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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.
- posted by Tobold @ 6:59 AM Permanent Link
Comments:
I think we are finally getting to the point where studios are seeing that WoW-like numbers won't happen again, regardless of what you create, and so you can't throw crazy money to make an MMO because WoW has 5m subs. As studios plan around 300-600k subs (and we have yet to see a 600k MMO), expectations will be more realistic and more dev teams will be kept around to continue to build on to what they release. Perhaps in that regard, WoW did set the genre back a few years...
I completely disagree. 1 week after playing WAR I wrote a lengthy review about the game. Almost 90% of the stuff, I wrote about, could have been corrected in a few monnths work; some of it should have been corrected before the project was started (the endgame vision was flawed). It is not impossible to make a better game than WoW, and it will happen. Probably at a time nobody expects it.
All you need is a real good quality management and people who believe that what the QM tells them is correct.
The list of mistakes in WAR and AoC that could have been prevented before launch is many pages long. The list of bugs that could only have been found after release (admittedly, a problem in such complex software) is many pages shorter - and those bugs are often less dramatic.
MMOs are complex pieces of software, but it's not MS Windows. There is much more complex software out there and if you apply the right QM you can actually succeed at producing high quality. The newest windows version (in contrast to vista!) is a good example.
1) MMOs with less players can have less servers => less costs.
Server costs? I know that for a laymen it is hard to understand but nowdays it cost almost nothing to host a server for MMO.It was always very cheap but in last 5 years badnwidth and servers are so cheap , that anyone can afford to run them
You can run a 1000 concurrent users WoW server on 70$-100$/month. And thats at retail prices. If you scale it I bet it cost less than that in infrastructure costs for wow per realm are negligible
Of course the costs upfront for their data centers are somewhat significant - that is because they purchases and build out everything themselves(cheaper than buying retail, but more upfront costs)
Costs in running it mainly come from customer support and development. And those could be very modest as well. CS cost scales with users but so does your revenue
Main problem is the development. Costs are huge -MMOs are one of the most complex software out there , require huge amount of content , time and testing . AAA MMO just cannot be made cheaply nowdays.
I am really interested how landscape changes when cheap middleware appears ( swtor uses 3d party MMO platform - will see how it pans out). - That would make it possibly for small indy shops to make MMOs, while the content costs are still there , they could explore alternative models (like more player driven content ) .
p.c. And I as I am keenly aware how much really running mmo costs, I wouldnt be buying anything like WaR for over $15 . WaR has nothing in it which warrants higher price tag.
I bet wow could still be profitable if they charged 50c a month (of course they wont cut their profits for no reason).
People are very naive about what it truly takes to field an MMO. Especially one that can handle many hundreds of thousands to millions of players.
Well it costs quite a bit. But you are forgetting that it brings almost pure profit after it is deployed. They do not do it for charity you know. If say indie dev makes his own mmo he can run it very cheaply , as he doesnt need to buy datacenters and infrastructure for "millions of players" all accross the world.
For start he can just rent a couple of dedicated servers for a few hundred a month and start slowly growing his user base.
Say you have 10k subscribers, paying modest fee of $10/month. That is quite enough to pay for a couple of developers , infrastructure costs and a couple of CS .
Besides the making actual mmo the entry cost is very low. That is why emulator scene is booming - anyone can afford it . Heck many private servers make solid profit
Can I ask what your field of expertise is? I've been a system/network administrator for over 20 years now and have plenty of solid data center experience.
I am a network/sysadmin as well. Currently at decent sized online retail company with international presence.
I deal mostly with http(s) hosting aspects and akamai helps scaling and offload a great deal. Obviously not possible for MMOs
I am aware how much large scale network , storage and servers cost. Quite a bit , but if you buying 1 million dollar SAN and network equipment, then you maybe you going to big for an indie (nothing wrong if you secure financing)
but growth muddys the waters considerably. You are glossing over a great deal.
Well you saying it is mandatory to start with multiple multi-million datacenters . And the thing is it is not. You can grow your infrastructure from small servers sitting in the basement to the multiple datacenters.
Especially if your design supports it from the get go.
I am not saying that replicating wow infrastructure would be peanuts. It is very cheap for Blizzard to per user , because of their huge user base. But overall the cost is considerable.
It is just you don't need all that to run MMO, you can run it very cheap.
This is where WAR failed, thinking they could make a subscription game and compete with WoW.
Non-sense!
If that were the case, WAR hadn't started high and dropped then.
15€/month is a joke for that kind of entertainment. I SAVE money with WoW. Even one evening that I don't go and drink beer in a club is enough that WoW is profitable.
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This is a typical problem in a market society. Extreme examples are Microsoft, Google, Boing, Airbus.
There are a few reasons why it isn't that much a problem with MMOs:
1) MMOs with less players can have less servers => less costs.
2) Players get tired of one MMO. You remember the initian ansturm for AoC and, less intense, WAR?
3) MMOs aren't terribly expensive, compared to other industries. It's not like developing a new airplane. If you can convince people that you not only have a few good ideas for new MMO, but also the capability to really produce the next big thing, they woudn't have much of a problem to drown you in money. Looking at WoW they know that this can pay off
4) I am pretty certain that there is a luxury part in the MMO community. People who loved to pay 45€ the month or more to play a real good MMO - even if it isn't big. I know I am one of them.
5) Creativity ends even the most powerful monopolies. For example, Google is about the develop an OS, trying to end MS dominance.
There are a few reasons why it isn't that much a problem with MMOs:
1) MMOs with less players can have less servers => less costs.
2) Players get tired of one MMO. You remember the initian ansturm for AoC and, less intense, WAR?
