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Friday, February 04, 2011
Payback period
If you followed the news about Star Wars: The Old Republic, you might have heard that they retracted a previous statement that they would need a million players to be profitable, and lowered that break-even subscription number to 500,000. How misleading that can be is well visible in the reaction of Keen: Anyone on this planet knows that SWTOR will sell well and do fine on subscriptions. It’s Star Wars and Bioware. If WAR is still alive with even 50k subscribers for this long then SWTOR will do 500k sustained for at least a few months.
I do not think that if John Riccitiello speaks of half a million subscribers to be profitable, he means "half a million for a few months". The important question is how long the payback period is. Imagine that a MMORPG cost $100 million to make. The company sells a million copies at $50 each, and thus already recovers $50 million. Now imagine that they make $5 per player per month. In that case they would need to keep that 1 million player subscribed for 10 months before they break even. 10 months is the payback period for 1 million subscribers for that game. If subscription numbers drop quickly way before the 10 months are reached, it will take longer until the investment is paid back, and in the worst case the game never gets there.
So I have to say I agree only with half of Keen's statement. Yes, SWTOR will probably sell well, because both Star Wars and Bioware are very strong brands, which means many people will buy that game just out of trust. Hell, *I* will probably buy that game just out of trust. But as even John Riccitiello describes the game as "light sabers instead of swords, if you will.", I would say that there is a distinctive possibility that the game turns out to be yet another "kill 10 foozles" MMORPG. If players early on get an impression that this is basically the same game that they are already playing (and I'm not even saying which game that would be, as there are now so many games of that type), just with more voiceovers, then a subscription number curve like WAR had, with an early and steep decline is certainly possible. If players expect the second coming, and all they get is the same game with "light sabers instead of swords", they might get severely disappointed. And disappointed players are not good for the bottom line.
I have serious doubts whether EA, of all people, understands how much larger the demands of MMORPG players for novelty are. EA is used to players who apparently don't mind buying the same EA Sports game again, with only the last digit of the year printed on the box having changed. And nobody ever complained to EA that the latest shooter they brought out basically has the same user interface, controls, and gameplay as every other shooter out there. MMORPG players don't tick like that. I'm not a betting man, but if you'd ask me what the next big thing in MMORPGs will be, I'd put my money on Guild Wars 2, and not on SWTOR.
- posted by Tobold @ 1:17 PM Permanent Link
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The company sells a million copies at $50 each, and thus already recovers $50 million.
Sales money doesn't only go to the publisher.
Sales money doesn't only go to the publisher.
The company sells a million copies at $50 each, and thus already recovers $50 million.
Sales money doesn't only go to the publisher.
Well, and not only the publisher spent the 100 million. Everyone gets his own dole methinks. Tobold's estimation is better thean no estimation.
Sales money doesn't only go to the publisher.
Well, and not only the publisher spent the 100 million. Everyone gets his own dole methinks. Tobold's estimation is better thean no estimation.
Digital sales, Edawan. ;) Or you can put the cost for the box, and the distribution, into the $100 overall cost package.
I don't think we need to discuss the calculation. It is irrelevant to the point being made.
True, but when did a point being irrelevant ever stopped it from derailing a thread?
True, but when did a point being irrelevant ever stopped it from derailing a thread?
Gordon has an interesting thread on this topic at http://blog.weflyspitfires.com/2011/02/03/will-swtor-get-the-500000-subscribers-it-needs/
While I think your commentary on how SW:tOR will play out in the established MMO market is fair enough, I wonder how many first-timers this will bring in? There are a lot of Star Wars fans and most of them won't even know what an MMO is, far less have played one. If that well can be tapped, then SW:tOR could be huge - those players won't be comparing the game to anythign but their own enjoyment and how well it scratches their Star Wars itch.
Getting those people to even try the game might be a very big ask, though. If it turns out that nearly all the sales come only from the existing MMO market, then I think SW:tOR might struggle with retention. There is a lot of competition now, the converted AAA-to-F2P market is establishing itself strongly, GW2 is coming along with no subs and there are other strong subscription releases this year.
The current MMO playerbase can only play so many MMOs concurrently, and the gravitational pull of an MMO ou are already established in is very powerful.
