Snaffy's Space | MMO Fansites

So here's a random post about some random MMO thoughts I had in my head. I'm not actively subscribed to an MMO, nor am I playing any betas, trials, or F2P titles either. It's a bit strange that I still have MMOs on the brain but I guess you never really lose something that has been such a big part of your life. With that said, here we go.

Traditions, tourists, and tigers. I'm speaking of traditional MMO development, WoW tourists, and Asian Tigers specifically. The basic concepts I have floating around my head are that MMO traditions are changing, WoW tourists have an interesting effect on the industry, and Asian developers/investors might just be ahead of the curve. In my mind, these all come together in a weird sort of way.

Traditions

For many years, the MMO business model was exclusively subscription-based. The past couple years have shown the emergence of real-money-trading as a viable model. Subscription MMOs have proven to be the most lucrative money-maker for studios, but the catch is that you really need to maintain a subscription-base that is properly proportioned to your maintenance costs, new development costs, original development costs, and a few dozen other things.

Traditionally, most players have given slack to developers who release not-so-ready subcription-based products. Unfortunately for developers, this is changing due to a wide selection of competing subscription, F2P, or otherwise MMOs. Back in 2001 there were few quality MMOs with roughly 2.5M shared subscriptions between them. By 2008, there were roughly 16M active subs. The market is growing and so are expectations.

Many other traditions are breaking, but the ones I mentioned are sufficient to back up the rest of what I have to say.

WoW Tourists

What can be said about these unique and interesting creatures? They play WoW. They are legion. They are willing to give new MMOs a shot but almost always come home to roost. This has had a big effect on the Western MMO industry, which even now hasn't been able to mitigate against.

Tourists help build the hype for new MMOs and also add fuel to the wildfire of negativity that follows shortly after release. They boost closed beta signups. They bring open beta servers to their knees. Investors and developers alike see the WoW population base as a potential goldmine, which is falsely verified by their afforementioned engagement in the pre-release hype and beta processes. The developers try and fail to mimic the WoW success model, which dilutes the genre. But that's okay because many investors are scared to put "stock" in much else anyway.

WoW tourists aren't evil. Investors aren't evil. Developers aren't evil. They just mix together like oil, water... and rocks. Syncaine has an interesting thought on how they might finally blend.

Development Tigers

Making MMOs is risky business. They cost a lot of money, take a long time to build (even when they don't work as indended), and when released, are competing with more newer and established titles than ever before. Have the Asians figured it out?

Please correct me if I'm wrong as this is second-hand knowledge I'm about to pass along. Let's me explain it as it was explained to me.

In the West, subscription-based MMOs are developed basically as I have described above. In the East, however, many studios are taking a different path.

Instead of cramming as much content as possible into the release-ready version of the project, they scale way back. Instead of investing tens of millions into development and marketing, they scale way back. As a result, instead of taking 3-4 years to release an MMO, they crank them out much faster.

I believe the old saying goes, "Fast, cheap, good: pick two?"

It's an interesting concept. Even with Western MMOs, people complain about devouring content too quickly. They still whine about the quality. In fact, they even bitch about the development speed. If most people are going to complain, you might as well go with the fastest, cheapest option, right?

If a new title doesn't gain traction in the Asian market they simply nuke it. Oh well, at least it didn't cost much or waste too much of anyone's life developing it. If it does, however, they will invest more time and money into it. You can't make something cheaper or faster to develop after the fact. You can raise the quality though.

My assumption is that this would also allow them to try out wild and crazy design concepts without much repercussions for failure. I'm sure a lot of them totally bomb, but talk about a potential breeding ground for true innovation.

It should be mentioned that most of these titles are F2P with an RMT element. As a player, you may be bombarded with a shitstorm of... well, shit, but at least you can try it all for free. On the other hand, it would suck to really latch on to a title only to have the project dumped.

So how does this all fit together

I wondered to myself if we'd ever see that kind of development here in the West. MMOs developed the Asian way would be nearly tourism-proof. It might be riskier for the investor but the smaller budgets would be attractive. Developers could stretch their creative muscles and have more freedom to truly innovate. Players would have a greater variety of titles to choose from as well.

