Ferrel of Epic Slant and Chris of Game By Night have a new podcast titled MMO Radio. The show differs from their previous efforts with the Multiverse (where they invited me to guest twice) in that they have gone with the increasingly popular shorter format and also include segments on tabletop gaming. The new format appears to be working for them in the form of more frequent updates - in the time it took me to listen to last week's episode and type up this response, they've recorded and released a new one. All of that plugging aside, back to last week's episode.
Describing Business Models By What You Are Paying For
Chris suggests that "Buy to Play" might be more sustainable than "Free to Play", and cites LOTRO as an example. I have far more concerns about the sustainability of "Buy to Play", and I'd hold up LOTRO as the poster child for these concerns. To understand why, we need to take a step back and look at how these models actually work.
If you go back into the old days - EQ1, early WoW, etc - MMO's charged for two things. You would pay one-time fees for access to content (i.e. the game box and expansions) and recurring fees for services used to access that content (i.e. the subscription time, which was mandatory). These core parts of the business actually haven't changed all that much with all the time that has passed and all the new terms and user interfaces that have been added since. What has changed is how the charges for content and service are presented.
In today's non-subscription market, recurring fees for use of the content do not necessarily take the form of a straight up charge for a fixed dollar amount. When your game's cash shop requires the use of consumables to clear death penalties, improve new gear as you obtain it, travel around the world, etc, that is how you are paying for the service. For the question Chris asks about sustainability, the important point is that this is recurring revenue that the developer will continue to receive from you for as long as you pay for the game.
The other extreme in non-subscription games is to sell off your content - and sometimes game features - as one-time unlocks that do not require any ongoing payment as you continue using them. One big advantage to this approach when relaunching an existing game with years of content already created is that there is a lot of stuff already in game for new players - or existing players who are dropping down to non-subscriber status - to buy. This is roughly how I see Turbine's model today - heavily focused on one-time unlocks for content (and sometimes features) with almost nothing in the way of one-time payments for ongoing use of the service.
So which of these two approaches is more sustainable? Whether pay-for-content is sustainable depends heavily on how frequently you are able to produce content. As Ferrel pointed out on the show, DDO's adventure packs are perfect for this approach because Turbine can push them out every other month year-round. If, on the other hand, you are in the business of making large open zones that you can only finish once or twice per year, perhaps the rate of content generation is not the best thing to tie your income to long term. In this case - which is true for most MMO's - the only way for the business to be sustainable is to somehow charge people for continuing to play the game.
Aside: "Pay to Win"
Many players who are or were a raiders in a subscription MMO have a profoundly negative view of the free to play cash shop model, which they widely dub as "Pay to Win". This view makes sense when you look at what it means for them personally.
The subscription fee does not scale with how much you play the game - in fact, sometimes the developer WANTS you to play more so you will stay engaged and stay subscribed - while paying through an item shop means that you are very likely paying in proportion to how much you actually play the game. If you are used to paying the same subscription fee as everyone else and yet having the developer spend disproportionate attention making raid content for your single digit percentile of the population, then yes, in the short term, you'd rather have it the way it was in the old days. Whether this ultimately pushes the entire genre in directions that you do not like is more of a long term problem....
2013 Prediction Update
It's been all of 24 hours since I posted my belated predictions for the year, and there is already breaking news.
- Turbine dis-confirmed one of my LOTRO predictions by announcing the addition of a new region in the upcoming Update 11. I had predicted they would skip this roughly annual tradition in favor of saving more content for the fall expansion.
- Trion announced plans to publish the Eastern sandbox MMO ArcheAge in the West.
A decision like this one either does or does not make sense on its own merits based on whether Trion will make significant profit out of the deal. There are probably also economies of scale in publishing additional titles now that Trion is already publishing two titles and counting (whenever End of Nations re-emerges) - SOE also announced plans to pick up an Asian MMO last year. Overall, it doesn't disprove my theory about Rift going free to play this year, but the studio's backers clearly aren't throwing in the towel on the effort as a whole.
