Thursday, July 09, 2009
Does WoW ruin the monthly subscription model?
The history of industrialization is one of mass production. A company has both fixed costs, and variable costs per item produced, so the more items you produce, the lower the so-called "marginal" cost of producing one more. The same is true for MMORPGs. The cost per player is much lower if you have 1 million players than if you only have 100,000, because the fixed costs, for example the development cost, is spread out more. Unfortunately the players don't see it like that. For them it doesn't matter whether the game has 1 million subscribers or only 100,000, and they wouldn't want to pay more for the smaller game.
When Mark Jacobs announced, before Warhammer Online came out, that the game could quite possibly cost more than $15 per month, there was such an outcry that Mythic quickly had to drop that idea. World of Warcraft effectively caps the monthly fee other game companies can ask. WoW is the most popular game, so the players don't see why they should pay anything more for a less popular game. So when WAR ended up with a very respectable 300k subscribers, their profit margin and return on investment were so low that EA merged Mythic with Bioware and fired Mark Jacobs.
If it's "half a million subscribers or bust", then this makes life difficult for smaller game companies producing less mainstream games. They would need to charge players a monthly fee of $20 or $30 to get a decent return on investment if their development cost is in a similar order of magnitude than WoW or WAR. As players aren't willing to pay that, game companies either have to save on development cost and make visibly cheaper games, or they have to break out from the monthly fee business model and survive by some players paying a lot more than $15 per month. So next time you complain about a game with microtransactions, keep in mind that this could well be World of Warcraft's fault.