A recent "feature" article of dubious quality on SWTOR's new business model has prompted Scott Jennings to critique the state of gaming journalism. The situation has not changed much since his comments from four years ago regarding coverage of Tabula Rasa's collapse. I remember that post because I had planned to comment on it at the time but never got around to it. Apparently this is a week for dredging up years-old relics, so here are my thoughts.
When it comes to publicly available information and analysis, the professional gaming press sites are always at a disadvantage compared to the crowdsourced masses due to sheer force of manpower. The place where the media outlets have an advantage is in information provided directly from game developers/publishers. This serves a valuable function for the gaming public, but it also puts the gaming press in a very different position from those who cover politics or finance. When all the real information is coming from the people you are covering that - not the product placements or full-screen ads - inevitably affects the tone of the coverage.
It's not impossible to do real investigative journalism when it comes to online gaming - Unsubject's work to back up what many of us are thinking about Kickstarter with real numbers comes to mind. It's also unavoidably subjective because the information you'd really need to make a correct call is not public and will never become public. More often than not, you end up with something that looks more like my recent post about Turbine - the best speculation that can be cobbled together using old, vague, and limited data.
You could argue that gaming isn't actually important enough to deserve real journalism, but there is a real demand. Whether a company is actually going to deliver what they're telling the press they plan to deliver matters, because it affects purchasing decisions. When we get to the point where - even as my income has gone up to the point where I can reasonably afford as many games as I feel like playing - the default purchasing decision is "wait and see" for lack of information, it's the folks who made the product that doesn't get the sales or subscriptions it merited who are going to suffer.
Examining SWTOR's endgame
When I first hit level 50 in SWTOR, I was in no hurry to try the "elder game". My leveling path went solely through solo story content - I don't believe I joined a single group - and I was not in the mood to make the transition to grinding dungeons and farming daily quests. Having returned, I have been pleasantly surprised to find the game well-designed and executed.
However, given how much progress I made in a single month, I can see why Bioware is touchy about calling its max-level content the "endgame". SWTOR's high production value story-driven content is especially vulnerable to growing stale with repetition, and its incentive curve is already buckling under the pressure of how to accomodate new players.
Grouping for An Assassin
My immediate incentive to jump into SWTOR's group content was the addition of the HK-51 assassin droid in last month's patch 1.5. Though NPC companions are only used while solo - they take up a slot that is almost certainly better filled with a human player in max level content - the quest to obtain this new companion has multiple steps that require group content. Worse, two of the steps that basically require a second player occur in special instances that are specific to this questline. With no incentive to ever repeat this content in the future, I rushed out to complete them ASAP for fear that it would no longer be possible to find players who still needed them.
Setting aside the issue of whether players will ever be able to complete this quest chain in the future, Bioware got what they wanted. I claimed the free level 50 starter gear from the mission terminal (at the time, there was only PVP gear, but now you can supplement this with some PVE stuff), respecced my character into the DPS tree that sounded easier to play, and jumped into the hard mode flashpoint queue.
The first few groups got a lousy deal with such a green newbie. When solo players complained that this arc required groups, many players responded by arguing that grouping should be required for something in a MMORPG. I'd be curious how many of those players would have changed their minds and concluded that they would rather not have had me taking up a slot in their party. The good news is that the learning curve settled down eventually, I enjoyed the flashpoint game enough to continue beyond the required two hard mode runs, and eventually I picked up enough gear - and perhaps experience - to vaguely carry my weight.
Incentives ahead, but short-lived?
Your first few group zones at max level in an MMORPG are generally pretty rewarding, as everything is an upgrade. After running around a dozen hard mode flashpoints - each of the eight options once, and a few repeats - my character has left behind almost all of the endgame starter gear. Most of my Tionese gear (the PVE starter set - I actually bought this stuff with dungeon tokens, but players now receive it for free) has since been handed down to my companions, while I'm wearing mostly Columi stuff (originally found in the easy mode of the game's first raids), and a few pieces from the next tiers up.
