscription-based games – Lord of the Rings Online – into the free-to-play market and the success of games like Sony’s FreeRealms, it seems that “free-to-play” is a popular business model in online gaming these days.

TANSTAAFL. Nothing is free.

See, the reason that most MMOGs historically use subscriptions is because they’re incredibly expensive to operate. On the technical side of things, you need to pay for hardware, electricity to keep your servers operating, maintenance fees, bandwidth charges, and the like. Just keeping the 20,000 or so computers that comprise WoW‘s server clusters up and running runs Blizzard a staggering $136,986 per day. That’s before you factor in the money that has to go to the technicians, the maintenance teams, and the armies of customer support representatives who help players in-game – and every new player means a slightly heavier load.

That $136,986/day figure, by the way? That’s just what it takes to keep the lights on. MMOG users expect a continually evolving world. These aren’t games where work stops after you ship. Programmers, artists, writers, voice actors, modelers, designers – they’re all working on new content every day of the week, and they have salaries that need to be paid, computers and workstations that need to be upgraded and maintained … you get the idea. Manpower isn’t free; neither are electricity or computer parts or anything like that.

These expenses don’t suddenly go away when your game becomes free-to-play. You still need to keep servers up and running, and you still need to pay people to create new content lest your community get bored and go play some other game. But now, you don’t have guaranteed revenue streams from subscription – you need to find some other way to monetize the game.

The most common – and arguably most successful – way is the microtransaction. Charge customers for a shiny new sword, or put new content under a gate that they need to pay to bypass. Hopefully, you’ll be pulling in enough money to keep the game running – and indeed, many people who play F2P games do hand over their moolah for something extra-special. (I certainly do).

But “many” doesn’t mean “all,” and if you’re reading this article and snickering at the idea of people who fall prey to the lure of microtransactions, then I hate to break it to you: They’re probably still making money off of you, too. Most likely, it’s through advertising. Even if they don’t have ads in-game (seeing billboards in Middle-earth might break the immersion), they can still sell ad space in the launcher. Or they can advertise other games that they’d like you to buy – or just pimp their merchandise. You might not be paying for the game, but they make money off of you when you buy one of their shirts all the same.

Perhaps one of the most cleverly integrated examples of this is Valve’s Team Fortress 2. If you’re looking at the screen in befuddlement right now, swearing that you’ve never paid a cent for TF2 beyond the initial purchase, then … okay, yes, you’d be right. Valve does get an easy pass on the upkeep front, because, for the most part, all of the TF2servers are player-run. But the developer is known for consistently supporting the game, adding new items, new weapons, and new maps and gameplay types even years after its release.

None of that is free. All of those cost time (and money) to produce. If you seriously think Valve is doing this out of the goodness of its heart, you’re a fool – you can bet your britches that Gabe Newell and company know damn well that there’s no such thing as a free lunch. Beyond releasing a game every half-century or so, Valve’s main business model is its popular Steam service. Just like Gamestop or Wal-Mart, Valve takes a cut of every single game purchased through Steam.

You know, the games that you see advertised every time you load up Steam to play TF2. Or the deals that come up once you’re done and exit the match. By constantly updating TF2, Valve keeps players coming back to Steam, where they see the new games and probably buy some every now and then. It takes a loss on direct revenue from TF2, but makes up for it in the cash it rakes in by keeping you checking out its ads.

Of course, none of this is a bad thing. TANSTAAFL is a fact of life, but it isn’t inherently wrong. Money is exchanged for goods and services. You are deriving enjoyment from a game, and – whether via a subscription fee, microtransactions, or advertising – are giving the developers and publishers compensation for providing you with entertainment.

This is the way it should be. Just keep in mind that you aren’t getting a free ride, lest you wake up in the middle of the night a few years for with the sudden and horrible realization that you’ve been paying for your food all along.

Writing this column made John Funk hungry.