While I think your commentary on how SW:tOR will play out in the established MMO market is fair enough, I wonder how many first-timers this will bring in? There are a lot of Star Wars fans and most of them won't even know what an MMO is, far less have played one. If that well can be tapped, then SW:tOR could be huge - those players won't be comparing the game to anythign but their own enjoyment and how well it scratches their Star Wars itch.
Getting those people to even try the game might be a very big ask, though. If it turns out that nearly all the sales come only from the existing MMO market, then I think SW:tOR might struggle with retention. There is a lot of competition now, the converted AAA-to-F2P market is establishing itself strongly, GW2 is coming along with no subs and there are other strong subscription releases this year.
The current MMO playerbase can only play so many MMOs concurrently, and the gravitational pull of an MMO ou are already established in is very powerful.
Want to go back on our little bet yet?
Our bet is on Blizzard's next MMO, not Bioware's. I still believe that Blizzard won't make Titan have a too similar gameplay to WoW, already because they won't want to canibalize existing WoW subscribers. Yeah, it's funny, but I really believe SWTOR will bear a closer resemblance to WoW than Titan will have. Thus my bet that Titan will have a million subscribers after 6 months still stands (if I remember the terms correctly).
Our bet is on Blizzard's next MMO, not Bioware's. I still believe that Blizzard won't make Titan have a too similar gameplay to WoW, already because they won't want to canibalize existing WoW subscribers. Yeah, it's funny, but I really believe SWTOR will bear a closer resemblance to WoW than Titan will have. Thus my bet that Titan will have a million subscribers after 6 months still stands (if I remember the terms correctly).
I have evolved how I approach MMOs and my expectations for them.
When I bought EverQuest I had absolutely no idea what I was getting into.
With WoW I was expecting to get into a long term relationship with the game.
Since EQ I have also played City of Heroes/Villians, Champions On Line, Lord of the Rings and Pirates of the Burning Sea and I am sure others...and generally I consider the money spent on those MMOs well spent. They entertained me significantly longer than most other AAA release and told interesting stories within the framework off MMOs/RPGs.
I think Star Wars will be an amazing game for the stories it tells--at least 2 of them (Jedi/Sith), if not one per class. Even if ST:TOR ships with no max level instances and no raids--IE nothing to do at max level--it will be a worthwhile experience to play though just as if it were a single player game.
Star Wars may end up blowing it as a MMOG, but I think, with BioWare's strength in story, it has significantly more time because of what I expect from the story.
I am not a person who typically completes games--and BioWare is a significant exception that rule. Off the top of my head I have finished Baldur's Gate, Jade Empire, Mass Effect (4+ times), Dragon Age, Mass Effect 2 (3+ time).
When I bought EverQuest I had absolutely no idea what I was getting into.
With WoW I was expecting to get into a long term relationship with the game.
Since EQ I have also played City of Heroes/Villians, Champions On Line, Lord of the Rings and Pirates of the Burning Sea and I am sure others...and generally I consider the money spent on those MMOs well spent. They entertained me significantly longer than most other AAA release and told interesting stories within the framework off MMOs/RPGs.
I think Star Wars will be an amazing game for the stories it tells--at least 2 of them (Jedi/Sith), if not one per class. Even if ST:TOR ships with no max level instances and no raids--IE nothing to do at max level--it will be a worthwhile experience to play though just as if it were a single player game.
Star Wars may end up blowing it as a MMOG, but I think, with BioWare's strength in story, it has significantly more time because of what I expect from the story.
I am not a person who typically completes games--and BioWare is a significant exception that rule. Off the top of my head I have finished Baldur's Gate, Jade Empire, Mass Effect (4+ times), Dragon Age, Mass Effect 2 (3+ time).
All the footage so far shows that you will be killing 10 space foozles.
However, I think too much emphasis is placed on 'innovation' in this market.
Factors which I think will have a bigger impact on its success:
1) Is it polished? (No horrendous bugs)
2) Is there sufficient content at end game level?
3) What is the Word of Mouth? (Positive reviews or some high profile defections from WoW and other games)
However, I think too much emphasis is placed on 'innovation' in this market.
