Thursday, April 03, 2008
Although Relmstein threatened to fly over here "for a nice long chat about responsible use of April Fool's Predictions", I'd like to talk a bit more about the possible increase of monthly fees for MMORPGs. Although my fake announcement was designed to shock, it was only funny because we all know deep in our hearts that such an increase is far from impossible. In 2003 EA raised the monthly fee of Ultima Online from $9.95 to $12.95. Everquest originally cost $9.89 per month, with the price tag funnily chosen after the name of 989 Studios who designed the game, but was later raised to $14.95. Just last year SOE increased the price of their Station Pass, giving access to all SOE games, to $29.99. So believing that MMORPGs will always cost $15 per month is just wishful thinking.
Keen recently posted news about the Warhammer Online monthly subscription fee, which is going to be "around 14 Euro". Frankly I have no clue how Keen jumps from that information to the expectaction that in the US WAR will cost $14.99 per month. Not only is 14 Euros already 1 Euro more than the maximum monthly fee for World of Warcraft in Europe, so why should WAR be more expensive than WoW in Europe, but not in the US? But also 14 Euros at today's exchange rate is $21.87, which is far more than $14.99. Mark Jacobs already stated that the WAR monthly fee will "quite possibly" be higher than $14.99. So something higher than $15 per month for WAR wouldn't surprise me at all.
The unknown factor here is how price sensitive MMORPG players are. How many less players would play WoW if it cost $20 per month instead of $15? How many less players will pick up WAR if they announce a $18 per month price tag instead of $15? As I already mentioned in my April's Fool post, the total amount of monthly revenue is number of players times monthly fee, so if you increase the monthly fee by a third, and lose less than a quarter of your players, you make more money. And use less resources at the same time.
Demographics are a big factor here. Video games aren't just for kids any more. While $5 more might make a big difference for a teenager, a lot of adult players would consider the increase as minor. Playing World of Warcraft for a year is considerably cheaper than buying a new single-player video game every month. It is also cheaper than many other forms of entertainment, on a dollar per hour of entertainment basis. As the $9.89 example from EQ shows, the price chosen is completely arbitrary, and is in no way related to cost; Blizzard has a profit margin of over 40% on their monthly fee. And UO being $2 cheaper obviously doesn't make a large number of players switch from WoW, so monthly fee doesn't appear to be a big deciding factor. Yes, far more people play free-to-play games, but that is a completely different demographic and business model.
Now I'm not really predicting a monthly fee increase for WoW anytime soon. As the game ages and newer games come out, World of Warcraft will get less attractive over time. Keeping the monthly fee constant might be good business tactics to keep your players loyal. What I do predict is that future MMORPGs will cost more than $15 per month, probably already starting with Warhammer Online. And people will pay up, maybe under protest, but pay they will.