Tobold's Blog
Monday, December 03, 2012
Answer to Stropp: How Long Should A MMORPG Be Kept Alive?

Stropp is asking: How Long Should A MMORPG Be Kept Alive? and answers it by "I’m of the opinion that a game should be kept going as long as it still has X number of players logging in every day, and the cost of keeping it going is not an undue burden on the company." There are two major problems with that answer: What is X? And what is an "undue burden"?

My answer is similar, also resulting in an X which is unknown to the players. But it would be an X which is known to the game company: I'm of the opinion that a game should be kept going as long as it's return on capital employed is higher than the cost of capital. Note that this is a higher barrier than saying "the game is profitable". A game could theoretically be "profitable" by having a profit of $1 per year. But as then the company would make considerably more money on their investment if they closed the game, pulled the money out and put it on a savings account, in my mind that constitutes an "undue burden" on the company.

Note that capital employed does not include the "sunk" cost of developments. So even if going by my answer, a game could still be a bad investment: It could make more money keeping it alive than killing it and paying your debts back, but the extra profit might not be big enough to pay back the sunk cost before a hundred years. I don't think a MMORPG should be abandoned just because it wasn't quite as much a money maker as expected. But it needs to make more money than the cost of capital to be not a financial burden to a company. Read up on the Japanese economy if you don't see what the harm is in keeping zombie companies and projects alive artificially.

It's a good and fair answer.
This is basic microeconomics. Very nicely explained though, Tobold.

Had to laugh at the concept of 'undue burden' though. Jeez, so many people think the world owes them either a living or some form of entertainment.
There's also an opportunity and crowd cost: if you're already running a superhero MMO, any new superhero MMO is going to divide your market, even if it's something you develop yourself. Meanwhile, there's enough overlap between development and maintenance that an old MMO does restrict some manpower that could be used to make a new one, and hiring fresh manpower is a very expensive and risky thing.

On the flip side, there's a nontrivial cost to closing MMOs, and that can justify keeping one open even if it's not got ROCE over the cost of capital. NCSoft's incredibly ugly actions around Tabula Rasa's closing, along with the recent closing of City of Heroes, is going to discourage a lot of people from playing any of their smaller games -- it's the absolute worst kind of word-of-mouth, and probably means that games that'd normally be marginal or minor successes won't be if they sign under NCSoft.
On the flip side of the flip side, there's also a cost to keeping an older game running if a company is trying to rebrand itself and/or launch a new game. Especially if the older game has a very vocal core.

That cost is only known or imagined by those steering the ship.

Another issue may be that keeping a game running carries unexpected costs. Which is the worse PR disaster: closing a game with great ceremony, or waiting until we run into an inevitable problem that the slim budget just can't fix and closing it unceremoniously after it crashes?
The short answer is - as long as it makes hard-headed business sense to keep the game open. Anything else is being self-indulgent with tens of millions of dollars of other people's money. As well as the points you made, there's also the potential tax write-off from closing a relatively new game which can be offset against the profits from your other games that ARE doing well.
I think an interesting question would be "How much goodwill and future business would a company gain by open sourcing the server code after the game's lifetime has expired?"
They should be kept alive long enough that the community has had enough time to fully document the network traffic between server & client so they're able to create server emulators for the game, which will keep it alive long after the original company has ceased to exist? ;)
My view of X is the number of players needed to keep a game viable. This not only is in terms of number of subscriptions or FTP sales to pay for the costs, but also to keep the game feeling alive.

I see the gist of this post and comments as a more hard-headed approach to running a business, and that's a fair approach to take. After all a business needs to make money and to invest that money wisely. There are legal penalties for public companies if that approach isn't taken.

But developing and publishing MMOs to a large extent is all about building an audience that trusts you enough to keep playing your games. Call it brand loyalty.

If a player perceives that you'll shut a game down for whatever reason, then why would they start playing? After all players spend a substantial amount of time developing their characters.

NCSoft is at risk of becoming known as a company that dumps its games at the first sign of trouble. Perhaps they are taking the hardline economic view.

But players don't care about hardline economics, all they want to know is that their characters will continue to exist, sometimes even after they've stopped playing. Rational? Perhaps not. But customers don't always tend to be.

They're not stupid, they don't expect a game to keep going if it is going to harm a company financially. But, and this is what I meant by "undue burden" they expect a company to keep a game going as long as it doesn't hurt the company.

