Tuesday, September 04, 2012
City of Profitability
I must have seen a hundred blog posts about City of Heroes / Villains / Rogues shutting down today. Of those 100 bloggers there were 95 who expressed regret but hadn't actually contributed a single dollar to the survival of that game in the last 12 months, 4 who expressed regret and had actually played / paid for this game lately, and 1 who wrote a detailed analysis of why CoH/V/R is shutting down.
I do not believe that NCSoft closing down CoH is a sign of financial strain of the company. Yeah, they lost money in Q2 2012. But they released Guild Wars 2 in Q3 2012, a game that is selling so well, they have to limit sales to be able to keep up with the server hardware. My guess is that right now they are doing fine, overall.
What seems to be the problem is the profitability of City of Heroes itself. Revenues of CoH are down to less than a million per month and falling. I don't have numbers for what the cost are of running the game, but profit is revenue minus cost, so it is either low or negative. In the end a game company has to ask itself not just "do I make some money from this game", but also "would I make more money if I put my capital into something else". I think it is very possible that City of Heroes isn't covering it's cost of capital any more. The game is over 8 years old, there are now several other superhero MMORPGs, and the future for CoH wasn't looking all that promising.
Note that while some Free2Play-haters automatically interpreted this as the death of the Free2Play model, I don't think any conclusion about this is valid. CoH only converted to Free2Play very late in its life, when few people were still interested at all in this game. And there are hundreds of different Free2Play models, some more profitable than others. I could imagine the item shop of Guild Wars 2 doing very well, for example (it already got my money for bag and bank slots).
I don't think of City of Heroes shutting down as a "failure". You shut down after a year, your game is a failure. You shut it down after over 8 years, that might be described as a natural death. The very early games might have profited from a bigger nostalgia factor keeping them alive (UO is celebrating its 15th birthday). But I would be surprised if half of the games released between 2010 and today would still be running in 2020.