The Free Trade

Free isn't about piracy. Free is about pioneering game companies recognising the decline in consumers' perception of the value of media, and deciding to short-circuit this decline by switching business models and giving their products away for free. Free means dispensing with boxed products except as promotional items, throwing away up-front costs, and relying on the ability of a game to pull consumers back for long enough to make money through advertising, micro-transactions, game time cards or other services.

Of course, the rise of Free will in itself drive another nail into the coffin of Paid. Piracy provided consumers with their first taste of media as non-scarce commodity, of videogames as something distributed like confetti over the internet's practically limitless (for these purposes) bandwidth and storage, but piracy was tainted with legal and moral unpleasantness. Truly Free products will have even more impact, stripping that commoditisation of any legal grey area and creating a market where paying $30 to $60 up front for a piece of media seems utterly unjustifiable.

I've talked before about the importance of the sense of ownership to many consumers, and that remains absolutely true - but Free is another market force which, while not necessarily in opposition to ownership, needs to be balanced against it. Consumers want to own things, even digital things - they want the sense that they have a library of media with which they can do as they please. Free doesn't change that, but it does allow media holders to reign back on many implications of ownership - you don't need a second-hand market for a free product, for example.

The bad news is that many western companies are going to struggle to catch up with the Free concept. Wedded to the idea of selling boxed products and moving on to the next game, western (and Japanese) publishers are far behind their counterparts in developing economies such as China, where rampant piracy has forced publishers to think outside the box for many years. That was a reaction to a localised problem, but it turns out to have been exactly the strategy that the global market will need in years to come.

The worse news is that some companies simply aren't going to make the transition. The move away from traditional business models in the coming decade is going to leave many firms high and dry, as they struggle to find a way to replace boxed game revenues with ongoing revenue streams from Free products.

The worst affected will be those who assume that the Free market won't cannibalise the boxed games market, dismissing it as being a new market demographic unrelated to existing sales. This will, I suspect, be a common mistake - but even today, the availability of Free, be it legal or illegal, is starting to have an impact on gamers' willingness to pay boxed game prices. Within a decade, I suspect that only expensive peripherals and very special collectors' editions, filled with added value, will be able to command anything like the prices we now pay for standard boxed games.

Free is a concept that's either exciting, terrifying or both, depending on where you stand in the market today. It's a concept that's going to radically shake up every media industry, not just games - and it's a concept that's utterly unstoppable. The market and the network will interpret interference as damage and route around it.

When pirates are giving away your games in a more efficient distribution model than your own expensive one, and when your competitors are building compelling experiences and handing them out for free, entirely legally, the only sensible choice is to embrace the future. Those firms who decide to hold out and build sandcastles against the tide are going to get more than their feet wet.