Bhagpuss also questions whether Archeage's release affects my call that we will get most of the way into 2013 without a "major event launch". My gut still says no - the whole point of making a sandbox game is not to try and replicate the mass hype followed by exodus that has plagued the AAA MMO's of recent years. Selling large numbers of boxes is great, but having 75% of your players leave within a few months will kill the community that you need to sustain your sandbox longterm. Time will tell, but I am not expecting this to be an over-hyped event.
Belated Predictions For 2013
Last year's predictions did not go so well. I predicted that it would not be a great year for new subscription MMO's, but I also thought that SWTOR would skate by as a high churn subscription title, and that WoW could not afford to leave Cataclysm sitting on the shelf beyond early summer. Even so, I've found that I have a fair number of predictions either scattered through my blog and other peoples' comment sections, so I figure there's no harm in collecting all of my comic inaccuracy in a single spot.
Anyway, here are my belated predictions - I don't know if this makes my job easier because I have a month of additional information (see first item, below) or harder because there is less time left for the predictions to come true. In any case, if I have predicted bad things for your favorite MMO this year, rest assured that my lack of accuracy well have guaranteed your game's smashing success. :)
Rift Goes Free To Play in 2013
First up, a minor cheat by exploiting information that only became available in late January. Two days ago, I would have said that Executive Producers Scott Hartsman's position against turning the game free to play would be enough to keep it from happening in 2013 - even if Trion's views eventually changed, failing to work ahead on the conversion would keep it from launching this year.
Then came news that Hartsman has departed from Trion Studios. In the last week, we also learned that Trion's MMOFPS Defiance plans to launch with a buy-to-play model featuring a $60 box and no recurring subscriptions. We already knew that the online strategy game End of Nations - assuming it survives being in-sourced into Trion proper - was going to be Free to Play. Going back to last year, Rift already has an in-game store, and then there were the layoffs at Trion and the former End of Nations developers.
Moving this particular game to free-to-play is debatable, but Trion has investors to answer to. As long as things are going really well, Trion has the ammo it needs to justify why they are continuing to buck the overwhelming industry trend. If things have started to go downhill - and the layoffs suggest that they have - then we can expect Rift to lose its subscription in 2013.
LOTRO: Helm's Deep Or Bust
As I've previous written, I think LOTRO is under a lot of pressure to increase revenue THIS year. Turbine's 2008 press release indicated that they have the license through 2014, with options to extend the term out to 2017. We don't know whether the terms of the option years are favorable, and presumably the studio's new owners at Warner Brothers are capable of re-negotiating a reasonable deal if this is worth their time.
That makes 2013 the year in which Turbine has to prove the game's worth. LOTRO will not fold in 2013, but if things go badly it could very well close when the license issue comes due in 2014. To this end, I expect the following:
Asheron's Call 3 Announced
It's possible that Turbine dusted off AC2 just as a lark of a weekend project. Then again, we know that they've been working on a mystery title for a while, and it would make a lot of sense for them to work in their own IP so that they are not at the mercy of some rightsholder.
Blizzard Updates
This is a Blizzcon year, which means we will probably get some announcements in addition to the oft-delayed Starcraft II expansion. My guesses:
I'm not going to belabor my analysis from last week - this studio was on shaky footing before TSW disappointed, and I'm not convinced that layoffs alone can balance the books, especially if they hurt the ability to deliver future updates. I'm not sure what EA does on a day to day basis as the publisher for TSW - if they own the servers, billing system, etc, that would be a major impediment to any attempt to sell the title off.
New Subscription MMO's
If an MMO studio asked me for advice, I'd say that attempting to launch a new MMO with a box price and a monthly fee is really poorly advised. However, I don't think the industry is quite ready to let this approach die just yet. Looking at two major upcoming releases that have yet to announce business models:
After proudly proclaiming 2012 the year of the Kickstarter-funded game - and cheerfully pocketing 5% of the proceeds with no obligation to help ensure that backers get what was promised - Kickstarter is due for a reckoning. At least one video game product that received $1 million in backing will go bankrupt before delivering the promised game in 2013.
Kickstarter will make some token changes in response to the backlash, but will remain constrained by their business model - they make money when projects are successfully funded, not when they force creators to post information that dissuades people from backing risky and/or poorly thought out efforts. Expect some minimal token effort before returning to business as usual, but the incident will cost the site some of its hip status within the blogosphere.