Factors which I think will have a bigger impact on its success:
1) Is it polished? (No horrendous bugs)
2) Is there sufficient content at end game level?
3) What is the Word of Mouth? (Positive reviews or some high profile defections from WoW and other games)
I thought the terms were no MMO will retain 1m subs after 6 months anytime soon (which rules out Titan)?
Titan is tough to count because it might be as MMO as current WoW.
The bet stems from the fact that I believe the MMO market is smaller than 1m+ subs, and hence, WoW being an outlier for various reasons rather than just 'the best/most successful example of an MMO'.
Titan is tough to count because it might be as MMO as current WoW.
The bet stems from the fact that I believe the MMO market is smaller than 1m+ subs, and hence, WoW being an outlier for various reasons rather than just 'the best/most successful example of an MMO'.
# posted by 
: 4/2/11 18:00
: 4/2/11 18:00
Well, according to your blog:"Tobold and I have a friendly little challenge going (around comment 45 on that post), one that sadly won’t have a result for a few years. The challenge is simple: The next Blizzard MMO won’t reach the popularity of WoW. More specifically, my bet is the game won’t retain 1million+ subscriptions after 6 months in the US/EU. Tobold is betting on 1m+."
I don't the exact numbers, but the only MMO that really crashed and burned (in the servers got turned off in the first year) was APB.
Part of why there are so many very expensive MMOS coming out long after so many big budget MMOs have been hyped to the skys and immediately collapsed, is that I think it's pretty hard to really lose money on an MMO. If Age of Conan and War are still around, it's because they are at least making a profit on an operating level. Worst case scenario seems to be breaking even, best case scenario is swimming in buckets of cash, like Blizzard.
Part of why there are so many very expensive MMOS coming out long after so many big budget MMOs have been hyped to the skys and immediately collapsed, is that I think it's pretty hard to really lose money on an MMO. If Age of Conan and War are still around, it's because they are at least making a profit on an operating level. Worst case scenario seems to be breaking even, best case scenario is swimming in buckets of cash, like Blizzard.
# posted by : 4/2/11 18:43
: 4/2/11 18:43
Well, with the compentition appearing simultaneosly in the near future some of the new titles might bite the dust altoghether and NOT make the profit to sustain themself.
Also, you discuss SW:TOR, but there are more games coming. I'm not sure what are the facts for Fallout Online, but it would seem that it's all goining to sink. Neverwinter with some sort of a breakthrough when it comes to business models and WOD created by CCP are there too. Due to the hype that is popularily called 'Vampire Madness' WOD MMO is expected to have six times the subscriptions EVE has, and that's about 1.8m. Pretty sure WOD will pay back, and I am quite sure I'll be a part of the payback for Neverwinter and FO MMO, unless one of them fails to come. SW:TOR - I think that Star Wars lost it's popularity right after the premiere of Episode 1 and there's a downward trend there for years of pouring low quality materials at fans. I bet the stories told by Bioware will beguile SW Fans but not for long. IT requires a certain type of a person to play an MMO longer then tha story lasts, and SW fans are mosty not like that.
Personally, I agree with a lot of what you said in the previous osts Tobold - SW:TOR innovative part is not really that innovative. Bioware can do only so much to get the game into competition with WoW and it probably won't be enough, and SW has lost it's power over people, at least the one it kept until E1.
There are three titles I know I subscribe to when they come and that Fallout Online, cause I'm a fan of Interplay's fallouts, Neverwitner, because up to date I host a NWN1 Server and worked with that game for several years - and WOD MMO - cause CCP makes the games the way I always wanted them to be. I had the idea similiar to EVE in many aspects and even wrote a 2d version of such a game (it was basically Asterodis with multiplayer, played on LAN with several maps to which you travelled through gates and with stations to dock into and buy powerupps/change weapon mods, and the status of the game was saved on the PC that hosted it - bielieve me, that the WSAD controls made it really cool to fly these little ships). CCP has the potential for innovation, so I'm gonna wait for this project.
SW:TOR never got on that list, cause the SW spirit will not be in that game. No reason for me to even check it, and I know a group of SW fans that feel the same way about the title.
