Revisiting Cartel Resale Prices

Back in November, I correctly predicted that quirks to SWTOR's non-subscription model would drive down the re-sale prices for unlocks used by non-subscribers.  I then made an unfortunate attempt to apply basic macroeconomic supply and demand principles, concluding that the poor return on investment would discourage people from purchasing the unlocks to resell, thus gutting supply.  I therefore concluded that the time to buy was ASAP, before there was nothing left to purchase. 

I now own account-wide unlocks for basically all of the unlockable restrictions, other than the guild bank (which I don't need because I don't tend to take my guild's stuff even when it's offered)

Here at PVD, I'm not just the author of the analysis - I actually use it for my own purchasing decisions.  In this case, following my own advice caused me to overpay by probably at least two million credits for all of the stuff that I have since unlocked, when compared to better prices I have seen since.  It's hard to complain about that outcome when you consider that the credits I earned while playing at max level with one month of subscription time (some of which I spent starting new alts) turned into permanent account-wide unlocks for almost every feature available in the Cartel store - all without spending a single Cartel Coin.  The total would have been over 9000 Cartel Coins, at a real world cost of at least $80.

A lopsided "exchange rate"
I have been very surprised that the going rate for Cartel market items has gotten so low - many unlocks that run for around $5 in real money are available on the Global Trade Network for prices that non-subscribers can pay (i.e. no more than 350K credits due to the cap).  I would not have figured that people would open up their wallets for so few credits.  More surprising, this trend is not limited to the more expensive unlocks.  Some of the rarest items in the random gambling packs - items that people have not been able to get after spending $200 - are available for maybe 1-2 million credits. 

A few possibilities jump out to explain what we're seeing here.  It's certainly possible that some of the inventory was purchased before people realized how little demand there would be, and that folks have been stuck with stuff they can't sell for months since.  It's also possible that some subscribers do not place any value on the stipend of Cartel Coins that is included in their monthly fees.  Meanwhile, my perception of what credits are worth is defined by what I can get on my max level main, but many newer players are limited to low level income.  Finally, the random packs do mean that some players are going to end up with rare items they don't want, which will go on the market. 

Overall, it begs some interesting questions about who is paying for the Cartel Coins.  I get that there is a demographic that is categorically opposed to daily quests for any reason - I might even count myself in that number if not for the fact that they provide something to do while waiting for the random daily dungeon queue (which I actually enjoy running).  That aside, there's a real possibility that some players who do not own a max level character are dropping substantial amounts for real world money to get their characters set up with relatively modest amounts of in-game money for their leveling experience.  If so, it's a fascinating experiment in dev-sanctioned real money transactions.

Rethinking SWTOR, TSW Relaunches

I've been spending a fair chunk of my time on two of the more prominent MMO's that underperformed in 2012 - SWTOR and TSW - of late.  Both had to redo their business models within the first year of launch, and both revisions left me in some ways scratching my head.

Given more time, experience in the games after their relaunches, and the limited detail the respective games have released, I have new theories about both games... neither of which would be good news for me as a customer of both products.  I get the impression that SWTOR is heavily dependent on its cosmetic item gambling packs and that TSW appears to be running a fire sale to keep the lights on for a few more months before going under.

SWTOR - Funded by Gambling For Items?
As someone who prefers to pay for MMO's on a non-subscription basis, I've had a hard time wrapping my head around SWTOR's new approach.  Almost everything I would have been willing to pay for was either given away for free or else has not been offered for non-subscribers to purchase at all.  I get the desire to sell subscriptions, but how do you make more money by expanding the audience if you're seemingly so opposed to actually making money from the new non-subscription players?

I'm now increasingly thinking that the goal of Free to Play had remarkably little to do with expanding the player base.  Rather, it appears to have been about creating a justification for an aggressive cash shop aimed at the previous subscribers, with gambling for items as its centerpiece.

Bioware reps are currently on an offensive to defend the Cartel packs, telling both the TORWars fansite and the game's official forums that revenue from the packs is funding the rest of development.  They put their money where their mouths are, releasing a second random cartel pack with different random items within around a month after the F2P relaunch, with two more packs already finished and more in the pipeline.

We don't have the real numbers, but the claim makes some sense.  One of the last pieces of content before the incident at Darth Hater was a poll answered by 2,500 readers of the site - overwhelmingly subscribers - said that Cartel Packs and cosmetic armor were the two most popular purchases.  Players who read a third party news site are inherently going to be the most devoted players and not necessarily representative of the average player, but the numbers are intriguing.  From the survey, 24% claimed to have spent over $50 in real money on Cartel Coins, and 12% claimed to have bought 20+ Cartel Packs (which very likely cost over $50).