Unfortunately for the game's longevity, very few outright upgrades remain for me in flashpoint content. A few pesky drops aside, most of the upgrades that I can still obtain come from the "black hole commendation" vendor. Like WoW, SWTOR hands out raid quality gear as an incentive to keep players running the flashpoints (and also at least some daily quests). I could see this getting old really quickly given how much non-skippable story dialog happens in the flashpoints.
The other goal I've been pursuing are cold hard credits. On a good day, I pull down several hundred thousand credits, which I've been able to use to purchase a variety of stuff - legacy perks, and F2P unlocks to use when my subscription expires. This too has a limit, especially for the non-subscriber with the strict limits on currency.
Overall, it was a fun month, and perhaps there's another month or so worth of stuff to do at some point, but this endgame does not feel sufficiently robust to continue for month after month. Perhaps it should have been no surprise that the game's subscriber retention suffered as it did.
However, given how much progress I made in a single month, I can see why Bioware is touchy about calling its max-level content the "endgame". SWTOR's high production value story-driven content is especially vulnerable to growing stale with repetition, and its incentive curve is already buckling under the pressure of how to accomodate new players.
Grouping for An Assassin
 |
| The HK-51 companion has some interesting design. The droid is a specialized DPS beast designed to chew through the stronger mobs in daily quests - for each five mobs HK-51 damages, he can open the next fight by one-shotting a "strong" level mob, which can save a lot of time and danger. |
Setting aside the issue of whether players will ever be able to complete this quest chain in the future, Bioware got what they wanted. I claimed the free level 50 starter gear from the mission terminal (at the time, there was only PVP gear, but now you can supplement this with some PVE stuff), respecced my character into the DPS tree that sounded easier to play, and jumped into the hard mode flashpoint queue.
The first few groups got a lousy deal with such a green newbie. When solo players complained that this arc required groups, many players responded by arguing that grouping should be required for something in a MMORPG. I'd be curious how many of those players would have changed their minds and concluded that they would rather not have had me taking up a slot in their party. The good news is that the learning curve settled down eventually, I enjoyed the flashpoint game enough to continue beyond the required two hard mode runs, and eventually I picked up enough gear - and perhaps experience - to vaguely carry my weight.
Incentives ahead, but short-lived?
 |
| Triumph of the very blue speeder bike, obtained for running each hard mode flashpoint once |
Unfortunately for the game's longevity, very few outright upgrades remain for me in flashpoint content. A few pesky drops aside, most of the upgrades that I can still obtain come from the "black hole commendation" vendor. Like WoW, SWTOR hands out raid quality gear as an incentive to keep players running the flashpoints (and also at least some daily quests). I could see this getting old really quickly given how much non-skippable story dialog happens in the flashpoints.
The other goal I've been pursuing are cold hard credits. On a good day, I pull down several hundred thousand credits, which I've been able to use to purchase a variety of stuff - legacy perks, and F2P unlocks to use when my subscription expires. This too has a limit, especially for the non-subscriber with the strict limits on currency.
Overall, it was a fun month, and perhaps there's another month or so worth of stuff to do at some point, but this endgame does not feel sufficiently robust to continue for month after month. Perhaps it should have been no surprise that the game's subscriber retention suffered as it did.
A Critical Look at Turbine's Status
Roger at Contains Moderate Peril has a summary of some of the recent developments indicating that all may not be as well as gamers believe at Turbine, makers of Lord of the Rings Online and Dungeons and Dragons Online. The fate of any one studio or project aside, Turbine's status matters because DDO's relaunch kicked off the modern wave of free to play revamps. Bloggers like myself frequently cite the company's content-selling approach as an alternative to the more subscription-driven models at studios like SOE and Bioware. If Turbine's situation goes south, there are implications for the entire industry.
The missing context of DDO's revival
Turbine's success is often taken as gospel based on press statements that lack context. Yes, revenue increased by 500 percent over the first two months after the famous DDO re-launch. Yes, even the subscriber numbers went up 40%. What these relative numbers lack is a baseline.