Also, you discuss SW:TOR, but there are more games coming. I'm not sure what are the facts for Fallout Online, but it would seem that it's all goining to sink. Neverwinter with some sort of a breakthrough when it comes to business models and WOD created by CCP are there too. Due to the hype that is popularily called 'Vampire Madness' WOD MMO is expected to have six times the subscriptions EVE has, and that's about 1.8m. Pretty sure WOD will pay back, and I am quite sure I'll be a part of the payback for Neverwinter and FO MMO, unless one of them fails to come. SW:TOR - I think that Star Wars lost it's popularity right after the premiere of Episode 1 and there's a downward trend there for years of pouring low quality materials at fans. I bet the stories told by Bioware will beguile SW Fans but not for long. IT requires a certain type of a person to play an MMO longer then tha story lasts, and SW fans are mosty not like that.
Personally, I agree with a lot of what you said in the previous osts Tobold - SW:TOR innovative part is not really that innovative. Bioware can do only so much to get the game into competition with WoW and it probably won't be enough, and SW has lost it's power over people, at least the one it kept until E1.
There are three titles I know I subscribe to when they come and that Fallout Online, cause I'm a fan of Interplay's fallouts, Neverwitner, because up to date I host a NWN1 Server and worked with that game for several years - and WOD MMO - cause CCP makes the games the way I always wanted them to be. I had the idea similiar to EVE in many aspects and even wrote a 2d version of such a game (it was basically Asterodis with multiplayer, played on LAN with several maps to which you travelled through gates and with stations to dock into and buy powerupps/change weapon mods, and the status of the game was saved on the PC that hosted it - bielieve me, that the WSAD controls made it really cool to fly these little ships). CCP has the potential for innovation, so I'm gonna wait for this project.
SW:TOR never got on that list, cause the SW spirit will not be in that game. No reason for me to even check it, and I know a group of SW fans that feel the same way about the title.
I stand corrected. And am now a bit disappointed that it is just about Titan, as it further delays things. One more reason to hate Blizzard I guess.
# posted by : 4/2/11 20:32
: 4/2/11 20:32
I don't think most MMO players are as sophisticated as you think they are. I'm fairly certain that most MMO players are looking for a standard MMO game that feels comfortable and familiar but is stylistically different than whatever it is that they're playing now and different in small & fairly insubstantial ways. I think the problem with most new "WoW killer" MMO's has been their unpolished and buggy releases as well as an unfamiliar or unpopular IPs. There aren't a whole lot of WoW players out there that even know what Warhammer is or give a hoot about anything with the Conan title.
With SW:TOR I think a lot of gamers will be looking for WoW with lightsabers, and that's about it. If it does that well I'm sure the game will do well regardless of what gamers who are looking for something different think. I think you overestimate how many gamers there are who actually want something that different.
With SW:TOR I think a lot of gamers will be looking for WoW with lightsabers, and that's about it. If it does that well I'm sure the game will do well regardless of what gamers who are looking for something different think. I think you overestimate how many gamers there are who actually want something that different.
I think the payback period is actually a lot longer than even 10 months @ 500k subscribers. Usually investors want something like a 3x return on their investment after three years so my reckoning is that BioWare would need to maintain that subscriber count for at least a couple of years.
Plus we don't know their operating costs and gross margin. It may be that $5 per player is actually too high. If that's the case then we could be looking at an even higher risk situation. My gut feeling is that EA/BioWare know this and thus make comments like "anything north of one million subscribers is a very profitable business" meaning that really they want more than 500k to make good on their investment.
Plus we don't know their operating costs and gross margin. It may be that $5 per player is actually too high. If that's the case then we could be looking at an even higher risk situation. My gut feeling is that EA/BioWare know this and thus make comments like "anything north of one million subscribers is a very profitable business" meaning that really they want more than 500k to make good on their investment.
# posted by : 4/2/11 21:50
: 4/2/11 21:50
I think a little context is needed here.
WAR (and AoC) came out right before Wrath released. Not only did many people quickly decide they would rather check out Wrath, I think many people knew they were never going to stick around. They were just checking the game out while they waited for Wrath.
I think it would be interesting to know how many subscribers WAR would have held if Wrath had been delayed another 6 months.
I do not think SWTOR will hit the same issues with scheduling. They could very well have a steep decline, but I wouldn't bet on THAT steep.