This is not a random sample, but it does show that there are at least hundreds of players willing to pay $50+ in a single month on top of their subscriptions, and half of this particular sample was spending that money on Cartel Packs.  There's certainly money to be made from the cosmetic stuff - which is priced aggressively - but the random packs have to be a bigger bang for Bioware's buck when it comes to revenue per item sold.  This is a model that would never be tolerated in a subscription game cash store, but F2P may be just the excuse Bioware needed to get both their subscription fees and the most aggressive monetization normally reserved for non-subscription titles.

(Aside: Curse has posted its side of the Darth Hater saga, stating that they took over the site with the new year, and that the entire founding staff departed voluntarily without saying goodbye.)

The Secret Fire Sale?
In the month since removing the TSW's subscription fee, Funcom has announced that they sold 70,000 copies of the game, representing a 30% increase.  They then held more layoffs.  When you look at the numbers in context, you can see why they celebrated the success in this fashion.

According to numbers Unsubject dug up, Funcom was counting on 280,000 longterm sustained subscribers.  Instead, they did not even sell that many boxes - if 70K was 30% of sales as of mid-December then their total sales base at the time was roughly 230K and their current total sits somewhere around 300K.  This would indicate only marginal progress since the 200K copies sold number Unsub found at the end of the launch quarter, when he noted that the financials said the studio had not been profitable since 2010.

The stated business model for TSW right now is that some people are going to continue with the optional subscription, and the rest will pay $5-10 for DLC content as it is released.  This model does not make any sense.  Out of that 300K copies sold:

• Some have left for good, subscription or not.  
• Another large portion - 70K new players and probably a fair number of less dedicated existing customers - are bumming around Kingsmouth and are months away from ever spending money on endgame DLC content.  
• Amongst the previous subscribers, some folks will not care about the optional perks on the now-optional subscription and will drop down to paying a smaller amount for DLC only when it is released instead of paying a subscription every single month.
• There is also the brave handful who opted for lifetime subscriptions - which Funcom appreciated at the time, but who aren't worth that much more income going forward.
• The only new revenue here are new players who pay for stuff and previous subscribers who continue to subscribe but also choose to pay extra for DLC, rather than using the point stipend included in their subscriptions.

With all of the layoffs, it is unclear how this studio is going to manage frequent content updates that people are willing to pay for - a crucial point because now they only get paid when they release new content.  Even assuming that they manage it, I'm just not seeing a source for an increase in sustained revenue.  This game already had a cash shop, and now may stand to make less money from its content depending on what current subscribers do when their time runs out.

Given the unfortunate financials, one conclusion jumps out from this data.  Funcom just sold 70,000 of what are effectively $30 lifetime subscriptions to the launch game because they need the money right now to keep the studio open.  If I'm right, they're mortgaging their future income because otherwise they have no future.

To be clear, I'm not writing this because I hate the game or want it to fail.  I'm actually enjoying myself.  And I'm putting my time where my analysis is by getting as much as I can out of the game right now, because I'm unfortunately not optimistic that this product will be around to play if I wait six months.

Power Escalation In TSW

I'm currently about halfway through the Savage Coast zone in TSW, and I've had a bit more time to play around with the game's skill system.  One of the things that I find very interesting is how the developers try to expand your skill options as you gain more ability points without blowing the power curve out of the water. 

A key part of this plan is that higher end abilities tend not to do more damage/healing/etc.  Rather, they offer different and often more advanced secondary effects which might eventually add up to better performance if combined appropriately.  For example, sword-based finishers: 

• Balanced Blade, the basic AOE attack that everyone gets to start with, does AOE damage around the player and then gives back some sword resources if any targets were impaired (a debuff that happens less frequently because it also blocks actions by the victim)
• Five Petal Lotus, a mid-range ability does the same damage, but can center the attack anywhere the target happens to be, rather than just on the player
• Clearing the Path (CTS), a few steps further down the tree, still does the same damage but also always counts as an armor-penetrating hit against targets that are afflicted with damage over time

CTS is more powerful in that you can combine it with one set of abilities that make all your enemies afflicted, and then use your passive skill slots to load up on benefits that trigger when you penetrate armor.  All the secondary effects do a lot for your survivability, and even some additional damage.  All of this is incidental to doing the same damage as your base entry level skill.