For a nine month period while Turbine was revamping the game, no new content was added - a situation which would be tailor-made for increased subscribers after the next big patch, even if there had not been the hype of a relaunch. Revenue would almost certainly have been further depressed by some players choosing to cancel their subscriptions and await the relaunch before paying more. If we assume that Turbine's press people chose the most favorable numbers - which is their job after all - then that 5-fold increase is not a realistic baseline.
None of which matters if the increase in revenue were sustained. I've been arguing since 2010 that the limited data we have does not bode well on that front. According to a 2010 Game Developer's Conference talk - to my knowledge, the only such information Turbine has disclosed - the DDO's top ten revenue items included five one-time account unlocks, and three additional purchases (character slots, supreme +1 and +2 tomes) that are paid for only once per character.
We don't know whether this trend continues. That said, my experience with the Turbine model has been that customers can expect somewhat high one-time costs in setting up their accounts, but longterm savings that are significantly below the price of the subscription. This year to date, my total expenses are $25 for DDO and $40 for LOTRO, and both purchases will carry me well into next year. I'm not a heavy player of either game, but those numbers pale in comparison to what even an infrequent subscriber will spend. To the extent that my experience is representative, I suspect that Turbine's revenue has definitely dropped off from that one-time re-launch peak.
(As an aside, one analysis of the studio's 2010 sale to Warner Bros indicated that the studio had previously raised at least $100 million in investment capital, which would make the rumored $160 million sale price an underwhelming return on investment. While I'm largely ignorant of how investors compare annual operating profit to the purchase price of a company, my guess is that there is an upper limit to how well the games can have been doing at that time.)
What we can tell about today
As Roger reports, what little we know of Turbine's status this year includes layoffs, hiring of senior officials with job descriptions like "responsible for our digital technology platform that helps drive online engagement and monetization", and the termination of foreign language support for DDO. What we are seeing on the game development front is not more heartening.
Turbine's major releases this year in both games have drawn fire for uncharacteristically high rates of show-stopping bugs, even after a high profile delay to this year's Rohan launch. Prices have trended upward, with DDO's latest high level adventure pack coming in at 750 Turbine Points, compared to 450 for most releases in 2010, and expansions (themselves a new thing to DDO) coming in at $50 for the cheapest DDO bundle that includes the new class and $70 for the LOTRO bundle that includes the game's first bagspace increase since 2007. Turbine was quick to promote 2011's Isengard expansion as the best-seller in the studio's history, but I haven't seen even such vague comments on either of this year's releases.
Meanwhile, monetization is indeed on the rise in Middle Earth, with apparel mannequins displaying cosmetic outfits that initially appeared in the most remote, dangerous locations in the world, a $10 cosmetic purchase that lets Dwarves take off their shirts, and the joke hobby horse with its hypothetical $50 price tag. Meanwhile, it feels like buggy and unpopular systems - kill deed grinds, legendary item grinds, holiday festival grinds, etc - are being retained in part so that fixes for them can be saved for the cash shop.
None of these individually allows us to distinguish a for-profit company making reasonable efforts to increase revenue from a less favorable scenario in which the studio is struggling to maintain revenue as the short-term gains from the game's front-loaded business model are translating into non-subscribers who no longer need to purchase much of anything. All of the above collectively, however, starts to suggest the less-cheery scenario.
2013: make-or-break year?
I don't think Turbine is going to be the surprise MMO studio closure of 2013, but I do think this may be a moment of truth for the company. According to a 2008 press release, the LOTRO's license for the intellectual property runs through 2014 with options to extend it through 2017. Having a sudden and unfavorable chance in the license terms is the one thing that can suddenly kill a game that had been coasting along without issues.
We don't know the terms of the license, and it's certainly possible that Warner Brothers has the clout to negotiate a more favorable rate if they feel it's worth their time. The big question is whether it is worth their time, or whether this was primarily a transaction intended to net the parent corporation online community transaction technology and infrastructure. I'm certainly hoping it's the former given my investment in Turbine's games, and their generally enjoyable qualities. Time will tell whether that view is realistic.
