Phoenix Games Interview: Klaas Kersting explains the risks and rewards of the F2P model

With 6 studios under its name, Phoenix Games is well known in the mobile games industry for pushing the small and midsized studios to the next level with its vast industry expertise. We recently had the chance to interview the Phoenix Games CEO, Klaas Kersting where he discussed the risks and rewards of the free-to-play models of the mobile games.

Let us start the interview with a brief introduction of Phoenix Games for our readers

Phoenix Games is my third company in games that I started after Gameforge and Flare Games. We tackle the problem of increasing competitiveness that requires developers to be much better in many things that are not game developments. Usually, game developers struggle with those areas. What we do is acquire developers and help them and their founders to achieve more. Basically overcoming these invisible hurdles that this market has stacked against the small to mid-sized guys it makes it just hard for them and it’s our job to make them more successful.

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Phoenix Games interview

The mobile games industry is growing at a rapid pace and so is the competition among developers. According to you, what are the must-have traits for a Free-to-Play mobile game to become successful?

It’s a question that is really hard to answer because I don’t think it is about the game actually. There are so many different types of players out there that any game can find an audience of millions, probably hundreds of millions of players if developed properly. So maybe it’s more about the team that creates the game and how can the team act to increase their probability of having a successful game.

You can’t plan this, you can’t predict this and I’m in this industry professionally now for over 20 years, and it is rolling the dice. The only thing that you know in games when you build them, is that the next dice roll will be incrementally more expensive than the last one and you need to roll a higher number than the last time. So the only thing that you can do to counter those odds as a team is the disciplines and be really good at them. There will be a lot of failing until you find something that works and it’s just a natural part of the process.

How do you see the Free-to-Play model evolving 10 years down the line, considering the tough competition the market is seeing right now?

I think in 10 years down the road free to play it will be even more dominant than it is today already. I could see a huge portion of the total gaming market in terms of players and revenue but it will be even dominant in those areas. One of the reasons is that the big brand owners who really want to control the IP that still drives premium game purchases will need to tap into this business model because it just offers more opportunity and it offers more commercial success as well.

It is just quite frankly the most customer-friendly business model because you can decide not to pay it and still have a large part of the experience. And if the free-to-play design is done well, you can basically still experience everything, it just takes a while longer. It’s always like a trade of Time and Money. It is the best business model for the players and allows brand owners to reach even bigger audiences.

There are millions of people out there who will not pay 60 bucks for a title, and they never will because they, especially the younger audiences, grew up with free-to-play being the natural order of things.

What are the 3 things that needs to be done correctly to grow a loyal user-base?

In my experience, I would say these are – listen, analyze and understand. So listen to your users obviously but analyze what they say as well. Because what they say is usually not exactly what they mean. They will tell you something like, “this unit is too powerful” and what they are really saying is a game system is broken and needs to be fixed.

So you need to listen, understand, and analyze what they are actually saying and translated it into actions that actually fix the problem they are talking about, but not naming. They usually aren’t naming the correct problems but they are pointing to watch them and it gives you a lot of things to analyze and think about it and really act on. And then obviously keep them engaged by delivering awesome stuff, build, systems that are rewarding. Players always need a reason to start up this device and play the game. Without these, they’ll leave.

Knighthood, Midoki, Phoenix Games
Phoenix Games interview

Can you throw some light on the change in gamer expectations over the last decade?

I think there are 2 major trends particularly when you look at mobile. Those are there on other platforms as well. It is the market where the next issue of the franchise always outsells the previous title unless the developer messes it up. It is true for free to play as well, where the top 10 companies account for the major percentage of the total industry revenue. The industry is tilted against the small to mid-sized developers, but there’s still enough money just to build a viable business to build a successful game. But when you look at the total size of the industry it is over proportionally growing at the top. The good news is, it is still growing at the bottom as well. So there is a bigger pie and there is more to distribute. It’s a bit like capitalism I guess.

The other one in terms of game expectations, in particular, are the expectations from games. The quality of mechanics that the game has to offer, the level of engagement, the level of events, and the novelty of things. I think, what can be observed over the last years, is that innovation is not a particular strength of the industry currently. For the big companies in the free-to-play world, it’s just overprinting the approved recipes with maybe a change. While that is understandable, it’s a shame. Because that is not why I probably love the games industry for.

We often come across misleading ads being used by developers – what are your thoughts on that?

As a gamer, I don’t like it, because what I want to see in it is the game that I’m getting when I click on these ads. I guess, it’s a constant thing since games have been sold, even on the old PC titles that were shipped in the boxes. The game graphic shorts are not usually the in-game graphics. They are edited and made more beautiful and that’s where the misleading ads somehow start. It is obviously a part of the industry but then there are abuses of misleading ads that totally sell the different things, that is definitely something that just hurts the industry. And it’s stupid.