3) MMOs aren't terribly expensive, compared to other industries. It's not like developing a new airplane. If you can convince people that you not only have a few good ideas for new MMO, but also the capability to really produce the next big thing, they woudn't have much of a problem to drown you in money. Looking at WoW they know that this can pay off
4) I am pretty certain that there is a luxury part in the MMO community. People who loved to pay 45€ the month or more to play a real good MMO - even if it isn't big. I know I am one of them.
5) Creativity ends even the most powerful monopolies. For example, Google is about the develop an OS, trying to end MS dominance.
The end result of these economies of scale is that the major player effectively controls the market by being able to push out other companies (by temporarily minimizing profit per unit, or even selling at a loss). This isnt something which is unique for the mmo market of course. It does suggest though that the prime motivator for the customer is price, which is -imho- is only the case for certain producttypes. If games fall in this category, im not so sure. People are willing to spend vast amounts of money on entertainment, price doesnt seem to be the prime motivator.
Otoh, an important factor may be that the clientbase of an mmo for a large part consists of people who somehow got the notion that digital content must be free, at all times. Movies, games and software are products which are apparently made with zero cost (kind of like the central bank making money out of thin air) and therefore ANY price is too high. It would be interesting to know if Mythic did any research on the optimal price for WAR (or any other mmo) or just surrendered to the outcries on the net (which may be voiced solely by those mentioned above, for whom any price for DC is a crime).
Otoh, an important factor may be that the clientbase of an mmo for a large part consists of people who somehow got the notion that digital content must be free, at all times. Movies, games and software are products which are apparently made with zero cost (kind of like the central bank making money out of thin air) and therefore ANY price is too high. It would be interesting to know if Mythic did any research on the optimal price for WAR (or any other mmo) or just surrendered to the outcries on the net (which may be voiced solely by those mentioned above, for whom any price for DC is a crime).
I would honestly like to know what kind of research these MMO companies are doing, prior to product development, that allows them to make/form the educated risk analysis that says their product -will-, beyond a doubt, generate at least a marginal return on their investment...??
How many potential gamers are there out there right now that arent playing WoW already? How many gamers only own consoles?
Just how big is the potential gamer market?
And finally, I know very few people who can manage the time to play more than one MMO. This most certainly has to be a very important factor where market share is concerned, especially by age group. WoW has mass appeal across all age groups....so why cant other game developers do this as well as Blizzard?
How many potential gamers are there out there right now that arent playing WoW already? How many gamers only own consoles?
Just how big is the potential gamer market?
And finally, I know very few people who can manage the time to play more than one MMO. This most certainly has to be a very important factor where market share is concerned, especially by age group. WoW has mass appeal across all age groups....so why cant other game developers do this as well as Blizzard?
on a personal level I can tell you - for me $15 a month is almost too much. why do I pay it anyway? because I've been a fan of warcraft games (and blizzard games in general) for a while and because after trying WoW with 10 day free trial, i decided that it was worth 15 bucks a month.
but then again - I'm mostly a single player gamer, so I'm used to playing 40 dollars (or so) once and then playing as much as I want to for free.
anyway - the point I'm trying to make is - what if you look at it from a different perspective? what if you consider the fact that wow is actually making it possible for games to charge monthly playing fee as opposed to costumers expecting free game play and without popularity of wow, pay per month mmo's wouldn't be as widely accepted?
but then again - I'm mostly a single player gamer, so I'm used to playing 40 dollars (or so) once and then playing as much as I want to for free.
anyway - the point I'm trying to make is - what if you look at it from a different perspective? what if you consider the fact that wow is actually making it possible for games to charge monthly playing fee as opposed to costumers expecting free game play and without popularity of wow, pay per month mmo's wouldn't be as widely accepted?
# posted by 
: 9/7/09 10:56
: 9/7/09 10:56
@ Leah, I am by no means wealthy, but I have a difficult time envisioning any kind of lifestyle where the last $15 on a monthly fee can make or break someone, yet they can still afford to have the computer to play WoW on, electricity, internet access, food, a roof over their head? Normally $15 would be a pittance compared to these costs, and the monthly fee is really only a barrier to children living with their parents or college students who choose not to have jobs?
Even for a poor working family, if they can afford the luxury of the computer and high speed internet, certainly their is a place to come up with $15 to play WoW if that is the preferred form of recreation?
The outcry over a monthly fee has puzzled me ever since I played Meridian 59 and UO.
Even for a poor working family, if they can afford the luxury of the computer and high speed internet, certainly their is a place to come up with $15 to play WoW if that is the preferred form of recreation?
The outcry over a monthly fee has puzzled me ever since I played Meridian 59 and UO.
So if you have more customers, you have more profit? That only sounds obvious.
Yes, the only way to make as much money with less customers is to ask more for each customer. The only people would want to pay more is that because you give a better service, a more fun game. I'm sure that people would not mind paying $18 if the game is clearly better then WoW.
Yes, the only way to make as much money with less customers is to ask more for each customer. The only people would want to pay more is that because you give a better service, a more fun game. I'm sure that people would not mind paying $18 if the game is clearly better then WoW.
A successful enough game could break this. I would certainly try SWTOR if it cost $30 a month.
It would however need a higher proportion of early adopters staying than we've seen with games like WAR and AoC but not all their subscriber losses can be laid at WoW's door.
It would however need a higher proportion of early adopters staying than we've seen with games like WAR and AoC but not all their subscriber losses can be laid at WoW's door.
So if you have more customers, you have more profit? That only sounds obvious.
The non-obvious part is that the profit isn't linear. Twice as many customer don't just make twice as much profit, but a bit more than that, because the cost per customer goes down, and thus the profit per customer goes up.
The non-obvious part is that the profit isn't linear. Twice as many customer don't just make twice as much profit, but a bit more than that, because the cost per customer goes down, and thus the profit per customer goes up.