I think we also need more context for the 500k subscribers. Technically, WAR held 500k subscribers for one month, but I think most of us would agree that's not what they're talking about here.
A lot depends on sales to me, and I think it is crazy that so many people disregard box sales for MMORPGs. Do you guys buy your games with Monopoly money or something? If SWTOR sells 10 million copies, that game is profitable no matter what. Even if they only held 50k subscribers, you can lay off enough workers and merge enough servers that even that is minimally profitable.
WAR (and AoC) came out right before Wrath released. Not only did many people quickly decide they would rather check out Wrath, I think many people knew they were never going to stick around. They were just checking the game out while they waited for Wrath.
I think it would be interesting to know how many subscribers WAR would have held if Wrath had been delayed another 6 months.
I do not think SWTOR will hit the same issues with scheduling. They could very well have a steep decline, but I wouldn't bet on THAT steep.
I think we also need more context for the 500k subscribers. Technically, WAR held 500k subscribers for one month, but I think most of us would agree that's not what they're talking about here.
A lot depends on sales to me, and I think it is crazy that so many people disregard box sales for MMORPGs. Do you guys buy your games with Monopoly money or something? If SWTOR sells 10 million copies, that game is profitable no matter what. Even if they only held 50k subscribers, you can lay off enough workers and merge enough servers that even that is minimally profitable.
"Plus we don't know their operating costs and gross margin. It may be that $5 per player is actually too high."
The estimates I have read from developers are $2-3 per user per month, which obviously makes $5 per player too low.
Honestly, where do you all think your subscription money goes? Servers and bandwidth are not very expensive at all now, and you know the industry reputation for underpaying and overworking their employees.
The estimates I have read from developers are $2-3 per user per month, which obviously makes $5 per player too low.
Honestly, where do you all think your subscription money goes? Servers and bandwidth are not very expensive at all now, and you know the industry reputation for underpaying and overworking their employees.
"The estimates I have read from developers are $2-3 per user per month, which obviously makes $5 per player too low."
No, that makes $5 too high!
No, that makes $5 too high!
# posted by : 5/2/11 00:01
: 5/2/11 00:01
Eh, I dunno about MMO players' love of novelty.
It seems to me that the loudest voices call for novelty, but when it comes down to it, people want the same thing only with some personal pet peeve satisfied or with 25% shinier pets.
It seems to me that the loudest voices call for novelty, but when it comes down to it, people want the same thing only with some personal pet peeve satisfied or with 25% shinier pets.
""The estimates I have read from developers are $2-3 per user per month, which obviously makes $5 per player too low."
No, that makes $5 too high!"
$15 - $3 = more than $5
I can only assume I'm missing something here, it can't be that you did the same math I did and got a different result.
No, that makes $5 too high!"
$15 - $3 = more than $5
I can only assume I'm missing something here, it can't be that you did the same math I did and got a different result.
Ah, sorry, the COSTS are $2-3 per month, maybe that wasn't clear.
The lower costs for servers and bandwidth are part of what makes the free2play model viable now. Having an additional player who doesn't pay simply doesn't cost you all that much anymore.
The lower costs for servers and bandwidth are part of what makes the free2play model viable now. Having an additional player who doesn't pay simply doesn't cost you all that much anymore.
I honestly don't think it has to do with gameplay, and simply how many social networks it sets up. And in relation to that, what it does to set up social networks so people, to engage their social scene, must come to the game.
It'll probably do nothing new on that front, so all this applies.
Also from what I've heard wow gets around $10-$12 of the $15 a month after server costs. It's not that expensive to run.
It'll probably do nothing new on that front, so all this applies.
Also from what I've heard wow gets around $10-$12 of the $15 a month after server costs. It's not that expensive to run.
Also from what I've heard wow gets around $10-$12 of the $15 a month after server costs. It's not that expensive to run.
Can't be. Blizzard is making about $500 million profit on $1 billion revenue (and that's not a wild guess, but from their financial reports). Thus their profit is about 50%, or $7.50 per $15. Note that size plays a role here, due to fixed cost, so it is perfectly possible that a smaller game has a smaller profit margin, and only makes $5 per player.