No big winner, but perhaps balance?
Overall, I don't see a single MMO emerging as the big winner in 2013, the way that Guild Wars 2 arguably won the half of 2012 after its release. When you look at Syp's list of new MMO's to watch in 2013, half either aren't traditional MMO's or else are unlikely to release in 2013. As a result, we're likely to get at least 8-9 months into 2013 without a major event launch with the traditional cycle of hype - and all too often disappointment. (We could go the entire year if I'm wrong and Elder Scrolls slips into 2014.) Even the slate of major expansions is going to be relatively quiet since many of the big players released something in late 2012.
This is a real opportunity for MMO's that are currently sitting in the middle of the pack. Players will still wander from game to game, and now is the time where an existing product, with most of the rough edges from launch already smoothed out, can potentially make a big impression. Even if all of the things I've suggested come to pass, 2013 could be a good year on the balance if we come out the other side with a solid pool of games that are quietly getting the job done.
Anyway, here are my belated predictions - I don't know if this makes my job easier because I have a month of additional information (see first item, below) or harder because there is less time left for the predictions to come true. In any case, if I have predicted bad things for your favorite MMO this year, rest assured that my lack of accuracy well have guaranteed your game's smashing success. :)
Rift Goes Free To Play in 2013
First up, a minor cheat by exploiting information that only became available in late January. Two days ago, I would have said that Executive Producers Scott Hartsman's position against turning the game free to play would be enough to keep it from happening in 2013 - even if Trion's views eventually changed, failing to work ahead on the conversion would keep it from launching this year.
Then came news that Hartsman has departed from Trion Studios. In the last week, we also learned that Trion's MMOFPS Defiance plans to launch with a buy-to-play model featuring a $60 box and no recurring subscriptions. We already knew that the online strategy game End of Nations - assuming it survives being in-sourced into Trion proper - was going to be Free to Play. Going back to last year, Rift already has an in-game store, and then there were the layoffs at Trion and the former End of Nations developers.
Moving this particular game to free-to-play is debatable, but Trion has investors to answer to. As long as things are going really well, Trion has the ammo it needs to justify why they are continuing to buck the overwhelming industry trend. If things have started to go downhill - and the layoffs suggest that they have - then we can expect Rift to lose its subscription in 2013.
LOTRO: Helm's Deep Or Bust
As I've previous written, I think LOTRO is under a lot of pressure to increase revenue THIS year. Turbine's 2008 press release indicated that they have the license through 2014, with options to extend the term out to 2017. We don't know whether the terms of the option years are favorable, and presumably the studio's new owners at Warner Brothers are capable of re-negotiating a reasonable deal if this is worth their time.
That makes 2013 the year in which Turbine has to prove the game's worth. LOTRO will not fold in 2013, but if things go badly it could very well close when the license issue comes due in 2014. To this end, I expect the following:
- Unlike last year's Great River update or the F2P relaunch's Enedwaith region, we will NOT see a new region added at the current level cap. The price point on these new optional areas has generally been low, and that makes it a questionable investment that would be better saved for the next expansion.
- Speaking of which, I expect the new expansion to require a minimum purchase of $50, up from $40 last year and $30 the year before. As with last year, Turbine will offer plenty of opportunity to pay full price early and then discount the thing by 50% for an end-of-year sale once the early adopters have paid up.
- The expansion will bump the level cap to 95. LOTRO has lots of level-scaling content in past expansions that could be used to level to the new cap and skip buying the new content. Making the cap higher makes that option less desirable because you would have more levels to grind out.
- The actual battle of Helm's Deep - which, as in recent years, may get delayed to a patch after the expansion launch - will be presented from multiple different perspectives so that solo, group, raid, and monster players can all participate in this iconic bit of the lore.
Asheron's Call 3 Announced
It's possible that Turbine dusted off AC2 just as a lark of a weekend project. Then again, we know that they've been working on a mystery title for a while, and it would make a lot of sense for them to work in their own IP so that they are not at the mercy of some rightsholder.