Market-wise, this seems to be working as intended: The product with the cheapest price/(features+social network) ratio wins. If one stays within the DikuMUD formula, one either needs to deliver massively more and better features (which costs a lot), a better and/or larger social network or compete with the price. I admit that it may not be intellectually invigorating from a pundit's perspective, but mass market rarely is. However, the market is wide open for games that don't follow the DikuMUD formula.
I wouldn't say they ruin it, but like McD's of the fast-food world they demand attention. Devs getting in to the MMO business are lacking intelligence if they ignore WoW's offering, price point, genre, target audience, etc.
If they go higher than WoW's set price per month they better have the balls to back it up with quality. WAR was a "good" game, but it did not have what was needed to break through the barrier.
If they go higher than WoW's set price per month they better have the balls to back it up with quality. WAR was a "good" game, but it did not have what was needed to break through the barrier.
@ Hirvox:
"social networks" are a market failure.
http://en.wikipedia.org/wiki/Market_failure
It is an externality and one of those things Gevlon will never understand: Markets are good in some circumstances, and bad in other circumstances.
Networking effects decrease the competitive advantage of the better product.
"social networks" are a market failure.
http://en.wikipedia.org/wiki/Market_failure
It is an externality and one of those things Gevlon will never understand: Markets are good in some circumstances, and bad in other circumstances.
Networking effects decrease the competitive advantage of the better product.
I think WoW definitely sets the baseline for what a lot of people feel the price/ value of a monthly sub should be. (Bet Blizzard wish they'd charged more now ;) )
# posted by : 9/7/09 14:18
: 9/7/09 14:18
I suspect it depends on what your game is going for. If you're aiming to do a few things better than WoW, then you're capped at $15, because people might switch for those features and might buy a $50 box for those features, but they won't pay more than they're paying now.
By contrast, I suspect that a game that's more narrowly targeted could get away with it. A lot of hardcore raiders would likely pay $25/month if the raids were better and came more frequently than in WoW, and I bet most of the people playing Darkfall (hardcore PvP) would shell out $25 almost as easily as $15. If they like the gameplay and can't easily get "almost as good" gameplay for less, then they'd probably pony up. Those sort of niche games can also get away with ignoring other areas of the game - does Darkfall even have raids? Certainly a game focused entirely on hardcore PvE could skip out on battlegrounds and arena.
By contrast, I suspect that a game that's more narrowly targeted could get away with it. A lot of hardcore raiders would likely pay $25/month if the raids were better and came more frequently than in WoW, and I bet most of the people playing Darkfall (hardcore PvP) would shell out $25 almost as easily as $15. If they like the gameplay and can't easily get "almost as good" gameplay for less, then they'd probably pony up. Those sort of niche games can also get away with ignoring other areas of the game - does Darkfall even have raids? Certainly a game focused entirely on hardcore PvE could skip out on battlegrounds and arena.
"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."
Tobold,
Not to nitpick, but this is a really bad butchering of the facts.
1) Although EA put Bioware & Mythic in a group together with a common manager, the two entities are still autonomous and are not "merged" is any business sense of the term.
2) There is no proof that Mark Jacobs was "fired". All we know is that he's left Mythic. It could be just as likely that EA's restructuring plans placed Mark in a position that he was uncomfortable with or unwilling to fulfill and so he left of his own accord.
Tobold,
Not to nitpick, but this is a really bad butchering of the facts.
1) Although EA put Bioware & Mythic in a group together with a common manager, the two entities are still autonomous and are not "merged" is any business sense of the term.
2) There is no proof that Mark Jacobs was "fired". All we know is that he's left Mythic. It could be just as likely that EA's restructuring plans placed Mark in a position that he was uncomfortable with or unwilling to fulfill and so he left of his own accord.
@Andrew
The only two choices we really have is either Mark left or was fired.
I presume he left after hearing about the changes of management and reporting to the BioWare team now.
EA and Mark did not get along at all, he was grateful for the funds that Mythic received but EA pushed Jacobs around way to much.
EA is the reason classes, cities, and content were cut and rushed to market.
Mythic wanted and needed more time to fix the game but EA wanted to beat Blizzard to the market and we saw how well that plan worked.
On-Topic:
I agree with Tobold here, Blizzard has engraved peoples perspective of what a subscription model should be. As a developer, you either have to be at 15 or below 15 if you want subscribers today.
Like Tobold said, the problem lies when you need to regain those profits but when you do not even have 1-million subs it takes a long time.
Asking people to shell out 50 dollars for the box, then 15 a month to play is a little harsh in the begging, just to try a game.
I would gladly pay more for a superior product, unfortunately no one has come up with anything better then WoW.
The only two choices we really have is either Mark left or was fired.
I presume he left after hearing about the changes of management and reporting to the BioWare team now.
EA and Mark did not get along at all, he was grateful for the funds that Mythic received but EA pushed Jacobs around way to much.
EA is the reason classes, cities, and content were cut and rushed to market.
Mythic wanted and needed more time to fix the game but EA wanted to beat Blizzard to the market and we saw how well that plan worked.
On-Topic:
I agree with Tobold here, Blizzard has engraved peoples perspective of what a subscription model should be. As a developer, you either have to be at 15 or below 15 if you want subscribers today.
Like Tobold said, the problem lies when you need to regain those profits but when you do not even have 1-million subs it takes a long time.
Asking people to shell out 50 dollars for the box, then 15 a month to play is a little harsh in the begging, just to try a game.
I would gladly pay more for a superior product, unfortunately no one has come up with anything better then WoW.
You can't use WoW as the example here, as they are a major outlier in the market. Only a fool would aim for his new MMO to get 1m+ subs, and WoW has 5m or so. Like MJ said, WAR's model is very profitable at 500k, which I'm guessing means they are okay at 300k, just not as big a success as Mythic envisioned the game to be.
