THQ Moves Company of Heroes to Virtual Goods, Free-to-Play Model

Giant game publisher THQ is taking a first step into the free to play model with one of its most successful titles ever: Company of Heroes, a real-time strategy game first released in 2006 and later bolstered with expansions. The company is working with in-game monetization company Live Gamer to make the switch.

Choosing Company of Heroes as its first title to rely on virtual goods is not a hugely risky move for THQ. Boxed versions of the original game, although still popular, can already be easily found for under $10; the two expansions, though more expensive, also appear to sell fewer copies.

However, it’s clear that THQ’s move is an acknowledgment of the success social games have enjoyed over the past two years — not least because Live Gamer is primarily known for its work in that industry.

THQ’s own losses have mounted over the same time period that social games have skyrocketed through the mechanism of virtual goods. Company of Heroes should be a good test-bed for the company to decide whether to pursue the model with newer titles.

The evidence so far has been fairly positive; in a conversation with us, Live Gamer co-founder Andrew Schneider pointed out Chinese examples like Legend of Mir 2 and ZT Online that hugely increased revenue with free-to-play versions.

Schneider said that any slowness to act on the part of large traditional game publishers is less from skepticism about the model than the inertia of the old business model, in which the company’s only contact with customers is the initial sale of a game. “They’ve been disintermediated from direct consumer relationships by the box game market, so it’s hard for them to aggressively shift the business,” said Schneider. “There’s a major inflection point in who owns the end relationship.”

Now the focus is less on proving that virtual goods sales can be done at all, and more on the specifics. Live Gamer’s role is both to provide software and insight into what works. “What’s resonating most is merchandising — advanced selling and upsell techiques,” said Schneider, comparing virtual goods sales to traditional techniques of selling goods on a site like Amazon.

THQ isn’t alone; last week, we also mentioned that Lord of the Rings Online is going free-to-play, while another branded game, Star Trek Online, seems interested. Live Gamer may also be working on other partnerships.