No Respecs - good or bad?
One other point that seems to annoy some players is the lack of a respec option.  There is no limit on how many ability points you can get (well, until you run out of abilities to buy), and there is no increase in the amount of exp required to get ability points.  (The high end abilities do cost more ability points, but higher difficulty content awards more exp.)  As a result, the claim is that there is no need to refund spent points, because you will always have that the abilities you unlocked available as future options (including passive abilities, some of which are beneficial even if you do not use the weapon you got them from). 

I was a player who would completely switch soul builds in Rift every few levels just to see what I could do with more soul points.  As such, this system does not bother me much - I'm more than halfway through unlocking all the basic "inner wheel" abilities for all of the weapons (even the ones I'm not using often), changing out my weapons as I go (I've stuck to blade and experimented with pistols, fist, blood, and now rifles).  Because of the relatively flat power curve, I don't think I'm suffering too badly from this - someone who power-burned straight to an optimal cookie cutter build may be objectively more powerful, and I do occasionally hit a wall (usually prompting a build swap) but in general I'm not having problems.

That said, I can also see how someone who picked a single pairing early and did not spend any points outside those two choices could end up frustrated at mid levels with no way to jump ship on a build that is no longer cutting it.  If you just straight up swap into two weapons you have never used before, you'd in principle have to go all the way back to newbie land to start repeating content - though it's probably faster to take a step down in difficulty and bank up enough points using your existing gear to get started with your new combo.  Then again, if you really dislike your current build that could get frustrating, especially if you are similarly disappointed with your second attempt.

Overall, I don't think it's a bad system because it offers an incentive - but not a requirement - to try different things (you can always buy abilities for weapons you never intend to use if you need a specific passive ability).  Increased options are a fun reward that is probably worth the price to me personally... but then I guess I like the system to begin with.  

The Cost of Per-Hero Games

The Marvel Heroes "free to play MMO Action-RPG" is rolling out pre-launch prepurchase offers that include a $200 "Ultimate Pack" for access to all heroes and costumes announced for launch.  Traditional MMO's with a premium package this expensive have typically had to throw in a lifetime subscription. In the case of Marvel, the pack is very clear that it does not get you anything beyond the heroes announced for launch (some of which have since been delayed but will be included in the pack when they are completed).  Instead, they are marketing the $200 as a discounted price - "a $750 value" compared to what it would cost to buy the characters individually.

The sub-$10 character
Looking at Marvel Heroes' cheaper pre-launch packs, individual heroes are bundled with some costumes and exp potions for $20, but my guess is that you will be able to get your characters for less than the psychologically significant $10 price point to encourage impulse purchases post-launch.  There seems to be broad consensus around this type of price point across a variety of other games in a variety of genres.  A few examples:

• Champions in the MOBA League of Legends
• Mechs in the mech-based FPS Mechwarrior Online
• Heroes in the Warhammer Online Spin-off MOBA Wrath of Heroes
• Most monster player classes in LOTRO (free to those who take the optional subscription)
• Premade PVP "legends" characters in DCUO
• The $9 action figures that grant access to DLC characters in the popular Skylanders console game series

We live in an era of consumer objections to cash stores in MMORPG's and DLC's in console games.  In this context, it's remarkable how much customer acceptance there appears to be around business models in which companies sell access to individual pre-made characters for $5-10, even when this bumps the cost for access to the entire character roster into the hundreds of dollars. 

What you get for the money
A big part of the secret may be that you are getting something comparatively tangible for your money.  If you are playing the Marvel MMO then maybe it is worth $10 per head for you to pick up all of the Avengers who appeared in the movie.  Even the cosmetic costumes are potentially meaningful when you look at long-standing characters who have been depicted in dramatically different art styles over the decades.  Like DDO's paid content packs, it feels more rewarding to pay something to get something, compared to the model in various other games that charge players to remove restrictions that are added to make non-subscribers want to pay. 

This particular model isn't broadly transferable to traditional MMO's because our genre has focused more on vertical progression using a single character.  Games like Marvel Heroes that were designed from the ground up to take advantage of non-subscription payment methods also have a big advantage over MMO's that were designed for a subscription, only to be revamped when the market refused to tolerate that model. 

Even so, I find the concept vaguely compelling and perhaps even promising.  Most of the evidence from the last few years calls into question whether the prices the market is willing to pay are sufficient to support the development of the traditional MMO content model.  Meanwhile, here is an alternative in which studios are putting out regular, sustainable updates that customers are actually happy to pay for.  It's certainly not perfect, but it beats going out of business.