I think we are finally getting to the point where studios are seeing that WoW-like numbers won't happen again, regardless of what you create, and so you can't throw crazy money to make an MMO because WoW has 5m subs. As studios plan around 300-600k subs (and we have yet to see a 600k MMO), expectations will be more realistic and more dev teams will be kept around to continue to build on to what they release. Perhaps in that regard, WoW did set the genre back a few years...
I think we are finally getting to the point where studios are seeing that WoW-like numbers won't happen again, regardless of what you create, and so you can't throw crazy money to make an MMO because WoW has 5m subs. As studios plan around 300-600k subs (and we have yet to see a 600k MMO), expectations will be more realistic and more dev teams will be kept around to continue to build on to what they release. Perhaps in that regard, WoW did set the genre back a few years...
# posted by : 9/7/09 15:15
: 9/7/09 15:15
I've never had a problem with paying a monthly sub for a game that I play regularly, like I did UO, EQ, SWG or WoW. I logged into them nearly every day, and I feel I got my money's worth.
It's the fringe games, the niche games, that I don't want to pay for. Games that I'd rather play on the side--DDO, LOTRO, and CoH/V come to mind. Were these games microtransactions based, I'd have stable accounts for each of them right now. I will when DDOU launches, actually. If more games went F2P like DDOU is doing with VIP status subscriptions, there would be a lot more players going around.
I'm a lot more likely do spend 2-5 dollars on a game I play every few weeks when there's something I want rather than 15 dollars every single month. Let *me* pick how to pay, and I will be a subscriber for life. And in the end, the company just might make more money from me than they would with a fixed subscription price.
It's the fringe games, the niche games, that I don't want to pay for. Games that I'd rather play on the side--DDO, LOTRO, and CoH/V come to mind. Were these games microtransactions based, I'd have stable accounts for each of them right now. I will when DDOU launches, actually. If more games went F2P like DDOU is doing with VIP status subscriptions, there would be a lot more players going around.
I'm a lot more likely do spend 2-5 dollars on a game I play every few weeks when there's something I want rather than 15 dollars every single month. Let *me* pick how to pay, and I will be a subscriber for life. And in the end, the company just might make more money from me than they would with a fixed subscription price.
Not to nitpick, but this is a really bad butchering of the facts.
It certainly is an *interpretation* of the facts. But I have a faint suspicion that my condensed and interpreted version is closer to the truth than the EA company line you are repeating here.
Whatever happened to people thinking for themselves? Why is everybody blindly believing in press releases and official statements nowadays, and only accepts those official statements as facts? Have we all become slaves to these companies, forced to toe the company line? I got people telling me that if Blizzard doesn't admit to have lost millions of Chinese players, than that can't have happened, and all Chinese players must now be happily playing on Taiwanese servers. If EA says that Mark Jacobs voluntarily left the company he founded and loved, that must be the case, he couldn't possibly have been pushed. Don't you know that official statements are nearly always a mix of spin and outright lies?
It certainly is an *interpretation* of the facts. But I have a faint suspicion that my condensed and interpreted version is closer to the truth than the EA company line you are repeating here.
Whatever happened to people thinking for themselves? Why is everybody blindly believing in press releases and official statements nowadays, and only accepts those official statements as facts? Have we all become slaves to these companies, forced to toe the company line? I got people telling me that if Blizzard doesn't admit to have lost millions of Chinese players, than that can't have happened, and all Chinese players must now be happily playing on Taiwanese servers. If EA says that Mark Jacobs voluntarily left the company he founded and loved, that must be the case, he couldn't possibly have been pushed. Don't you know that official statements are nearly always a mix of spin and outright lies?
I think we are finally getting to the point where studios are seeing that WoW-like numbers won't happen again, regardless of what you create, and so you can't throw crazy money to make an MMO because WoW has 5m subs. As studios plan around 300-600k subs (and we have yet to see a 600k MMO), expectations will be more realistic and more dev teams will be kept around to continue to build on to what they release. Perhaps in that regard, WoW did set the genre back a few years...
I completely disagree. 1 week after playing WAR I wrote a lengthy review about the game. Almost 90% of the stuff, I wrote about, could have been corrected in a few monnths work; some of it should have been corrected before the project was started (the endgame vision was flawed). It is not impossible to make a better game than WoW, and it will happen. Probably at a time nobody expects it.
All you need is a real good quality management and people who believe that what the QM tells them is correct.
The list of mistakes in WAR and AoC that could have been prevented before launch is many pages long. The list of bugs that could only have been found after release (admittedly, a problem in such complex software) is many pages shorter - and those bugs are often less dramatic.
MMOs are complex pieces of software, but it's not MS Windows. There is much more complex software out there and if you apply the right QM you can actually succeed at producing high quality. The newest windows version (in contrast to vista!) is a good example.
I guess the better question is why do game companies all want to provide a similar level of service as WoW, while charging the same fee. I would gladly pay more if we got more. If WoW offered a $30 a month fee to play on a server with live GM hosted events and human controlled raid bosses etc. would many players sign up? I think they would fill the server no problem.
Would you pay an extra $5 per month on a game to always be at the front of the line for the login queue and always be the next call up for the GM to help out? Many players already pay extra for “collectors edition” releases that offer some in game benefits. Many micro-transaction games offer this with “VIP” memberships etc.
COH/V is exploring offering extra services for additional fees in their mission creator system.
Would you pay an extra $5 per month on a game to always be at the front of the line for the login queue and always be the next call up for the GM to help out? Many players already pay extra for “collectors edition” releases that offer some in game benefits. Many micro-transaction games offer this with “VIP” memberships etc.