For whatever reason, there are types of games where apparently it doesn’t matter because the main point seems to be to get players in the multi-layer skinner box where they don’t find their way out again. In the end, they are there because they work on a commercial level which astonishes me because they shouldn’t, but they are usually not run by stupid people. So these campaigns and these ads exist for a reason, majorly because they make their developers a huge chunk of money.

Most mobile games offer heavy in-app purchases. So there’s a stereotype in the gaming community that mobile games are low-quality cash grabs. What are your thoughts on this?

I feel that the observation of the stereotype is of a very vast outspoken minority. Actually, they are coming from console and PC and what they desire is the full experience for a predictable price without any barriers. They can have that if they buy a game for 60 Bucks, they can not have that if they get the game for free. It is for a different audience and they’re almost two billion other people who actually like it. I feel it’s a very outspoken minority and other than those guys, everybody profits.

Phoenix Games, Nonstop knight
Phoenix Games Interview

As more AAA mobile games get announced (such as Apex Legends, Battlefield, Valorant Mobile), do you think the stereotype of “mobile games are low-quality cash grabs” will gradually die out?

I think at the beginning of the mobile games industry there were a bunch of games that were low-quality cash grabs, definitely. But the market has evolved. It is completely professionalized now.

What people state when they say AAA, is usually premium, and that is a completely wrong perception. The AAA refers to the level of production quality, given the particular restrictions of the end-user device. And in terms of what the production quality and graphical things work on mobile devices now, it’s insane. I grew up with 16-bit games of my childhood and you’re basically talking about games here loading in on the uncanny valley, it’s ridiculous looking at what is possible from a technical perspective. And with mobile devices is becoming more and more powerful, AAA experience will be possible and it already is.

The mobile device is not necessarily a device that is built for AAA experiences. The context in which you play on your mobile device is completely different. It is not about getting immersed in the world as deep as possible, which is the purpose the AAA serves, but sometimes it is just killing time or a distraction, and then the AAA game is actually not what I need to. 

Season pass/subscription-based systems are being introduced in many mobile games with a great success. What are your thoughts on season passes as a monetization option?

From my perspective, subscriptions are the next logical step. In the beginning, it was like we build a game and then we build another game, and then build another game… and now it’s kind of the opposite. You try to build a game that can run forever, a real evergreen, where you build a loyal customer base, a loyal player base and they have some reason to play this game forever. To achieve that, obviously, you need to find a way to monetize that better, because that’s what companies do. And giving loyal users something that only makes sense for loyal users is then the next thing that is obvious. It’s fairer, it’s a good business model, it is basically like yeah – the Netflix. And if you spend so much time with the game that’s it’s worth it, hey cool every everybody is happy right!

Wild Rift Wild Pass
Image via Riot Games

How do you see the option of making a premium game (let’s say $10 or $25) instead of a Free-to-Play title with heavy in-app purchases – is it sustainable in the long run?

10 bucks is a lot for a premium mobile game, and then there are expectations that it will be free. I remember when Nintendo did their Mario game where you had to buy the game for 10 Bucks right after the fifth level or so, it was the death of this game. If they would have made the game free to play, it would probably have gotten half a million downloads, and that’s much fuller, and everybody engages with the franchise, and everybody is happy. So I think it’s a tough spot.

There are definitely companies that found success in doing premium games for the price points of like $2.99, $3.99 or so. Ironhide Games of Kingdom Rush series for example, always find their loyal player base that keeps emotional attachment to the brand and will buy whatever the studio builds, and it’s awesome!

However, in comparison to the total market size, it is broadly negligence and it would be interesting to see what would happen if they would figure out free to play for monetization on top of a Kingdom Rush franchise game. So I think the bigger opportunity for sure is in free-to-play. However, there are neat opportunities in premium titles if you get a lot of things right, price it right, and sell it right to build the right game for the right audience and to find it. So I would advise any developer to try to go free to play. It’s just more players and more opportunities out there.

Bonus from the Phoenix Games Interview: What was the reason behind the shutdown of Throne Wars

Not enough players anymore problem was that I mean the game was tailored to a very hot core audience. And all of that’s frustrating nationalities war was not intentional. It worked quite well as a motivation to drive retention and engagement in the game and that’s also circles back but it didn’t have a positive user acquisition case. So we couldn’t acquire the users to keep the critical mass alive and it didn’t make any sense anymore to spend it on, unfortunately.

For me, personally, the Phoenix Games Interview was more than just a regular interaction I do with the industry veterans. Someone who was once a mad fan of Throne Wars with thousands of hours, made friends over this beautiful game who are still in touch with, talking with the founder and knowing the reason for the closure (that we could never get to know, even in the official forum) was actually a fulfilling experience.

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