But as noted earlier, some people really don't get the concept of what an EXAMPLE is. Nobody said that this were real numbers, or estimates about SWTOR. The point is that a game makes PART of its investment cost directly with game sales, and PART over time with subscriptions, so if subscriptions drop fast, the second part might be a lot lower than estimated.
Can't be. Blizzard is making about $500 million profit on $1 billion revenue (and that's not a wild guess, but from their financial reports). Thus their profit is about 50%, or $7.50 per $15. Note that size plays a role here, due to fixed cost, so it is perfectly possible that a smaller game has a smaller profit margin, and only makes $5 per player.
But as noted earlier, some people really don't get the concept of what an EXAMPLE is. Nobody said that this were real numbers, or estimates about SWTOR. The point is that a game makes PART of its investment cost directly with game sales, and PART over time with subscriptions, so if subscriptions drop fast, the second part might be a lot lower than estimated.
"Blizzard is making about $500 million profit on $1 billion revenue (and that's not a wild guess, but from their financial reports)."
I've corrected you on this before, Tobold. $500 million was the costs for ALL of Blizzard in 2009, including development costs for Diablo 3, Starcraft 2, Cataclysm and Titan.
I've corrected you on this before, Tobold. $500 million was the costs for ALL of Blizzard in 2009, including development costs for Diablo 3, Starcraft 2, Cataclysm and Titan.
They are making around $1 billion revenue and $500 million profit every year since 2007. (see here for example. " Blizzard will have revenues of $1.1 billion this year and operating profits of $520 million."
They also report an operating margin of 40% in their own press release. If that all is development cost for Diablo and Starcraft, those games would have to cost a cool $1 billion each, which is extremely unlikely.
They also report an operating margin of 40% in their own press release. If that all is development cost for Diablo and Starcraft, those games would have to cost a cool $1 billion each, which is extremely unlikely.
"Learn2Read, Samus: I wasn't talking about development cost at all. I'm talking about ANNUAL profit and revenue. I annual profit is half of annual revenue, then profit margin is 50%, is that so hard to understand? Just look up their annual report, filed to the SEC."
I was the only one of your readers who DID read that report, which is why I know what you're talking about. Your original claim at the time was that WoW specifically costs $500 million to run, which simply isn't true.
Take a cost of $7.50 per month for a year, times 11 million players.
11 * 7.5 * 12 = $990 million
On the other hand, take 11 million players at $2 per month for a year.
11 * 2 * 12 = $264 million
Add in the costs of all the other games, and you get around $500 million.
My numbers hold up, $2-3 per player is a fair cost estimate.
I was the only one of your readers who DID read that report, which is why I know what you're talking about. Your original claim at the time was that WoW specifically costs $500 million to run, which simply isn't true.
Take a cost of $7.50 per month for a year, times 11 million players.
11 * 7.5 * 12 = $990 million
On the other hand, take 11 million players at $2 per month for a year.
11 * 2 * 12 = $264 million
Add in the costs of all the other games, and you get around $500 million.
My numbers hold up, $2-3 per player is a fair cost estimate.
That simply can't be true, Samus. Blizzard does NOT spend $250 million PER YEAR on development of the other games. To spend that much money, they would need 2,500 developers working on those games. And the single-player games could never make back over $1 billion development cost. To put it bluntly, the development cost of a Diablo 3 is a rounding error compared to an annual revenue of $1.1 billion from WoW.
Furthermore I'm not even sure that development cost for other games is counted as operating cost. It seems more likely that it is counted as "investment", and thus be coming out of the profits.
You simply made that $2 per player per month cost up. Link me ONE SOURCE to confirm that number, and I'd be more inclined to believe you.
Furthermore I'm not even sure that development cost for other games is counted as operating cost. It seems more likely that it is counted as "investment", and thus be coming out of the profits.
You simply made that $2 per player per month cost up. Link me ONE SOURCE to confirm that number, and I'd be more inclined to believe you.
From Kotaku:
http://kotaku.com/5050300/how-much-has-wow-cost-blizzard-since-2004
WoW cost $200 million in total from 2004 to 2008 (the date of the article), or $50 million per year. It had an average of around 5 million subscribers during that time period, or about $10 per year per customer, or less than $1 per month.