COH/V is exploring offering extra services for additional fees in their mission creator system.
# posted by : 9/7/09 16:34
: 9/7/09 16:34
@Tobold:
"It certainly is an *interpretation* of the facts. But I have a faint suspicion that my condensed and interpreted version is closer to the truth than the EA company line you are repeating here."
I agree that it is an interpretation of the facts. But you phrase your article as if it is the gospel truth, and unfortunately neither you nor I have the insight/information required to make a definitive statement such as you have done.
Now maybe this is my years of political blogging coming to bear, but stating an ASSUMPTION/GUESS as fact is NEVER a good way to blog - it can only serve to (further?) mislead people and get rebuttals in comments. =)
"Whatever happened to people thinking for themselves? Why is everybody blindly believing in press releases and official statements nowadays, and only accepts those official statements as facts? Have we all become slaves to these companies, forced to toe the company line? "
No, we don't need to toe the company line. But we also don't need to present our best guesses as fact.
Also, I don't think it's "toeing the line" to correct you with regards to the Mythic/Bioware restructuring - that is NOT a merger and I don't see how anyone can claim it is without simply fabricating evidence.
"I got people telling me that if Blizzard doesn't admit to have lost millions of Chinese players, than that can't have happened, and all Chinese players must now be happily playing on Taiwanese servers."
If those Chinese players suddenly started subscribing o Chinese servers then I would expect a Blizzard announcement of a sudden influx of 5m new accounts. :P While I'm sure that some players have moved to Taiwanese servers, it's probably a minority.
"If EA says that Mark Jacobs voluntarily left the company he founded and loved, that must be the case, he couldn't possibly have been pushed. "
They didn't say one way or another how Jacobs left. They just stated that he HAD left. Maybe he was pushed, maybe he wasn't. My best GUESS is that they offered him a position/direction that was distasteful to him and he couldn't accept it. Perhaps the alleged offer was even designed to provoke that reaction. We still can't just go around saying he was fired as if we know the inner workings of the company though.
"Don't you know that official statements are nearly always a mix of spin and outright lies?"
You bet I do. It's as bad as politics.
Companies release mostly spin. A company will rarely lie outright.... because the consequences for getting caught out are possibly severe. But massive spin is what I always assume we get from companies.... just look at SOE going on about the 4m "registered Free Realms players" without ever telling us how many active accounts/concurrent users they have.
"It certainly is an *interpretation* of the facts. But I have a faint suspicion that my condensed and interpreted version is closer to the truth than the EA company line you are repeating here."
I agree that it is an interpretation of the facts. But you phrase your article as if it is the gospel truth, and unfortunately neither you nor I have the insight/information required to make a definitive statement such as you have done.
Now maybe this is my years of political blogging coming to bear, but stating an ASSUMPTION/GUESS as fact is NEVER a good way to blog - it can only serve to (further?) mislead people and get rebuttals in comments. =)
"Whatever happened to people thinking for themselves? Why is everybody blindly believing in press releases and official statements nowadays, and only accepts those official statements as facts? Have we all become slaves to these companies, forced to toe the company line? "
No, we don't need to toe the company line. But we also don't need to present our best guesses as fact.
Also, I don't think it's "toeing the line" to correct you with regards to the Mythic/Bioware restructuring - that is NOT a merger and I don't see how anyone can claim it is without simply fabricating evidence.
"I got people telling me that if Blizzard doesn't admit to have lost millions of Chinese players, than that can't have happened, and all Chinese players must now be happily playing on Taiwanese servers."
If those Chinese players suddenly started subscribing o Chinese servers then I would expect a Blizzard announcement of a sudden influx of 5m new accounts. :P While I'm sure that some players have moved to Taiwanese servers, it's probably a minority.
"If EA says that Mark Jacobs voluntarily left the company he founded and loved, that must be the case, he couldn't possibly have been pushed. "
They didn't say one way or another how Jacobs left. They just stated that he HAD left. Maybe he was pushed, maybe he wasn't. My best GUESS is that they offered him a position/direction that was distasteful to him and he couldn't accept it. Perhaps the alleged offer was even designed to provoke that reaction. We still can't just go around saying he was fired as if we know the inner workings of the company though.
"Don't you know that official statements are nearly always a mix of spin and outright lies?"
You bet I do. It's as bad as politics.
Companies release mostly spin. A company will rarely lie outright.... because the consequences for getting caught out are possibly severe. But massive spin is what I always assume we get from companies.... just look at SOE going on about the 4m "registered Free Realms players" without ever telling us how many active accounts/concurrent users they have.
1) MMOs with less players can have less servers => less costs.
Server costs? I know that for a laymen it is hard to understand but nowdays it cost almost nothing to host a server for MMO.It was always very cheap but in last 5 years badnwidth and servers are so cheap , that anyone can afford to run them
You can run a 1000 concurrent users WoW server on 70$-100$/month. And thats at retail prices. If you scale it I bet it cost less than that in infrastructure costs for wow per realm are negligible
Of course the costs upfront for their data centers are somewhat significant - that is because they purchases and build out everything themselves(cheaper than buying retail, but more upfront costs)
Costs in running it mainly come from customer support and development. And those could be very modest as well. CS cost scales with users but so does your revenue
Main problem is the development. Costs are huge -MMOs are one of the most complex software out there , require huge amount of content , time and testing . AAA MMO just cannot be made cheaply nowdays.
I am really interested how landscape changes when cheap middleware appears ( swtor uses 3d party MMO platform - will see how it pans out). - That would make it possibly for small indy shops to make MMOs, while the content costs are still there , they could explore alternative models (like more player driven content ) .
p.c. And I as I am keenly aware how much really running mmo costs, I wouldnt be buying anything like WaR for over $15 . WaR has nothing in it which warrants higher price tag.
