First off, you cannot discount how the DDO resurgence went. DDO was a dying game, and looks to have been revitalized by it's move to F2P. I's debatable how much of the revitalization was due to F2P, and how much was due to the fact that Turbine spent a fair amount of effort improving the game, and that the massive publicity of going F2P got enough people to take a second (or first look at it). But regardless, if a suit sees that income increased by 500% (increasing small numbers always looks impressive) after going F2P, then of course she's going to assume that going F2P will have a beneficial effect on the other games.
However, I think the more compelling economic reason for LotRO to go F2P is their Lifetime Subscription program. By all accounts, it's been reasonably popular. But Lifetime Subscriptions aren't always profitable, even after accounting for the time-value of money. If we assume a 10% annual rate of return, a $300 Lifetime Subscription is worth roughly 22 months, or slightly over 3 years, of a $15 subscription. After that, the company is essentially getting no money from those subscribers. And Lord of the Rings Online was launched just over 3 years ago.
Furthermore, who are the people most likely to buy Lifetime Subscriptions? The people who buy Lifetime subscriptions are the people who are more inclined to spend lots of money on their hobby. Section B in the graph.
So I think that LotRO's income chart now looks more like this:
The higher the inclination to spend money, the more likely the customer is to have purchased a Lifetime Subscription, which has now run its course. So Turbine is actually getting the least money from the people that should be giving it the most money!
And because Lifetime Subscriptions are implicitly pitched as "You never have to pay again!", it's much harder politically to introduce things like Star Ponies. The Lifetime Subscribers have a reasonable expectation that they don't have to pay for anything, and the optics of the situation just look bad. But in a wholesale revamp of the payment model, such problems are greatly diminished.
So the real advantage of LotRO going F2P is that the Lifetime Subscription gets converted into a monthly subsidy of Turbine Points. This frees up all those people in Section B to to follow their natural inclination and spend more money on the game. They don't have to spend more, but they can, and because they are inclined to, they probably will. They may spend a little less because of the subsidy, but it's much better than getting nothing from them as Turbine would otherwise.
I think the real lesson to draw from this situation is that Lifetime Subscriptions aren't really a good idea for MMOs. If the game is good, you can count on people playing for a fairly long time. Lifetime Subscriptions only make sense if you think that people will stop subscribing before the break point. I'm not sure that is a good assumption for anyone with a decent MMO to make.
I appreciate what you're trying to convey, but a couple of points:
ReplyDelete1) A graph without labelled axes is worth less than:
2) Completely arbitrary ratios defined by your own personal point of view with no evidence or data.
On the whole, I think that your discussion has merit, but without facts to back it up, you're just begging the question.
And seriously, put axes labels on your graph. I have no idea what the X and Y are.
The graph is money paid by an individual in a unit of time against the potential audience. The X axis represents increased willingness to pay.
ReplyDeleteThus the area under the curve is the total (gross) income for the game per unit time.
The entire point of the graph is to compare the shapes, rather than being numerically accurate. Which I cannot be, since I don't have access to real data.
My main points are:
1. A F2P game is likely to show a curve with some people paying little and some people playing lots.
2. A subscription game is a step function with part of the audience not paying and the other part paying the same amount.
3. Some people will "move up" to the subscription level from the F2P level, because that is what is necessary to play.
The graph is merely a visual representation of those three points. I chose to use it because it seemed easier to grasp the implications right away.
Specifically that the relative sizes of the areas under the graph in the non-overlapping sections are what matter when discussing F2P versus Subscription income. As I wrote in the last post, is A + B > C?
If it helps, imagine you can move the lines around, without altering the basic shapes (unless you have reason to, like I did with Lifetime Subscriptions). What situations are better for which style of payment? What situations are more probable?
ReplyDeleteIt's just a model to play with, and not something carved in stone.
So, for the sake of argument:
ReplyDeleteX-axis is how much an individual will pay per month.
Y axis is the potential audience.
So you're saying that, for group C, there is a linear decrease in willingness to pay beyond their subscription fee, while F2P games have an exponential growth curve from zero.
If so, I completely disagree with your assertion. If anything, C is just a line, starting at some point on the X-axis and trending identically to the curve (imo).
Sparkle Pony + Minipets + Blizzcon + WoW Magazine proves this... at least as convincingly as your conjecture :)
"If we assume a 10% annual rate of return, a $300 Lifetime Subscription is worth roughly 22 months, or slightly over 3 years, of a $15 subscription. After that, the company is essentially getting no money from those subscribers. And Lord of the Rings Online was launched just over 3 years ago."
ReplyDeleteYour math is just a tiny bit fuzzy there. At $15 a month, they have paid for 20 months, not 22. So technically, they would have started losing their money over a year ago as their anniversary is in April.
The people who pay a lifetime subscription basically pay for 30 months. So if you look at this, then yes, your analogy may fit as they would have started losing money about 9 months ago.
Why do I say they are paying for 30 months? Because those of us who buy our subscriptions in packets of 3 months or more only pay $10 a month.
The only flaw in your thought is that by assuming that Turbine is doing this to makeup for money lost from lifetimers you are assuming they believe the following:
1. That few if any lifetime subscriptions were sold after the initial release of the game.
2. That current subscribers will start putting money back into the system by buying points.
I don't think you should assume either of these. My husband bought a lifetime subscription and I'm seriously thinking of going out and getting mine today (I believe this is the last day to do so).
