MMORPG Subscription Economics Discussed

Thanks to GamePro for their article discussing why MMORPGs charge a monthly subscription fee, discussing the "extra developer attention and player community" a monthly payment allegedly brings. It quotes a Blizzard spokesman as saying "running a massively multiplayer game like Blizzard's upcoming World of WarCraft costs about three times as much as running an online server like Battle.net, because MMO games require constant maintenance, 24/7 customer support, and an ongoing dedicated development team", and NCSoft's Robert Garriott, brother of Richard, says: "Think of it as running a small city. Many of these games have hundreds of thousands of 'citizens.' NCsoft operates the 'government' that builds new roads, puts criminals in jail, and digs new caverns for citizens to explore and enjoy. All of that costs real money."

Comments

Re:There is ONE problem with the MMORPG model

[Allen Varney]

It's sad that most MMORPG developers seem to be bent on profit and refuse to let go of this obsolete payment model. Either go for monthly supscriptions or go for a one time fee. NOT both.

At the Austin Game Conference last weekend, John Taylor of Electronic Arts and (previously) Kesmai, among many others, explained that almost the entire profit of the boxed game goes to the publisher, which is often a different entity entirely from the company that runs the actual online service. The profit on the retail box is an incentive for the publisher to distribute the game widely, a necessity for the online service to build its audience.

Yes, the MMORPG developers are bent on profit -- being, you know, businesses -- but they're not holding onto an "obsolete payment model" out of greed for the box profits. The boxes are only the means to an end.

We do it for free, but...

[Doctor Cat]

Our game Furcadia has been running for almost seven years now, and currently supports a community of around 40,000 players. We don't charge any fee to play the game, and I'm proud of what we've accomplished. We do have some optional addons players can get, but most of our players never buy anything. So we have a LOT less than the $120+ per player per year that the big online games have to work with, and our first three years we didn't charge for anything at all.

Our bandwidth was provided free at first, by Mplayer and then by Playnet. (Thanks, guys!) Now we pay something like $650 a month for a game server, mail server, and web server plus enough bandwidth to service all our current players, with really good private peering to keep netlag minimal. It's great how much bandwidth prices have come down since we started in 1996! If we had to, we could take day jobs again as we did our first few years, just pay that monthly hosting bill, and keep the game open. And the game's been a lot of fun for a lot of people, led to marriages, all the usual things online games have (and a few unusual things, since we let players upload their own art, maps, code their own scripts to make quests, games, etc.)

But... While you might think someone with a background like that would be on the "they charge too much, burn the witches!" side of the debate... I've worked in the game industry since 1982, and I know a lot of the people that work on the big expensive hit MMORPGs. And those costs aren't made up. Yes, my partners and I, and the game we made, serve as living proof that you can do SOMETHING on a pretty fair sized scale for almost no money. But you do get a lot of things on a game that charges $10-$13 or more a month. Millions of dollars worth of professional quality art and animation, for one thing. And paid customer service and tech support staff, something we mostly use unpaid volunteers for.

Ultimately, the biggest operational cost on most of the commercial online games today is customer service, eclipsing even the number two cost, bandwidth. And I think most people would agree that the average level of customer service quality today is not satisfactory to players, and would not be considered acceptable in most other industries that maintain customer service phonelines and such. (Which is almost all of them). Rather than argue that they exaggerate their costs, one COULD make an argument that they need to be spending even more, until they are providing satisfactory service!

Current games spend half or more of their revenues on customer service staff and bandwidth (and a few other operational expenses). Whether they'll eat into the profits more, raise prices, get consumers used to the idea of never expecting higher quality support, or keep outsourcing more and more of the support work to India, that remains to be seen.

I kind of like our all-volunteer model for the enthusiasm it brings, but the big companies would never take a legal risk like that, after seeing the lawsuits against AOL and Ultima Online. A lawsuit like that could crush a company as small as ours just from the legal fees, even if we won - but it's in the nature of tiny companies to take the big risks, right?

Re:There is ONE problem with the MMORPG model

[DarkZero]

At the Austin Game Conference [gameconference.com] last weekend, John Taylor of Electronic Arts and (previously) Kesmai, among many others, explained that almost the entire profit of the boxed game goes to the publisher, which is often a different entity entirely from the company that runs the actual online service. The profit on the retail box is an incentive for the publisher to distribute the game widely, a necessity for the online service to build its audience./i.

This does not, however, explain why the expansions cost $50 instead of being a part of the subscription model that's downloadable from inside the game. It's not as if Everquest is going to disappear off the shelf without expansions, because Half-Life and StarCraft still haven't and they don't have more than one retail expansion each.

I can understand the need to get the game onto shelves to build an audience and prove that the game isn't some sort of fraud, especially for brand new companies, but that doesn't excuse the use of retail expansions to screw another $50 payment or two out of people that are already paying the $50 retail price plus $120-$180 per year for their subscription.