The missing context of DDO's revival
Turbine's success is often taken as gospel based on press statements that lack context. Yes, revenue increased by 500 percent over the first two months after the famous DDO re-launch. Yes, even the subscriber numbers went up 40%. What these relative numbers lack is a baseline.
For a nine month period while Turbine was revamping the game, no new content was added - a situation which would be tailor-made for increased subscribers after the next big patch, even if there had not been the hype of a relaunch. Revenue would almost certainly have been further depressed by some players choosing to cancel their subscriptions and await the relaunch before paying more. If we assume that Turbine's press people chose the most favorable numbers - which is their job after all - then that 5-fold increase is not a realistic baseline.
None of which matters if the increase in revenue were sustained. I've been arguing since 2010 that the limited data we have does not bode well on that front. According to a 2010 Game Developer's Conference talk - to my knowledge, the only such information Turbine has disclosed - the DDO's top ten revenue items included five one-time account unlocks, and three additional purchases (character slots, supreme +1 and +2 tomes) that are paid for only once per character.
We don't know whether this trend continues. That said, my experience with the Turbine model has been that customers can expect somewhat high one-time costs in setting up their accounts, but longterm savings that are significantly below the price of the subscription. This year to date, my total expenses are $25 for DDO and $40 for LOTRO, and both purchases will carry me well into next year. I'm not a heavy player of either game, but those numbers pale in comparison to what even an infrequent subscriber will spend. To the extent that my experience is representative, I suspect that Turbine's revenue has definitely dropped off from that one-time re-launch peak.
(As an aside, one analysis of the studio's 2010 sale to Warner Bros indicated that the studio had previously raised at least $100 million in investment capital, which would make the rumored $160 million sale price an underwhelming return on investment. While I'm largely ignorant of how investors compare annual operating profit to the purchase price of a company, my guess is that there is an upper limit to how well the games can have been doing at that time.)
What we can tell about today
As Roger reports, what little we know of Turbine's status this year includes layoffs, hiring of senior officials with job descriptions like "responsible for our digital technology platform that helps drive online engagement and monetization", and the termination of foreign language support for DDO. What we are seeing on the game development front is not more heartening.
Turbine's major releases this year in both games have drawn fire for uncharacteristically high rates of show-stopping bugs, even after a high profile delay to this year's Rohan launch. Prices have trended upward, with DDO's latest high level adventure pack coming in at 750 Turbine Points, compared to 450 for most releases in 2010, and expansions (themselves a new thing to DDO) coming in at $50 for the cheapest DDO bundle that includes the new class and $70 for the LOTRO bundle that includes the game's first bagspace increase since 2007. Turbine was quick to promote 2011's Isengard expansion as the best-seller in the studio's history, but I haven't seen even such vague comments on either of this year's releases.
Meanwhile, monetization is indeed on the rise in Middle Earth, with apparel mannequins displaying cosmetic outfits that initially appeared in the most remote, dangerous locations in the world, a $10 cosmetic purchase that lets Dwarves take off their shirts, and the joke hobby horse with its hypothetical $50 price tag. Meanwhile, it feels like buggy and unpopular systems - kill deed grinds, legendary item grinds, holiday festival grinds, etc - are being retained in part so that fixes for them can be saved for the cash shop.
None of these individually allows us to distinguish a for-profit company making reasonable efforts to increase revenue from a less favorable scenario in which the studio is struggling to maintain revenue as the short-term gains from the game's front-loaded business model are translating into non-subscribers who no longer need to purchase much of anything. All of the above collectively, however, starts to suggest the less-cheery scenario.
2013: make-or-break year?
I don't think Turbine is going to be the surprise MMO studio closure of 2013, but I do think this may be a moment of truth for the company. According to a 2008 press release, the LOTRO's license for the intellectual property runs through 2014 with options to extend it through 2017. Having a sudden and unfavorable chance in the license terms is the one thing that can suddenly kill a game that had been coasting along without issues.