So I apologize, my $2 per month estimate was too high.
http://kotaku.com/5050300/how-much-has-wow-cost-blizzard-since-2004
WoW cost $200 million in total from 2004 to 2008 (the date of the article), or $50 million per year. It had an average of around 5 million subscribers during that time period, or about $10 per year per customer, or less than $1 per month.
So I apologize, my $2 per month estimate was too high.
The same article says WoW has "$300 gazillion in the "revenue" column". Very believable!
I've read that story at the time, and several people already then pointed out that the $200 million was DEVELOPMENT cost, not OPERATING cost.
If your numbers were right, Blizzard would be lying in the SEC filing and annual report. Which since the Sarbanes-Oxley act is actually a criminal offense and can get you into jail. Highly unlikely. Your numbers just don't add up. According to you it costs only $50 million a year to run World of Warcraft, but $250 million a year to develop Diablo. That is just plain stupid.
I've read that story at the time, and several people already then pointed out that the $200 million was DEVELOPMENT cost, not OPERATING cost.
If your numbers were right, Blizzard would be lying in the SEC filing and annual report. Which since the Sarbanes-Oxley act is actually a criminal offense and can get you into jail. Highly unlikely. Your numbers just don't add up. According to you it costs only $50 million a year to run World of Warcraft, but $250 million a year to develop Diablo. That is just plain stupid.
"I've read that story at the time, and several people already then pointed out that the $200 million was DEVELOPMENT cost, not OPERATING cost."
You have that backwards. While Blizzard states that it is total costs since 2004, Kotaku theorizes that does NOT include development.
If you think Kotaku are liars, then just Google "World of Warcraft cost $200 million." It was also reported by Wired, 1up, PC Magazine, IGN, and a slew other others. Are they all liars?
"If your numbers were right, Blizzard would be lying in the SEC filing and annual report."
*rolls eyes*
That report included all costs from all of Blizzard's operations, not just the upkeep for WoW.
It feels like I might have said that before...
Here is the latest filing: http://investor.activision.com/secfiling.cfm?filingID=1047469-10-1649
Scroll down to page 41. There is a nice breakdown of all the different areas of cost for all of Activision. Product development for all games is listed as $617 million, while total costs are $4.3 billion. Obviously, there are a lot of other costs besides either product development or running WoW.
You have that backwards. While Blizzard states that it is total costs since 2004, Kotaku theorizes that does NOT include development.
If you think Kotaku are liars, then just Google "World of Warcraft cost $200 million." It was also reported by Wired, 1up, PC Magazine, IGN, and a slew other others. Are they all liars?
"If your numbers were right, Blizzard would be lying in the SEC filing and annual report."
*rolls eyes*
That report included all costs from all of Blizzard's operations, not just the upkeep for WoW.
It feels like I might have said that before...
Here is the latest filing: http://investor.activision.com/secfiling.cfm?filingID=1047469-10-1649
Scroll down to page 41. There is a nice breakdown of all the different areas of cost for all of Activision. Product development for all games is listed as $617 million, while total costs are $4.3 billion. Obviously, there are a lot of other costs besides either product development or running WoW.
None of the numbers on that page suggest that World of Warcraft only cost $50 million per year. The ANNUAL "Cost of sales - MMORPG" alone is over $200 million, and what other MMORPGs than WoW is Activision Blizzard selling? And there are another $300 million somewhere in the other cost lines, just not specified as being for MMORPG.
Where exactly in those numbers do you see a $2 per player cost only?
Where exactly in those numbers do you see a $2 per player cost only?
@Samus Hehe, yeah that's where the confusion came from :) I was talking profit, you were talking costs!
# posted by : 5/2/11 21:51
: 5/2/11 21:51
There seems to be a bit of a can't see the forest for the trees problem in these comments. Do we not all understand that the numbers were a hypothetical example?
I'm with Baghpuss on this one, mainly because I look back at my own reasons for trying out WoW. I was not an mmo player at the time and to be honest, I'm not much of one even now. I didn't try WoW because it was the next big mmo thing, I tried it out because I was a fan of warcraft universe as well as Blizzard games in general and after seeing yet another youtube video, my curiosity was peaked enough to give it a go.
