Tobold's Blog
Wednesday, July 08, 2015
 
Cash cows and moving on

There has been much discussion about a recent announcement that there will be no more major content added to Warlords of Draenor, thus presumably leaving it with only minor content patches until the next expansion which based on previous form should be out in Q4 2016. That is a long time with no added content, and will certainly lead to new lows in subscription numbers for World of Warcraft. Why wouldn't Blizzard want to keep up subscriber numbers by adding more content?

The answer to that question is relatively basic economic theory of any business venture. After an initial phase where you spend more on development than you get in revenue, and a phase of peak popularity where you pump less money into the project and get a maximum out of it, there is a third phase that is generally called the cash cow phase where the business venture produces cash with very little maintenance. World of Warcraft is in this cash cow phase, where Blizzard considers it as a low-maintenance venture that will produce cash without requiring major investment.

That is not some heartless or stupid decision. Fact is that a good part of the decline in popularity is natural, and that it would cost increasing amounts of money to keep up subscription numbers. If you tried, you'd end up with costs higher than revenue, and an expensive but unprofitable business. The wiser decision is recognizing that the peak of popularity has been passed, and using the cash that WoW produces to finance other projects that haven't reached peak popularity yet.

Blizzard basically has moved on, and at least mentally so should we. We can enjoy WoW in its current stage with a decade worth of content in the game, but we shouldn't expect an increase in the future speed of content creation. The subscription peak of WoD was in some respects an anomaly, it should have been smaller, but was more a reflection of the lack of success of WoW's competitors to create games that remain popular for more than three months. The most interesting thing about it is that if WoW loses 3 million subscribers, you don't see those 3 million people turn up elsewhere.

Comments:
Yup. And really, there is enough content to last years. Even after you "finish" the current stuff, there are doubtlessly loads of old content to go back to and do in a different way.

I have to laugh at the people that kill themselves to get through current content as fast as possible as if they're competing with other people. Hell, I haven't even seen "Age of Ultron" yet. And I assure you, I want to see "Age of Ultron!" But I can wait to see it on my terms.

Relax! Slow down...
 
The wiser decision is recognizing that the peak of popularity has been passed, and using the cash that WoW produces to finance other projects that haven't reached peak popularity yet.

While that is true for normal products, it also represents a sort of antithesis to MMOs generally. Who wants to get invested in a dying game world? Skyrim will still be Skyrim no matter when you play it; meanwhile an MMO experience is vastly different depending on who is still playing.

Besides, while Blizzard is a faceless corporation that has no particular moral obligation to anyone, I do find the situation of them (and any MMO company for that matter) creating these social platforms and then intentionally going into "maintenance mode" to be especially cruel. It makes perfect business sense... in the same way tobacco companies adding addictive chemicals to cigarettes makes perfect business sense.
 
Azuriel, the entire model is cruel, whether they are pumping out content or not. The entire model is to induce addiction and waste huge chunks of players lives on a game that, at the end of the day, isn't really even fun for the most part. Like smoking, occasionally it's quite nice and relaxing, but mostly you are just doing maintenance on your addiction. On the whole it is a vast negative to the quality of like for the addict, even if they can't see it.

I'm glad MMOs are a dying genre. It's a great day for nerds and the human race. When I think about how many relationships and friendships have been damaged by WoW, how many people dropped out of college or hurt their careers, how many people let their health and fitness deteriorate, how many songs and novels went unwritten so people could raid Molten Core, well, it's sad. Blizz letting the game wind down is less cruel than fighting to keep the addicts addicted.
 
"Fact is that a good part of the decline in popularity is natural, and that it would cost increasing amounts of money to keep up subscription numbers. If you tried, you'd end up with costs higher than revenue, and an expensive but unprofitable business."

While this is true in a general sense, WoW still makes just way, way too much money for that to be true yet in their case. It is still a game that pulls in roughly $1 billion a year in revenue. If your efforts could slow the decline by just 10% of that, that's $100 million. Are you really telling me that a new raid instance would cost more than $100 million? I would be shocked if it cost even $10 million.

Nearly every MMORPG faces a steady decline right from launch day. Almost none of them will ever get anywhere near even 1 million subscribers. Are they all stupid for releasing any additional content at all? Because WoW still has 7 million subscribers, and it doesn't cost Blizzard all that much more to add content than it does another less successful MMORPG.

Yes, there is a certain amount of inevitability to the decline. But considering the numbers involved, yes, it IS stupid for them to just give up on what is still, today, by far the most successful and popular MMORPG.
 
Q4 2016, meaning October 2016? That's more than a full year.

I am SO glad Diablo III is going to release a new awesome patch, time to leave WoW (once again)!
 
Are you really telling me that a new raid instance would cost more than $100 million?

No, I'm telling you that a new raid instance wouldn't slow the decline by 10%.

Q4 2016, meaning October 2016? That's more than a full year.

Burning Crusade was released in January, but then Wrath of the Lich King came slightly earlier, in November. Cataclysm came in December. Mists of Pandaria was the earliest ever, in September, but Warlords of Draenor went back to November. So it is the fourth quarter of every even year, give or take a month. Pretty predictable.
 
Yep. Part of that is MMOs are a mature segment. Sigh at least until your special fairy dust like Kickstarter and VR completely revitalize it.

Re the 10%/100M: I submit even that is not sufficient. Even if $100M invested in WoW would be profitable, that does not mean that WoW is the best place for ATVI to invest the $100M. The "WoW Killer" is not GW2 or Rift, it is [something like] Hearthstone. A couple of dozen people made a game that is profitably generating ? hundred million dollars of revenue. If WoW was the only game in the company, they would probably be investing more in it. But it is just the high profit, low growth product in the product portfolio - a/k/a the cash cow.

