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Subscriptions Are Dead; Long Live Subscriptions

Tobold has a post up talking about the fate of the subscription model. Namely, that while TESO and Wildstar devs are heroically trying to swim against the F2P current, the hard numbers and future MMO releases paint a different, more bleak picture. As somewhat hilariously pointed out by commenter Mike Andrade in that post, this sort of subscription analysis appears to be a Tobold yearly August tradition, but nevermind.

Both Gevlon in the comments and SynCaine in a post come out of the gate with a rather blistering one-two retort: 1) maybe recent sub games are floundering because the games themselves are bad, and 2) where are all the F2P successes then?

Granted, SynCaine moved the goal-posts a bit by specifying “day-1 F2P,” when the facts of the matter are (likely) that subscription games that have made the F2P transition are only still online because of said transition. In other words, SWTOR and LOTRO and Aion and DDO and STO and TSW (etc) are perfectly valid examples of F2P success stories by virtue of those games still being online and profitable. That all of them would prefer the giant piles of initial subscriber cash isn’t really saying anything about the long-term sustainability of the model itself. Why would any of them start off F2P if it’s possible to not leave that money on the table?

But if we’re looking ahead, I suppose ArchAge and SOE’s flagship EverQuest Next being F2P might be potential candidates day-1 F2P success (however that ends up being defined).

The subscription counter-example a lot of people have been using is FF14, which frankly shocked me in terms of subscriber numbers. Apparently there are 2 million of them? If legitimate, that would rocket it past all non-WoW MMOs to be one of the most successful subscription games of all time. Of course, it sells for $15 on Steam every three weeks, there’s a sizable console market for the game (something not many MMOs can achieve), and it technically got a do-over that allowed it to “launch” with years of content instead of the normal zero. But still! That’s impressive.

Okay, actually FF14 has two million “registered accounts,” which is sort of like subscribers in the same way F2P games are “free to play.” Still, subscriptions! 500,000 people log on at least once per day! For now, anyway.

Ultimately, I think a lot of the subscription game musing is sort of missing the point. While there are subtle pressures involved when you look at a subscription game – worrying about getting your money’s worth even if $15/month is pocket change normally – I agree with people like SynCaine that say if a game is worth it, you’ll pay the money… to a point. Because when you are talking about MMOs, the quality of the content itself is almost a tertiary concern to retention. Don’t believe me? Then tell me how a game like WoW can get away with having zero new content from September 2013 to today and “only” lose around ~10.5% of its population. It’s the people, stupid. Yeah, there’s an underlying game space that needs to be entertaining enough to collect everyone in one spot and having fun during downtime, but how long is anyone really subscribing to a single-player game? You can have the most entertaining base game in the world, but if nobody is making those sticky social connections – perhaps because they already have social networks elsewhere – then they are just going to leave in three months anyway.

Frankly, the biggest issue with subscriptions are companies whom vastly overestimate their own popularity, and otherwise set themselves up for failure. If you budget your MMO such that you need 500,000 people paying $15/month just to survive, you’re going to have a bad time. The lower that floor is, the more space you will have to grow the audience later. Or, hell, just maintain the people you have currently.

So while I do not believe the subscription model itself is going anywhere, I do think that it’s only going to be particularly sustainable to those games which have tightly-wounded social pockets. Creating said pockets out of thin air is incredibly tough, but that’s not going to stop games like TESO and Wildstar from at least capitalizing on 6-12 months of bonus revenue they would not have otherwise had if they went with B2P and/or F2P.

Where Are All the Bodies?, pt 2

Almost exactly two years ago, I asked “Where are all the bodies?” in terms of a trend of flight from MMOs. Last week, Wilhelm presented the SuperData Research group’s June report. The two slides of note are below:

Hmm.

Hmm.

Research2

HMM.

As pointed out in the comments over on TAGN, the accuracy of numbers and legitimacy of the research company itself might be in question. For one thing, neither FFXI nor FFXIV are even on that list. The absence of Guild Wars 2 makes a little sense given the criteria for inclusion (subscription option), but the others? I dunno. Perhaps they are being implied in the missing 26% of market share. Which, incidentally, covers $756 million of the total revenue on the chart.

In an attempt to compare the subscription revenue graph to the last update from MMOData.net, I got the following result:

Extremely scientific, I assure you.

Extremely scientific, I assure you.

