Massive Business Model Wars

Next Generation has an article up discussing the throwing down of the gauntlet that Guild Wars' business model represents. There is, indeed, more than just a monthly fee. From the article: "We're not the only ones in the industry looking at business models...If our competitors did this, would we be cheesed off? The answer is yes. We would view this model as one that might be used against us. So we wanted to be there before our competitors."

Comments

Does it matter though?

[CloudsSpaz]

I think the Guild Wars model is fantastic personally (although I think it has to be recognized that it's not being applied to a standard MMOG- Guild Wars is much more like Diablo II/PSO when it comes to the actual formating/instancing of the gameplay), but I'm not sure it'll really be used all that much. I mean, when you look at a game like WoW (one of the highest-price-per-month games out there, and of course, one of the most successful), where Blizzard literally has players distribute game patches themselves, regardless of the monthly fee compenstation, I just don't see any big MMO developers jumping ship anytime soon.

Re:Does it matter though?

[superpulpsicle]

The Guild War model would be a success giving the fact that they plan on releasing Addons after Addons after Addons. I have no problem buying massive $20 Addons versus $15 monthly fee.

Revenue variability

[Bazuul]

One of the key business challenges Next Generation faces is revenue variability. While box sales of Guild Wars have been phenomenal, it is basically a point sale with unlimited support costs flowing behind it. Next Generation plans on making money to cover the support costs by continuously releasing expansion packs and/or new games.

One challenge with this model is that the company will have consistently growing support costs while revenue will be generated in large spikes. It is very difficult to gauge how much revenue a new game will generate, and without an accurate forecast the problems of scaling backend support grow proportionately. But the real danger lies in that in only takes one poor-selling game to threaten the company's future.

If Guild Wars has 20 million players, and Next Generation is eating all those support costs without a monthly revenue stream supporting it, what happens if the next expansion pack flops? Suddenly you have another 9-12months of support costs ahead of you with no real revenue to feed it.

The whole thing reminds me of the pager companies in the 90s that offered lifetime pager service for an initial flat fee. They enjoyed explosive growth, but as soon as the market saturated, it only took one month for their support costs (satellite bandwidth in this case) to sink them. The owners of the company pocket millions and the subscribers were left out to dry. I can very easily see the same thing happening to the Guild Wars installed base.

Um, RTFA?

[mbourgon]

Let's see....
Guild Wars offers an online gaming universe for the price of the box; and that's it. No monthly subscriptions.
and
NCSoft hopes to create a large enough fan base to guarantee sales of sequels and add-ons.

I don't see how no monthly fee equals "more than just a monthly fee". They've already said that you can play forever. If you want to buy the expansion, then you get the advantages of it, but if not, keep playing the game you bought. And this summer, they're putting out a mini expansion - Sorrow's Furnace. For free. Not to mention the weekly patches, fixes, new quests and the like.

I'm not an MMO guy. Far from it. I bought this because I wanted something like Neverwinter Nights, and I haven't been disappointed. Everything but the "cities" (which are basically chat channels and places to form a group) are personalized for you and your group. The only PCs you'll see outside a city are in your group of 4/6/8 people. It's damn cool. Might be enough to make me drop my sig.