As for #2, I won't need to buy points as far as I can tell and neither will lifetime subscribers. As subscribers we are going to be given 500 pts each acct, plus an extra 100 for keeping our subscriptions current, plus points between the announcement and the time that F2P goes live. What will current subscribers buy with these points? It would have to be small buffs likely as I don't need to buy quest packs and neither will lifetimers.
Your assessment on people buy lifetime memberships because they pay a lot for hobbies? No, we did the math. It was pretty simple to see which was cheaper in the long run. We played WoW on average of 2 years and figured that we would actually be saving money by paying up front. It made good economic sense. It also protected us in case subscription rates increased.
This comparison is the same as saying people who shop at Sams or Costco are doing so because they are more inclined to spend money, when in fact, they are trying to save money by buying in bulk.
So, what you are saying is you think blizzard NEEDS to sell sparkly ponys and pets to stay afloat? That if they didn't they would have the same issues Turbine is having? I still play WoW and I didn't buy a sparkly pony and my hubby (the lifetimer) wouldn't have either, but according to your idea we are the people that should have? The people that bought sparkly ponys are people who have few if any hobbys outside of the game, if you want to get right down to it. So they want everything in their main hobby that they can get. People who have quite a few hobbies don't want to spend a lot of money on all of them, but want to spread it out in an intelligent way.
In any case, I am not sure why it matters so much to the WoW community. They are going free to play regardless any of our hypotheses of why.
Though LOTRO does not have a Sparkle Pony, they did have a $20 add-on called an "Adventurer's Pack" that came with a shared bank feature that was very obviously cut out of the Mirkwood miniexpansion, two additional character slots, and a pre-order bonus mount that I suppose we might call a "Greed Goat" in the name of alliteration (fast speed and usable in Moria, which ordinarily requires a rep grind, but has lower HP and therefore players are likely to be dismounted by mobs). In hindsight, this tested the waters for the free-to-play shift. There was much outrage, but, as with other games that have added greed steeds, very little lost income for Turbine (lifetimers can't unsubscribe).
ReplyDeleteMy guess is that the discounted subscriptions are a much larger problem for Turbine than the lifetimers. They have offered $30/3 months so often that it might as well be the default price.
@Josh, A, B, C are *areas*. They're simply the three areas under the graph that do not overlap.
ReplyDeleteThe lines are the amount that is paid to the game.
Star Pony, etc. are being purchased by the people in Group B, on the right side of the graph. That potential revenue is being left on the table by subscription games, and Star Pony represents an attempt to get some of it.
The other interpretation is that going F2P is a creative way to SCREW the lifetime subs, who thought they would get the full game, forever. There's a halfway decent lawsuit in there but not profit in it for a lawyer to pursue. Those lifetime subs had the rug pulled out from under them, frankly.
ReplyDelete@Barrista, there is a concept of time-value of money. $100 today is worth more than $100 a year from now. That's because if you got the money today you can invest that $100, and in one year, you would have $100 plus some interest. That's why the Lifetime Subscription is worth 22 months, not 20 months.
ReplyDeleteAs for the assumptions, I don't agree with your Assumption 1. It's just that after 3 years, people start going free, and that process is happening now. Each month that passes, more and more Lifetime Subscribers effectively stop paying for the game. Depending on how they did the accounting for Lifetime Subscriptions, it might have started showing up in their accounting books.
As for assumption 2, I'm not saying that the only people who bought subscriptions are section B people, only that they are more likely to be Section B, because Section B is less likely to blink at spending large amounts on their hobby.
It is an assumption, you are right, but I believe it is a correct one.
Second, Blizzard doesn't "need" to sell Star Ponies. They get their $15 from the people who buy Star Ponies and the people who don't. My point is that there is a segment of the LotRO audience that is not paying Turbine $15/month anymore, and yet would expect something like a Star Pony to be given to them because they've already paid for it.
I know you think your assumptions are correct, but that's the problem with assumptions, until proven correct they are only a hypothesis.
ReplyDeleteAnd once again, if it is their ONLY hobby that requires money, then yes.
And I know Blizzard doesn't have to sell sparkly ponys... that was kind of my point. Also, most subscribers don't pay Turbine $15 a month. That's the month to month rate, not the packet subscription rate and always has been.
What I really wonder about posts like this is honestly why do people care? And why do you need to feel so "right"? This use to be a really good Paladin blog.
I write posts about this kind of stuff because I am interested in this kind of stuff.
ReplyDeleteIf you are not interested, you can always chose not to read my blog.
(Also Blizzard has released very little new paladin information, so there's not much to talk about there.)
They can't create another section C game AND sustain WoW at the same time. One would cannibalize the other. I think Blizzard will only have one section C game at any time.
ReplyDeleteIf their next MMO will be a subscription based MMO, then WoW will become FTP. But most likely the new MMO will be FTP. Which would still allow them to charge a monthly fee for some services.
- WoW - FTP
- Access to the remote AH functionality $2.00 / month
- Additional character slot $2.00 / month
- GM service $5.00 / month
- skip the login queue $4.00 / month
- premium dungeon servers (lag free) $8.00 / month (I would buy that)
- access to in game chat through iPhone $2.00 / month
- Instant ingame teleportation service payed per use or subscription based. (Scroll of Teleport: Stormwind, 10 charges, $5.00)
- The ability to play on every server you like $8.00 / month (e.g.: Coriel-Lethon plays on Mal'Ganis for the duration of a raid)
I think their next game will be FTP because they leave all the FarmVille cash on the table. Something like the remote AH is Blizzards playground to test the water in that area. Their next game can be played completely through Facebook for the "play during work hours Facebook crowd" or it can be played through a heavy weight game client for the "surf forum during work hours crowd". Could be really interesting.