Reading what the WoW devs say, it sure seems like gamers without a clue about business. But looking at how ATVI has COD, Destiny, Skylanders, SC2, D3, HotS, and soon Overwatch, as well as a very good strategy for the world's #2 soon #1 market, then somewhere in the executive suite there must be some skills.
 
"No, I'm telling you that a new raid instance wouldn't slow the decline by 10%."

Considering they just released an expansion half a year ago that not only stopped the decline, but temporarily reversed it, I'd call this a highly questionable assumption. We are talking about a game that is still, right this second as we're talking about it now, the most popular MMORPG by a massive margin. The cost of $10 million for a new raid instance (which I highly doubt is even that high) equates to 1% of their revenue.

So you are still going to tell me that there is no chance whatsoever that a new patch could have even 1% effect on this game, to the point that it isn't even worth trying?
 
I'm pretty convinced that the spike in subscribers for WoD had absolutely nothing to do with raid content, as there isn't anything special about WoD raiding. It could be player housing (garrisons), as that is accessible to far more millions of people than raiding. Or it was simply that everything else on the market wasn't any better than WoW.
 
I'm going to go out on a limb here and say that if blizzard does not announce a new xpac for holiday 2015 or early 2016 then we WILL see another content patch for WoD. Maybe something Ruby Sanctumish or Sunwellish but definitely something. I do not for a second believe they would be stupid enough to expect this patch to last a year and a half.
 
"Or it was simply that everything else on the market wasn't any better than WoW."

This is still true, nothing has changed about the market in the last year. I'm not saying they can stop the decline, I'm just saying that when you still have 7 million subscribers, every dollar you spend trying to keep them is still worth the effort. To cover a $10 million content patch (still absurdly high), you only need to get one extra month from just 10% of those subscribers.

For so long you have spoken out against the many, many "WoW is dead/dying" posts, pointing out that it is still dominates the market. It is just strange to see such a sudden 180 degree shift to, "it's dead, don't even try."
 
@Bigeye

WoW went 15 months at the end of Mist of Pandaria with no new content. It may be crazy, but I absolutely believe they will do it again.
 
WoW's very impressive 3M new subscribers in a month was not due to a patch but an expansion.

If expansions get so much more free press than patches and if far more people are playing an MMO for a few months, not the many years of a decade ago, then having smaller, more frequent expansions that you charge for - the Blizzard philosophy - makes great sense to me.

The issue is they have the smaller down; the open question is can they do the quicker? Announce at Gamescon, Beta at Blizzcon is one extreme; 15 months of TJ is the other. We don't know at this point. The realities of software development means Blizzard may not know either.
 
Maybe it is so they can prepare for the free to play version?
 
Bliss seems to think, and they would be the people who have had a decade of numbers to back it up, that new raid content isn't worth it...

I'd say a vanishingly small percentage of players actually finish the raid content that comes with the expansion. Ergo, new content they won't be able to access , or new content that just diverts them from pre-existing content is not a good money maker for them.
 
"So it is the fourth quarter of every even year, give or take a month. Pretty predictable."

Except Blizzard's explicitly stated their goal is to get expansions out faster, hence why we only have two raid tiers (can only put one out every 5-6 months in terms of how long it takes people to "consume" the content). Which means they want to get another expansion out in Q1 of 2016 most likely (which is about 6 months for the final raid tier of WoD). They're not going to go another 15-18 months without a content patch.

If something does go wrong with the development of the next expansion, as Bigeye said they'll throw the equivalent of Sunwell out. SoO was enough of a disaster that Blizzard will pretty do much anything they can to avoid that. I could maybe see Hellfire Citadel dragging on for 7-8 months. But not 12, and certainly not 15+.
 
Except Blizzard's explicitly stated their goal is to get expansions out faster

They announce that in 2011. If they didn't manage in the last 4 years, why would they suddenly be able to deliver on that now?
 
I know and each time it happens they get more and more flak for it. They specifically designed WoD with only two content patches in order to get out the next xpac faster.

If the only deliver two content patches and then still take over a year for the next xpac blizzard will be in tremendously hot water.

They charged more for this xpac. Delivered less content. Then still take a year and change for the next update? I feel that would be a tipping point for a lot of players.
 
The amount of content-per-expansion is well documented here

http://eu.battle.net/wow/en/zone/#expansion=5

As we can see, year after year we've got less and less stuff to do. WoD is really the worst one in terms of dungeons and raids.
 
"If they didn't manage in the last 4 years, why would they suddenly be able to deliver on that now?"

What Bigeye said. They specifically designed WoD around the idea of two content patches and they know they'll be in major trouble with players if they fail to deliver on a timely expansion given that.

"WoD is really the worst one in terms of dungeons and raids."

WoD's already had more raid bosses in two tiers than Cataclysm did in three. It'll also beat every expansion except BC in terms of bosses to months ratio. Read point two of this post if you want the full numbers: http://balkothsword.blogspot.com/2015/07/been-rather-busy-but-cross-post.html

Really the main thing WoD has been "lacking" is solo max level play (which was added in a bit in Tanaan). Blizzard was "silly" enough to think more people would actually be social and join normal raids or lower ranked Rated Battleground groups using their new group finder. It's depressing when I read things like "Once you hit 100, there was little reason to see another person again, outside of LFD/LFR" because...that's not the WoW I play at all. I raid twice a week with my Mythic raiding guild, run a social/casual OpenRaid run weekly for normal modes, and do other content with guildies/friends at times. Pretty much *all* of my WoW experience is with other people.
 
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