I bet wow could still be profitable if they charged 50c a month (of course they wont cut their profits for no reason).
It really isn't a simple thing to say that if development cost X, and you have Y users per month, then profit is Z There are fixed costs associated with a certain level of service. The hardware and infrastructure that was developed and planned for will allow some growth but beyond that there would obviously be additional costs associated with the purchase of new hardware, cabling, bandwidth capacity and additional technicians.
Those additional costs will most likely be non-linear as additional decision making will often take place along with them, such as a decision to decentralize infrastructure in order to spread the user base out further to account for more growth more easily.
People are very naive about what it truly takes to field an MMO. Especially one that can handle many hundreds of thousands to millions of players.
Simply increasing players does not mean profit goes up. You have to be able to set a price-point that enables continued growth of this nature, enables the investors to recoup their development costs, and maintains an acceptible level of service.
Those additional costs will most likely be non-linear as additional decision making will often take place along with them, such as a decision to decentralize infrastructure in order to spread the user base out further to account for more growth more easily.
People are very naive about what it truly takes to field an MMO. Especially one that can handle many hundreds of thousands to millions of players.
Simply increasing players does not mean profit goes up. You have to be able to set a price-point that enables continued growth of this nature, enables the investors to recoup their development costs, and maintains an acceptible level of service.
People are very naive about what it truly takes to field an MMO. Especially one that can handle many hundreds of thousands to millions of players.
Well it costs quite a bit. But you are forgetting that it brings almost pure profit after it is deployed. They do not do it for charity you know. If say indie dev makes his own mmo he can run it very cheaply , as he doesnt need to buy datacenters and infrastructure for "millions of players" all accross the world.
For start he can just rent a couple of dedicated servers for a few hundred a month and start slowly growing his user base.
Say you have 10k subscribers, paying modest fee of $10/month. That is quite enough to pay for a couple of developers , infrastructure costs and a couple of CS .
Besides the making actual mmo the entry cost is very low. That is why emulator scene is booming - anyone can afford it . Heck many private servers make solid profit
@Max
I'm not sure where you are getting your numbers from, and I am not familiar with the specific hardware that Blizzard uses to host WoW but I do know that typical super-computing clusters can run into the millions each.
Multiply that by the number of data centers Blizzard currently has and has planned. Each realm with its own cluster (of whatever size). Add in additional clusters for user authentication, data bases, modeling, etc, etc, etc.
Those numbers can be quite large but represents money spent once. Or spent inoften accounting for growth and upgrade of hardware over time (life-cycle management).
Add in technical support staff for all the machines. Increase the staff as you increase infrastructure. Technical support, development staff, help desk personnel... these numbers are not small and explain why companies always look to the IT staff to cut when looking to increase the bottom line.
Then add in Bandwidth capacity, which is is probably one of Blizzard's largest expenses and I think you begin to see the expenses are quite a bit higher than I think you are mentioning.
I'm not sure where you are getting your numbers from, and I am not familiar with the specific hardware that Blizzard uses to host WoW but I do know that typical super-computing clusters can run into the millions each.
Multiply that by the number of data centers Blizzard currently has and has planned. Each realm with its own cluster (of whatever size). Add in additional clusters for user authentication, data bases, modeling, etc, etc, etc.
Those numbers can be quite large but represents money spent once. Or spent inoften accounting for growth and upgrade of hardware over time (life-cycle management).
Add in technical support staff for all the machines. Increase the staff as you increase infrastructure. Technical support, development staff, help desk personnel... these numbers are not small and explain why companies always look to the IT staff to cut when looking to increase the bottom line.
Then add in Bandwidth capacity, which is is probably one of Blizzard's largest expenses and I think you begin to see the expenses are quite a bit higher than I think you are mentioning.
@Max
Can I ask what your field of expertise is? I've been a system/network administrator for over 20 years now and have plenty of solid data center experience. I'm obviously in operations, but have been around long enough to have some knowledge of the financials involved. I've had to plan for and make recommendations on plant, hardware, cabling, and other hardware expenditures and I simply can't reconcile my own experience with what you are saying.
I haven't developed an MMO, but have been in on development of major applications, intranet/extranets, ERP, and a range of projects inbetween. An MMO would be very much like many of the projects I've worked on, sans the graphics (client anyway).
There is no such thing as pure profit in my experience. Development costs initially are expected to be recouped over a period of time (RoI), but growth muddys the waters considerably. You are glossing over a great deal.
Can I ask what your field of expertise is? I've been a system/network administrator for over 20 years now and have plenty of solid data center experience. I'm obviously in operations, but have been around long enough to have some knowledge of the financials involved. I've had to plan for and make recommendations on plant, hardware, cabling, and other hardware expenditures and I simply can't reconcile my own experience with what you are saying.
I haven't developed an MMO, but have been in on development of major applications, intranet/extranets, ERP, and a range of projects inbetween. An MMO would be very much like many of the projects I've worked on, sans the graphics (client anyway).
There is no such thing as pure profit in my experience. Development costs initially are expected to be recouped over a period of time (RoI), but growth muddys the waters considerably. You are glossing over a great deal.
It is an externality and one of those things Gevlon will never understand: Markets are good in some circumstances, and bad in other circumstances.
Too bad for him, then. Not every actor in the market uses ironclad logic to make their choice and if one wants to create a economic theory that corresponds to the observable facts and even could be used for extrapolation, one must take it into account. Especially in this case, when the social network is a core property that customers expect from a Massively Multiplayer Online Role Playing Game.
Networking effects decrease the competitive advantage of the better product.