Consider Asheron's Call. Is that game making money for Turbine/WB? Probably not. But they can keep it going without it being a harsh financial burden, so they do.

Here's a question. Would you feel comfortable buying and subscribing to a NCSoft game now?

I would be wondering how long it was going to last. Surely that can't be good for the game.
Pixelrevision has it exactly right. The answer is a good load of goodwill.
Thing is that the team to run a MMORPG can be scaled nicely to the number of users, even scaled down.

You need a certain minimum team though, so that limits your min players you must have to keep running.

Most good / profitable MMO RPG's are still up to day, with UO and Tibia being two of the oldest (15 years? jeez). Remember that there are countries where those games will do money as they don't have our high tech PC's.
I think pixelvision has it wrong, not realizing the risks/costs in releasing it as open source.

Unless you spend a lot of money vetting the source code, there are a number of risks.

There is the merely annoying - someone reporting of the number of mispellings in the comments or people ridiculing the style/algorithms. Worse, some junior contract programmer has some racist/misogynistic slur in the comments that makes the front page of massively. Or something like "here is where we get the gold from the idiot."

Then you have the bigger problems, someone claiming your commercial software is using their code, or came from an open source project. The ultimate nightmare these days are the [IMO very pernicious] software patents. If you are any size company, defending software patents is becoming an unfortunate cost of doing business. There is also the issue that the source code to the old game could provide insight to your authentication servers/algorithms or your security & anti-botting techniques.

And just the source code is probably insufficient for outsiders to get it running. So you either have to spend money to document it or have the risks with little benefits as nobody gets it working.

Releasing as open source has a lot of intellectual appeal to me as the right thing to do. But there is no way I could in good conscience recommend it to my company unless the good will from the community was [impossibly] huge; otherwise you are just adding needless risks by releasing the source that will almost certainly not be worth it.
I expect any mmorpg to be kept going forever. Naive? Sure. But some companies keep games running and others shut them down.

I haven't bought a ncsoft mmorpg and I won't since tr. I file keeping a game running under "customer service".
I'm not sure there is usually a lot of capital that can be retrieved from shutting down an MMORPG. If there isn't, from the most simple economic perspective the question does reduce to a matter of operating profit. But looking at the broader picture, there are other considerations, both positive and negative, several of which have been mentioned.

Current customers are one issue. By shutting down now you annoy them. But then again, you avoid annoying them by maybe having to shut down at some unknown time in the future which might coincide with you having something else you want to sell. Shut down now and the issue should be long forgotten.

Another issue is invisible costs due to loss of company focus. If Microsoft took over the most profitable pizza parlour in New York, it might make sn operating profit but it would in principle lose money because of the time wasted elsewhere in the company thinking about it. [And promoting useless people sideways to there would be too obvious a case of constructive dismissal!]

Finally, there are the IP issues, which have two aspects. This MMORPG has its own code, but it's design and operation is going to have stuff in common with any other MMORPG you make. If you have another in the pipeline, you try to get your customers into that. And one thing that seems like a terrible idea is releasing the source. This is likely mean the continuation of a MMORPG which will have resemblances to your next one. Not to mention other issues such as idiots complaining about your code. And not to mention giving away code and assets that you can re-purpose for your new projects. I would only release the source if I were getting right out of the business forever. And probably not even then. Let some people take the *ideas* and make their own game with them, would be my attitude.

And one thing that seems like a terrible idea is releasing the source. This is likely mean the continuation of a MMORPG which will have resemblances to your next one. Not to mention other issues such as idiots complaining about your code. And not to mention giving away code and assets that you can re-purpose for your new projects. I would only release the source if I were getting right out of the business forever. And probably not even then.

id software was extremely successful in releasing the source code of their games, from Doom to Quake 3 (even Doom 3 I think) and that has not hurt them at all.

In fact I think it gained them a huge amount of customer goodwill and loyalty.

Sometimes doing the counter-intuitive thing is good for business.
If we assume that game developers are not total nitwits, we can assume the game will be kept going as long as it is a reasonably profitable thing to do. The discussion about this stuff is somewhat obnoxious because it assumes that a bunch of guys on the internet with little to no knowledge of the the financials of the game are better equipped to make these decisions than the company itself.

There was a lot of whinging about CoH, but nobody wanted to put their money where their mouth was.
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