My methodology was to squish the one graph until the years lined up. Regardless, I have a hard time imagining the precipitous drop in subscription revenue on their chart is correlated in reality. There is a very real decline in overall MMO population – we have reached the same population levels from mid-2008 at this point – but revenue can’t be that bad. Can it?

What is sorta interesting though is in the small text below the graph, which states the data was pulled from “36.9 million digital gamers.” If you take that figure and multiply it by the market share, you get 13,284,000 as the WoW population. Of course, WoW did not have 13+ million subscribers in 2013. Discrepancy! Or is it? If you assume a 5% churn rate each month, at the end of the year you are left with 7,178,143. That is somewhat close to the estimated 7.6 million from this year. In other words, it’s entirely possible that 13+ million players played WoW at some point during the year and 6 million of them cycled out.

On the other hand, when you plug EVE into that same equation, you get 1,107,000 players throughout 2013. So… maybe it’s all bullshit.

Accuracy aside, I think the takeaway from all this is twofold. First, the MMO market has clearly peaked and we are transitioning into a much lower (presumed) equilibrium. Second, it’s still surprising how money there is in the genre. I mean, look at SWTOR there. $165 million in revenue last year? It actually took this Forbes article to kind of shock me into the realization (emphasis added):

And what may be a surprise to many is that Star Wars: The Old Republic is actually #4 on the list, bringing in $165M in revenue last year. While much of the game went free-to-play after a disappointing debut, there’s still a subscription model that has made the MMO profitable for EA. Often SWTOR is regarded as a cautionary tale in the industry in terms of bloated budgets, over-ambition and emulating competitors, but looking at the numbers, the game has evolved into a profitable enterprise for EA, and has made even its massive budget back at this point.

I don’t even know if that is true for sure, but remember, SWTOR budget was somewhere in the neighborhood of $200 million. So… are we still allowed to call the game a “failure?” The criteria gets a little goofy when you are making ~44% more than the paragon of subscription growth¹, EVE. We can maybe say that it could/should have earned more, but (presumably) profitable businesses really speak for themselves.

As always, I believe key to success is keeping realistic expectations and budgeting around that. If you need 500,000 or 1 million subscriptions to stay afloat, maybe you should calm your shit, Icarus. The entire market is like 18 million subs, and more than a third of those are locked down in Blizzard HQ. If you can get by with 50k or 100k, you should have no problems capturing a least a portion of the 500k+ people that seem to appear on MMO release days and leave a month later. Now more than any other time, you need to start small and work your way up.

¹ Which is more historical fact than current event. As far as I’m aware, EVE has lost subs at this point like all mortal MMO endeavors.

Player Churn

It’s been about two weeks since this Gamasutra interview with Jeremy Gaffney, but I think it’s still worth a read. Or just have your mind blown with this thought experiment:

“Even a good game churns 5 percent of its users out every month,” says Gaffney. “That means every 20 months you’ve churned out your whole user base.” If you have one friend who still plays an MMO, that means you might have 10 friends who used to play that MMO.

That 5% monthly figure has been pretty consistent over the years, as WoW had an apparent 4-5% churn rate even during the heights of vanilla/TBC. That means each expansion could basically have an entirely new playerbase. Obviously, some stick around for the long-haul, so there’s some continuity.

Nevertheless, I feel like this more succinctly highlights the design pressures on MMO developers. Does an MMO ever get more hardcore over time? It’s hard to see how it could, given how one needs to entertain an entirely new audience every (at best!) two years.

Dust, Draenor, Destiny

The one bit of news out of CCP’s Fanfest 2014 that peaked my interest was Project Legion. Which is, for all intents and purposes, a rebooting of Dust 514 on the platform it should have been released on in the first place: the PC. I’m not actually sure a sandbox PvP/PvE hybrid shooter MMO is what I’m looking for anymore, but given I have continued to grudgingly slink back to PlanetSide 2 for my FPS urges, let’s just say that I’m not exactly opposed to new experiences. It should be noted that in that article, CCP basically states that Dust still has 100,000 active daily players, which is around 100k more than it seemed to have any reason to have last time I played.

Incidentally, NoizyGamer believes that this year or the last one might have marked the last year of consecutive EVE subscriber growth. That’s noteworthy specifically because the ~10 consecutive years of growth itself was noteworthy. And rather annoying to argue against with my MMO market saturation theories.