True, and blogged about it before. If one wants to dethrone WoW, it's not enough to offer a slightly better product, it must be better by a decent margin. And Blizzard, being known for polishing others' ideas will try it's best to keep that margin as narrow as possible. Therefore it would probably be more cost-effective not to go toe-to-toe with the 1000-pound gorilla.
Too bad for him, then. Not every actor in the market uses ironclad logic to make their choice and if one wants to create a economic theory that corresponds to the observable facts and even could be used for extrapolation, one must take it into account. Especially in this case, when the social network is a core property that customers expect from a Massively Multiplayer Online Role Playing Game.
Networking effects decrease the competitive advantage of the better product.
True, and blogged about it before. If one wants to dethrone WoW, it's not enough to offer a slightly better product, it must be better by a decent margin. And Blizzard, being known for polishing others' ideas will try it's best to keep that margin as narrow as possible. Therefore it would probably be more cost-effective not to go toe-to-toe with the 1000-pound gorilla.
@Hirvox
"If one wants to dethrone WoW, it's not enough to offer a slightly better product, it must be better by a decent margin."
I think a caveat is needed here; "better in the eyes of your target market", rather than simply "better". It's entirely possible to imagine a game producer following what we might loosely call the Apple model, where they charge more for subscriptions, but make a product that a subset of the market prefers to WOW. For example, a game that charged more but offered GM-run events or RP-servers where the RP rules are actually enforced could justify charging more. This would allow them to make fairly good profits even with a small market share.
"If one wants to dethrone WoW, it's not enough to offer a slightly better product, it must be better by a decent margin."
I think a caveat is needed here; "better in the eyes of your target market", rather than simply "better". It's entirely possible to imagine a game producer following what we might loosely call the Apple model, where they charge more for subscriptions, but make a product that a subset of the market prefers to WOW. For example, a game that charged more but offered GM-run events or RP-servers where the RP rules are actually enforced could justify charging more. This would allow them to make fairly good profits even with a small market share.
WoW didn't ruin the subscription model, the number of MMO's released did. The more MMO's that come out, the less sense the subscription model makes. When there were very few MMO's, the subscription model made sense, you pick one, you play it. But as the market grew, it makes less and less sense, as a subscription model limits your chances of getting customers that will pay to play.
So it's not WoW that ruined the subscription model, it's the over-saturation of the MMO market. If you want to compete in the MMO market in the future, you can't expect to do so with a subscription model. This is where WAR failed, thinking they could make a subscription game and compete with WoW.
The subscription model is dying. Deal with it.
So it's not WoW that ruined the subscription model, it's the over-saturation of the MMO market. If you want to compete in the MMO market in the future, you can't expect to do so with a subscription model. This is where WAR failed, thinking they could make a subscription game and compete with WoW.
The subscription model is dying. Deal with it.
Can I ask what your field of expertise is? I've been a system/network administrator for over 20 years now and have plenty of solid data center experience.
I am a network/sysadmin as well. Currently at decent sized online retail company with international presence.
I deal mostly with http(s) hosting aspects and akamai helps scaling and offload a great deal. Obviously not possible for MMOs
I am aware how much large scale network , storage and servers cost. Quite a bit , but if you buying 1 million dollar SAN and network equipment, then you maybe you going to big for an indie (nothing wrong if you secure financing)
but growth muddys the waters considerably. You are glossing over a great deal.
Well you saying it is mandatory to start with multiple multi-million datacenters . And the thing is it is not. You can grow your infrastructure from small servers sitting in the basement to the multiple datacenters.
Especially if your design supports it from the get go.
I am not saying that replicating wow infrastructure would be peanuts. It is very cheap for Blizzard to per user , because of their huge user base. But overall the cost is considerable.
It is just you don't need all that to run MMO, you can run it very cheap.
This is where WAR failed, thinking they could make a subscription game and compete with WoW.
Non-sense!
If that were the case, WAR hadn't started high and dropped then.
15€/month is a joke for that kind of entertainment. I SAVE money with WoW. Even one evening that I don't go and drink beer in a club is enough that WoW is profitable.
well no, you have to offer something different enough from WoW that you can charge more, and understand you are not getting the same number of players.
They didn't "have to" drop the price, they did because they spent money and made plans assuming they were going to get 500k subscribers. If they did in fact charge $20 a month, there would still be plenty of people wanting to pay that much but not as many. Think of how much better that would have made the WAR launch: less servers needed, meaning not having to add a bunch only to remove them later. And the "wow tourist" complaint would go away.
They could have charged more but to do that you have to decide what you want to be and who your market is.
They decided they wanted part of WoW's market, that is the problem. If that is your market THEN you will have a hard time charging more than Blizzard.
They didn't "have to" drop the price, they did because they spent money and made plans assuming they were going to get 500k subscribers. If they did in fact charge $20 a month, there would still be plenty of people wanting to pay that much but not as many. Think of how much better that would have made the WAR launch: less servers needed, meaning not having to add a bunch only to remove them later. And the "wow tourist" complaint would go away.
They could have charged more but to do that you have to decide what you want to be and who your market is.
They decided they wanted part of WoW's market, that is the problem. If that is your market THEN you will have a hard time charging more than Blizzard.
"Networking effects decrease the competitive advantage of the better product."
The better product is the one that provides what people want. Which is a network plus feature supporting that network. The product that gives a market what it wants wins. That is the only way to define better. Saying "oh but this product is nicer/has these features" so what, if that's not what the market prefers then it's not better.
If what you are saying is true, Facebook would not have replaced MySpace, but it did, by offering something better. At the very beginning Facebook had no network effect because on day 0 you have 0 users.
The better product is the one that provides what people want. Which is a network plus feature supporting that network. The product that gives a market what it wants wins. That is the only way to define better. Saying "oh but this product is nicer/has these features" so what, if that's not what the market prefers then it's not better.