SWTOR will attract a lot of people who might not be much of MMO players, but who are fans of KOTOR in particular and Bioware in general.
plus, some people prefer sci-fi settings to fantasy ones, so space adventure might be exactly what they are looking for.
will it kill WoW? at this point, only WoW can kill WoW. Will it have a chance to make steady profit and keep steady subscription base? unless they really mess it up - absolutely yes.
SWTOR will attract a lot of people who might not be much of MMO players, but who are fans of KOTOR in particular and Bioware in general.
plus, some people prefer sci-fi settings to fantasy ones, so space adventure might be exactly what they are looking for.
will it kill WoW? at this point, only WoW can kill WoW. Will it have a chance to make steady profit and keep steady subscription base? unless they really mess it up - absolutely yes.
"The ANNUAL "Cost of sales - MMORPG" alone is over $200 million, and what other MMORPGs than WoW is Activision Blizzard selling?"
This is true, and this would probably be a pretty good number to use. Although, on page 51, it does list total MMORPG revenues as $1.248 billion, while revenue for all of Blizzard is listed at $1.196 billion, so Activision must have something else.
Still, I think we can agree WoW accounts for the vast majority of those costs (assuming we are looking at the right thing). $212 million for 11 million players works out to $1.60 per month.
OR, we could look at it from the other direction.
Blizzard had costs last year of $641 million ($1.196 billion revenue minus $555 million profit, as per page 42). If, hypothetically, ALL of those costs were for running WoW, that would work out to $4.86 per player per month.
So, I think we can safely say their cost per player cannot be higher than that. And if you make at least some consideration for other costs, I would still argue that $2-3 per player is a pretty reasonable estimate.
This is true, and this would probably be a pretty good number to use. Although, on page 51, it does list total MMORPG revenues as $1.248 billion, while revenue for all of Blizzard is listed at $1.196 billion, so Activision must have something else.
Still, I think we can agree WoW accounts for the vast majority of those costs (assuming we are looking at the right thing). $212 million for 11 million players works out to $1.60 per month.
OR, we could look at it from the other direction.
Blizzard had costs last year of $641 million ($1.196 billion revenue minus $555 million profit, as per page 42). If, hypothetically, ALL of those costs were for running WoW, that would work out to $4.86 per player per month.
So, I think we can safely say their cost per player cannot be higher than that. And if you make at least some consideration for other costs, I would still argue that $2-3 per player is a pretty reasonable estimate.
The battle.net upgrade costs and the subscription (Battle.net) vs licensed (China) revenue may be confusing these numbers. Though to quote Nils, "(The calculation) is irrelevant to the point being made."
It IS Bioware however. They have a very strong track record. And it is Star Wars as well, which has its own appeal (though some SW games were total duds for sure).
Just like someone else said, Bioware tends to make games that I want to finish. And I did. Neverwinter Nights (twice, each expansion twice), Jade Empire (1.5 times), Mass Effect, Kotor (twice), Baldur's Gate... Unless it is really bad, I know I will finish it at least once (read: reach level cap).
Just like someone else said, Bioware tends to make games that I want to finish. And I did. Neverwinter Nights (twice, each expansion twice), Jade Empire (1.5 times), Mass Effect, Kotor (twice), Baldur's Gate... Unless it is really bad, I know I will finish it at least once (read: reach level cap).
There's already been another Star Wars MMO, and AFAIK that one failed to get much higher than 300k subs. I do believe that TOR will easily sell 500k+ copies of the game and probably retain that many subs. But it's not a slam dunk, a lot of people on the internet seem to think it will suck and are classifying it as a "single player game" rather than an MMO. A stronger single player type experience, in my opinion, is more likely to appeal to non-MMO players.
These people may not be long term players, but with content updates and paid expansions they may be "guaranteed" future income in addition to the normal subscribers. You can think of a monthly fee as paying for DLC, which so far for RPGs has been horrible anyway.
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These people may not be long term players, but with content updates and paid expansions they may be "guaranteed" future income in addition to the normal subscribers. You can think of a monthly fee as paying for DLC, which so far for RPGs has been horrible anyway.
# posted by : 10/2/11 16:36
: 10/2/11 16:36<< Home