Speaking of bodies, WoW lost another 200k of them since last quarter, bringing the total to a mere 7.6 million. I’m not really sure what to think about this sort of thing anymore; at the moment, I’m leaning towards simple incredulity that there are 7.6 million people paying a subscription to a game that will be going on a full year without any new content. I mean, I too was that guy years ago, but that sort of shit doesn’t fly with me these days.

Speaking of questionable Activision Blizzard moves, the console-only FPS MMO Destiny is reportedly going to cost $500 million:

To put some perspective on this, the money being spent on Destiny is more than twice the amount EA reportedly spent on Star Wars: The Old Republic and a little less than double the $265,000,000 Rockstar paid to get GTA V made. The Reuters article cites analysts saying that Destiny will have to sell 15-16 million copies at $60 to break even. So, the final game has to make a very, very good first impression.

For reference, Borderlands 2 cost ~$35 million and sold 8.5 million copies as of February 2014. It’s worth noting that the first link estimates Destiny at $140 million, so it’s entirely possible that the $500 million is in reference to the entire 10-year franchise run that Activision Blizzard purchased from Bungie rather than the BorderHaloLands game we have on display.

Still… goddamn. This doesn’t even seem like the same ultra-conservative game company of a year ago, who didn’t want to branch out into the mobile space simply because the Top 10 games change every year. I’d like to imagine those executives with a fat Hearthstone egg on their face, but great handfuls of money make for surprisingly effective yolk removal.

Blizzard’s Q4 2013 Report

If you have not already heard the news, WoW has lost gained 200k subscribers in the last quarter, edging back up to 7.8 million subs. This is quite a reversal from last May, when they hemorrhaged 1.3 million in three months.

In a fit of investigative journalism, I went ahead and looked at the investor report. Here are some choice quotes:

In particular, free-to-play games have achieved scale that should now allow us to realize great returns from the investments that we’ve been making in this area. Over the next few years, we plan to introduce at least three potential groundbreaking franchises operating on our free-to-play transaction systems designed to appeal to players across numerous platforms and in numerous geographies. These games including Hearthstone, Heroes of Warcraft, Blizzard’s Heroes of the Storm and Call of Duty online, all have enormous potential.

Personally, this is the first time I’ve heard about a Call of Duty online, but I confess that I don’t follow CoD news generally. Apparently, it is going to be released in China first, but… actually, I don’t know. Surely there will be mainstream releases of the regular CoD franchise every year (even if they go to a 3-year cycle), so perhaps this will be China-only.

When the call got to Mike Morhaime, there were a series of amusing transcription errors. Like this one:

We should use the strength in Q4 for a few factors. The excitement from BlizzCon, seasonality from the holidays and a refresh of the recruit of final program which offer special test inbound to players to bring revenue into World of Warcraft.

…and…

We think that this is a great feature that will make it easier for friends to play together in World of Warcraft. It’s also attractive for veteran players, who have already experienced the level and process multiple times and wants to quickly raise a new character to deal ending combats.

…and…

Entry into a special game mode called Arena can also be purchased with Indian gold or real currency.

So when you face your special inbound test, make sure to use real currency instead of Indian gold to deal ending combats.

The rest of the call was uneventful beyond one final item, of particular note to the skeptics of Blizzard’s “stabilization”:

Okay. And the other part of the question was on the East-West split. So, in Q4 we were slightly down in the East and slightly up in the West.

So in other words, a lot of the gain came from NA/EU rather than the people paying pocket change in China.

And that’s basically it. Morhaime mentioned that he’s expecting some weaker numbers in Q1 2014 given how they won’t have the BlizzCon boost anymore nor any new content, but is otherwise hopeful that the level 90 boost will drive some ex-player engagement. It doesn’t do anything in particular for me though, at least right now, but we’ll see.

Good Guy SOE

So, I find myself playing PlanetSide 2 again. Yes, I had stopped for good. Probably more than once. I might be what they call an “unreliable narrator.”

What brought me back into the fold (for the time being) were forum tears. Specifically, I saw a veritable rash of QQ posts on Reddit concerning how overpowered A2A missiles are, how unfair it is that skilled pilots (presumably packing lolpods) are being blown out of the sky by noobs, and so on. So I did what every rational gamer would do in such a situation: log on and run the flavor-of-the-month gravy-train all the way to cheeseville.

Let the hate flow through you.

Let the hate flow through you.