If what you are saying is true, Facebook would not have replaced MySpace, but it did, by offering something better. At the very beginning Facebook had no network effect because on day 0 you have 0 users.
@ yunkndatwunk:
Assume two dating sites:
One is terrible in every aspect, but it was the first and has 100mio subscribers.
The other one is brilliant, but new and has 1000 subscribers.
Now: You are right in that people go to the better one. And from their perspective that is the big one.
But the better product is still the new one.
I don't blame the people. But networking effects hinder innovation.
The efficient allocation of resources were 100mio people as subscribes to the new dating site.
It is a market failure. The market doesn't lead to the best allocation. If a central 'government' forced everybody to go to the new dating site, everybody would be better off (except the people running the old site:).
Assume two dating sites:
One is terrible in every aspect, but it was the first and has 100mio subscribers.
The other one is brilliant, but new and has 1000 subscribers.
Now: You are right in that people go to the better one. And from their perspective that is the big one.
But the better product is still the new one.
I don't blame the people. But networking effects hinder innovation.
The efficient allocation of resources were 100mio people as subscribes to the new dating site.
It is a market failure. The market doesn't lead to the best allocation. If a central 'government' forced everybody to go to the new dating site, everybody would be better off (except the people running the old site:).
I think a caveat is needed here; "better in the eyes of your target market", rather than simply "better". It's entirely possible to imagine a game producer following what we might loosely call the Apple model, where they charge more for subscriptions, but make a product that a subset of the market prefers to WOW.
Indeed, and that's a part of not taking Blizzard head on. Trying to beat Blizzard in it's own game is a lost cause, IMHO. One needs to target the markets that Blizzard's either not targeting or doing a lousy job at.
Indeed, and that's a part of not taking Blizzard head on. Trying to beat Blizzard in it's own game is a lost cause, IMHO. One needs to target the markets that Blizzard's either not targeting or doing a lousy job at.
Couple things.
The only reason I played WoW was because my friends played it. I went to EQ2 first and loved the game. I got deployed and came back and all my friends had switched, so I followed.
The only maker that can really dethrone WoW is Blizzard's new MMO. It will have 2-3 million preorders and probably retain atleast half in subs.
We are at the point where it is going to be very hard for any game to break in on WoW because of all the bad games out there. Consumers are scared. Leaving a MMO is one of the hardest things a gamer does. Developers are taking our loyalty to our avatars far to lightly.
The only reason I played WoW was because my friends played it. I went to EQ2 first and loved the game. I got deployed and came back and all my friends had switched, so I followed.
The only maker that can really dethrone WoW is Blizzard's new MMO. It will have 2-3 million preorders and probably retain atleast half in subs.
We are at the point where it is going to be very hard for any game to break in on WoW because of all the bad games out there. Consumers are scared. Leaving a MMO is one of the hardest things a gamer does. Developers are taking our loyalty to our avatars far to lightly.
Hey, if WoW cost me only 15$ and not 15 EUR, I'd still be using my second account! (it's more like 13 anyway)
To be more serious, I've seen and played games with monthly subscriptions before and even then I would have never paid more than that.
Even now I'm not spending money for a second account of either game, neither another wow account nor LotRO or WAR, although I'd love to play them once in a while.
To be more serious, I've seen and played games with monthly subscriptions before and even then I would have never paid more than that.
Even now I'm not spending money for a second account of either game, neither another wow account nor LotRO or WAR, although I'd love to play them once in a while.
I'm not sure I follow the initial logic. The first premise is that you have to charge $15/mo to make a profit... Games like Guild Wars have shown us that you can get away without a sub at all and still be very profitable indeed.
Secondly, the $15/mo is a bit specious anyway. It's an arbitrary figure set from back in the mists of time, and bears little relation to what it costs to run a game online. Different companies have different technology, operating envinronments, etc. - it's perfectly reasonable to guess a company could charge $1/mo and be profitable if they could run their entire game world on a single computer (original MUDs, anyone?).
But your point is otherwise well made - when someone sets the market bar, other people need to follow it or come up with a significantly attractive value proposition in another way. It's possible, for example, that a company could charge $30/mo for a game - if there was no out of the box purchase price (free download). Or they could charge $1/hour (which for many WoW gamers would be extremely expensive compared to $15/mo) because that model works better for some people.
Innovation is a bit lacking here, I don't think that the problem is that Bliz are killing the market - people are just unwilling to try different monetisation models.
Secondly, the $15/mo is a bit specious anyway. It's an arbitrary figure set from back in the mists of time, and bears little relation to what it costs to run a game online. Different companies have different technology, operating envinronments, etc. - it's perfectly reasonable to guess a company could charge $1/mo and be profitable if they could run their entire game world on a single computer (original MUDs, anyone?).
But your point is otherwise well made - when someone sets the market bar, other people need to follow it or come up with a significantly attractive value proposition in another way. It's possible, for example, that a company could charge $30/mo for a game - if there was no out of the box purchase price (free download). Or they could charge $1/hour (which for many WoW gamers would be extremely expensive compared to $15/mo) because that model works better for some people.
Innovation is a bit lacking here, I don't think that the problem is that Bliz are killing the market - people are just unwilling to try different monetisation models.
This is as well the problem associated with Ecosystems (the term for these closed communities appearing in the last times). As in facebook or in the other networks, including things such as AOL, Facebook and MMORGS and such, you are interested in being in the one that has the more user, since this gives you more value. What worth could you have from joining some game or network where no one is there, if the purpose directly or not is to socialize? The thing is that these companies take advantage of that. I think that if someeone is clever to pull out a game that offers tremendous value for the players, could attrack a critical mass that could rival that of WOW and uses a different revenue model (such as that one from Runes of magic), then we could see a change in the game.
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