There are some negatives as well but it's definitely interesting to think about. For one, the MMO wall at your local game store will start to resemble the Wii wall with a huge amount of truly horrendous wastes of time and money.

I was working on a post for Massively and came across this interesting bit of information I had not heard of before, called the 89/10/1 Rule:

Many of these sites, like SuperSecret.com, are free-to-play, but rely on something called the “89/10/1 Rule,” says John Davison, co-founder of WhatTheyPlay.com, a Web site that helps parents navigate the many game choices for their kids. This rule, Davison says, assumes that 89 percent of your audience is playing for free, 10 percent is paying for something and 1 percent is spending a lot of money, buying new clothes or convenience items for their avatars.

The big word in there is "assumes," however, the ratio seems pretty realistic to me. I can't believe I haven't heard of this rule before. I mean, I know F2P game developers must use something like this to pitch to their investors, I just haven't seen this rule come up before. Maybe it's because I don't really follow the F2P scene.

Just for fun, let's assume the rule is true and that Free Realms, Runes of Magic, and Wizard101 are achieving it. Let's also pretend the minimum monthly fee is $5 and the big spenders drop at least $15 per month, which isn't unreasonable.

Free Realms (1M accounts): 100,000 are paying $5 ($500K) and 10,000 are paying $15 ($150K) = $650K/month
Runes of Magic (1M accounts): The same as FR, which is $650K/month
Wizard101 (2M accounts): Double FR and RoM, which is $1.3M/month

Now let's compare the numbers to two subscription-based MMOs, WoW (5,000,000 accounts in NA/EU) and WAR (300,000 accounts in NA/EU). We're not going to get overly picky about exchange rates or exact numbers since this is a basic example for comparison.

World of Warcraft ($15/month sub): $75M per month
Warhammer Online ($15/month sub): $4.5M per month

As you can see, even with only 300,000 accounts, WAR is bringing in 3 times as much revenue as Wizard101, which has nearly 7 times as many players. World of Warcraft... well let's not even go there because it really is an aberration compared to other MMOs using the subscription model. It's making a mint.

There are four things I think we should consider.

Accessibility - A free MMO will almost always have greater accessiblity than a subscription-based MMO, which is why you see quite a few F2P MMOs with account numbers in the millions and WoW as the lone subscription-based wolf. Actually, WoW has become so successful because of a different kind of accessiblity - ease of entry, which is something many other subscription MMOs face plant on. Due to both types of accessibility, I believe the growth potential of F2P MMOs is a lot larger, even though they may not make as much money as a result.

Demographics - I haven't checked recent global statistics but I'd wager the amount of kids in our world (aged 5-13) is a lot higher in population than the 19-34 male gamer demographic. Most F2P games go after kids while most subscription-based MMOs go after the latter for the simple reason of economics. It's much easier trying to hook a kid by giving him or her a zero entry barrier F2P game than immediately asking for $15 plus the cost of the box. Once the kid is hooked, it's off to mommy and daddy begging for the RMT goodies. Parents want to keep the kid quiet (let's be serious, most do...). Cha ching. Easy sale!

Development Costs and Quality - I think these two go hand in hand. The more you spend on an MMO during its development, the more quality you're likely to get. You don't always get top-notch quality in games that are expensive to make, especially at launch, but chances are your graphics, sound effects, feature set, expansiveness of content, and other things are going to benefit from it. Most subscription-based games have higher development costs. I believe WoW was $60M to make and WAR was $80M+. I hear Free Realms was $20-30M, but that is probably the most expensive F2P MMO ever made. I can't imagine the development budgets of most other F2P titles costing much more than $10M. Subscription MMOs make more but owe more. F2P MMOs make less but owe less.

I don't think we really have enough information to predict whether or not F2P will overtake the subscription system any time soon but this rule makes it pretty interesting to do comparisons and estimate where various F2P titles are at given their development costs. Personally, I see no problem with having both types of MMOs in the space. I do find it interesting that while most things around us are inflating in price, MMO subscriptions haven't really done so lately. Do you believe this is because of competition from F2P entries in the genre or because $15/month is lucrative enough, even when you only have a few hundred thousand people playing your MMO?

Personally, I don't see it going up any time soon.