Blizzard Updates
This is a Blizzcon year, which means we will probably get some announcements in addition to the oft-delayed Starcraft II expansion. My guesses:
- WoW's next expansion announced, but will not be ready for beta in 2013. After years of promising to try and get expansions out in a more timely fashion, Blizzard finally concedes that it's going to be 20+ months like the previous attempts.
- Blizzard announces a console based non-subscription spinoff of one of its existing IP's. A recent rumor suggested that this was the real nature of Titan, the long rumored online followup to WoW, but that was supposed to be an original IP. We know they've been flirting with consoles for years now, and I'm guessing that this is a separate effort. It will be interesting to see whether it runs on current generation console hardware, as Blizzard's development cycle is so long that next generation consoles will probably arrive before this game does.
- Titan will finally be announced, but will not be playable or in any way suggesting it will debut in 2014. Blizzard has had time to ponder how DIII went for them and see the way the wind is blowing, so this game will NOT have a subscription. It will instead be designed from the ground up with something - content, characters, etc - that people can purchase to keep the revenue flowing.
I'm not going to belabor my analysis from last week - this studio was on shaky footing before TSW disappointed, and I'm not convinced that layoffs alone can balance the books, especially if they hurt the ability to deliver future updates. I'm not sure what EA does on a day to day basis as the publisher for TSW - if they own the servers, billing system, etc, that would be a major impediment to any attempt to sell the title off.
New Subscription MMO's
If an MMO studio asked me for advice, I'd say that attempting to launch a new MMO with a box price and a monthly fee is really poorly advised. However, I don't think the industry is quite ready to let this approach die just yet. Looking at two major upcoming releases that have yet to announce business models:
- Wildstar: Will definitely have a box price at launch. I predict it will not charge a subscription by the end of 2013 - either they'll be smart and not try or they'll be forced to reconsider between launch and the end of the year.
- Elder Scrolls Online: With all the hype they're already firing up for this game's beta, this game shows all the signs of having a large budget, and they are declining to state their planned business model. It's possible that they are going to go buy-to-play with frequent paid DLC and are saving this piece of news to build anticipation for the inevitable pre-purchase campaign. Still, GW2 aside, I will believe that a big budget MMO like this one is willing to voluntarily surrender the monthly fee when I see it.
So I predict Elder Scrolls WILL launch with a monthly fee. They will probably still have it through at least the end of 2013, but that may have more to do with launching late in the year than with the game's success. (I do predict they will launch this year - even Blizzard doesn't start its beta process an entire year in advance of release.)
After proudly proclaiming 2012 the year of the Kickstarter-funded game - and cheerfully pocketing 5% of the proceeds with no obligation to help ensure that backers get what was promised - Kickstarter is due for a reckoning. At least one video game product that received $1 million in backing will go bankrupt before delivering the promised game in 2013.
Kickstarter will make some token changes in response to the backlash, but will remain constrained by their business model - they make money when projects are successfully funded, not when they force creators to post information that dissuades people from backing risky and/or poorly thought out efforts. Expect some minimal token effort before returning to business as usual, but the incident will cost the site some of its hip status within the blogosphere.
No big winner, but perhaps balance?
Overall, I don't see a single MMO emerging as the big winner in 2013, the way that Guild Wars 2 arguably won the half of 2012 after its release. When you look at Syp's list of new MMO's to watch in 2013, half either aren't traditional MMO's or else are unlikely to release in 2013. As a result, we're likely to get at least 8-9 months into 2013 without a major event launch with the traditional cycle of hype - and all too often disappointment. (We could go the entire year if I'm wrong and Elder Scrolls slips into 2014.) Even the slate of major expansions is going to be relatively quiet since many of the big players released something in late 2012.
This is a real opportunity for MMO's that are currently sitting in the middle of the pack. Players will still wander from game to game, and now is the time where an existing product, with most of the rough edges from launch already smoothed out, can potentially make a big impression. Even if all of the things I've suggested come to pass, 2013 could be a good year on the balance if we come out the other side with a solid pool of games that are quietly getting the job done.
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.
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.
 |
| 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) |
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.
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