We don't know the terms of the license, and it's certainly possible that Warner Brothers has the clout to negotiate a more favorable rate if they feel it's worth their time. The big question is whether it is worth their time, or whether this was primarily a transaction intended to net the parent corporation online community transaction technology and infrastructure. I'm certainly hoping it's the former given my investment in Turbine's games, and their generally enjoyable qualities. Time will tell whether that view is realistic.
Should You Want To Pay?
Should we as players (i.e. consumers) of MMO's want to pay for our games? Most people who can count will have some level of selfish desire to pay less, get more, and somehow have the developers not go out of business in the process. That aside, should you want to play a game where you are paying your fair share? Equally important in the era of non-subscription payment models and cash shops, should you NOT want to play games that are structured in a way where you are not paying much?
My complaint about SWTOR's new model - which should not be a surprise to longtime readers since I have raised the same objection to several SOE games that have taken a similar approach - is that I actually want to pay them more. Bioware does not think it's in their interest to allow non-subscribers to pay for a fully unimpaired experience in their product. If the only two options are to subscribe or suck up quality of life penalties and pay nothing more once I've unlocked the handful of things Bioware is willing to sell, I may just go ahead and freeload. That's not really the happiest outcome for either myself or Bioware.
I would argue that studios have done themselves a disservice by hyping the "free" angle on for-profit products that have to make money somehow. The games can never be completely without cost, and there will always be one restriction that is the most onerous one left no matter how many things the studio relaxes. (EQ2 may be running into this wall today after several years of doing the dance that SWTOR is doing today.) Meanwhile, the dual business model creates a variety of expectations, with most non-subscribers misguidedly begrudging every penny and subscribers insisting that their $15 should be the only money anyone is allowed to ever pay and anything more would be "pay to win".
And so we have the talk of whales, mounts that have gone from $10 outrage to $25 sparkle ponies and perhaps $50 soon, and the ongoing slippery slope of cash shops as studios claim that more revenue is needed and the majority of players rush to say "not it!". I'm not about to run out and pay hundreds of dollars for premium stuff, but in general I think that players who are not supporting the product can expect to be disappointed with its future direction. Perhaps the middle ground was the old world in which everyone paid $15 and the developers did whatever they wanted to with the proceeds, but that ship appears to have sailed. If the result really is a generation of games whose primary revenue stream is catering to the highest cash store bidder, I don't think anyone (other than that one big spender) will be happy with the result.
My complaint about SWTOR's new model - which should not be a surprise to longtime readers since I have raised the same objection to several SOE games that have taken a similar approach - is that I actually want to pay them more. Bioware does not think it's in their interest to allow non-subscribers to pay for a fully unimpaired experience in their product. If the only two options are to subscribe or suck up quality of life penalties and pay nothing more once I've unlocked the handful of things Bioware is willing to sell, I may just go ahead and freeload. That's not really the happiest outcome for either myself or Bioware.
I would argue that studios have done themselves a disservice by hyping the "free" angle on for-profit products that have to make money somehow. The games can never be completely without cost, and there will always be one restriction that is the most onerous one left no matter how many things the studio relaxes. (EQ2 may be running into this wall today after several years of doing the dance that SWTOR is doing today.) Meanwhile, the dual business model creates a variety of expectations, with most non-subscribers misguidedly begrudging every penny and subscribers insisting that their $15 should be the only money anyone is allowed to ever pay and anything more would be "pay to win".
And so we have the talk of whales, mounts that have gone from $10 outrage to $25 sparkle ponies and perhaps $50 soon, and the ongoing slippery slope of cash shops as studios claim that more revenue is needed and the majority of players rush to say "not it!". I'm not about to run out and pay hundreds of dollars for premium stuff, but in general I think that players who are not supporting the product can expect to be disappointed with its future direction. Perhaps the middle ground was the old world in which everyone paid $15 and the developers did whatever they wanted to with the proceeds, but that ship appears to have sailed. If the result really is a generation of games whose primary revenue stream is catering to the highest cash store bidder, I don't think anyone (other than that one big spender) will be happy with the result.
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