11 kills in 43 minutes may not sound like anything – and it’s not – but they were 100% other players in jets, which I can assure you is a feat I have never remotely came close to before. Indeed, the time was inflated a bit because I had to go in search of more jets, having destroyed the gate-camping ecosystem I was hunting in.

In the meantime, there was another controversy brewing on the Reddit forums in the form of John Smedley changing the way subscriptions work at SOE. Currently, you can subscribe to Ps2 for $15/month, receive some membership perks, and then receive a monthly stipend of 500 Station Cash (SC). As Wilhelm has detailed previously, SOE has had a ton of issues with people hoarding currency from triple SC sales, to the point where they had to stop letting you redeem SC for expansions, subscriptions, etc. For the less economic-minded, the problem with SC hoarding is that SOE can’t actually count the cash you used to purchase SC as revenue until you redeem it; until you do, the SC technically counts as a liability. Indeed, since the introduction of Player Studio items, SOE faces the additional uncertainty of having to potentially pay out an unbounded amount of cash to players once per quarter, depending on how many people redeem their SC for those items. We aren’t talking about virtual money for virtual items anymore, we’re talking cash payments to player artists.

If that still sounds confusing, an example I’ve heard is this: imagine what would happen if 100% of EVE’s playerbase used PLEX for their subscription next month. Sure, CCP technically already has the money, but they are unlikely to have enough cash on hand to cover a full month’s worth of payroll, server costs, etc, with nothing coming in that month. Companies do end up estimating “breakage” (e.g. gift cards that are never redeemed and the like) but they can’t claim all of it without running afoul accounting principals.

The first solution Smed presented was interesting. Instead of a 500 SC stipend that simply accumulates, they would allow you to purchase one item a month that costs up to 2000 SC. A voucher, if you will. The primary issue under that scheme is that there is next to nothing in the Ps2 store that costs 2000 SC aside from the ocassional bundle, which you cannot even buy with it. Most player-created items – which, incidentally, are so much cooler than SOE-designed items that its sickening at this point – cost 1000 SC apiece, so ostensibly you would be coming out ahead under this rubric… but Player Studio items were also excluded. Even if Player Studio items were allowed, the creators would see zero reimbursement since the 2000 SC voucher was “free” – Smed stated in the thread that SOE was seriously considering eating the cost and paying the item creators anyway.

If you weren’t interested in fancy hats and cosmetic items though, you were going to be boned as a Ps2 player under this system. One of the perks of subscribing to Ps2 was getting access to a 2nd Deal of the Day, and said deals frequently put items at price points below 500 SC. Indeed, there were two items last week that were selling for 99 SC. If I wanted both, I could either spend an extra dollar and use the 2000 SC purchase on the other, or I could get both with the 500 SC stipend and have some virtual change left over for next month. And on the other end of the spectrum, if you have been playing for a while, there isn’t liable to be anything you want to buy in the store in a given month – especially since the devs decided to take their content-free optimization break. Each month you didn’t purchase anything as a Ps2 player was 500 SC you weren’t ever getting back.

After going back and forth across a 200+ response Reddit thread, Smed dropped some interesting information. The plan going forward for SOE is for the All Access Pass to be lowered to $14.99/month and to automatically apply to all SOE games (on the PC, for now). In other words, one subscription to rule them all. It sounds a bit weird at first, given how many of the games SOE offers are F2P to begin with. But that sort of makes it subtly brilliant: the fact you are receiving “premium” bonuses for games like DCUO might make you more inclined to download the client and take advantage of them. But what if I don’t care about DCUO or EQ1/2 in the least? Hmm. Maybe you have heard of EverQuest Next: Landmark & EQN proper?

The plot… it thickens.

As for the stipend, Smed will be bringing up a compromise to the suits: subscribers will get the 500 SC like usual, but you have to log on each month to claim it. While it seems silly that that solves anything, I wouldn’t be surprised that there are a non-zero amount of people that have auto-renew subscriptions and do nothing with them. After all, that’s kind of the point of auto-renew subscriptions as a business model. For every heavy Netflix user, there is someone like me who has booted it up for about two months out of the entire last year.

In any case, mad props to John Smedley for coming to Reddit of all places and laying down the behind-the-scenes facts. There are some people who are not happy with the way things shook out (the 2000 SC voucher sounded better to them), but no one can deny the fact that SOE climbed down the mountain and took the feedback of its players seriously. If you were going through Ghostcrawler withdraw like I am, look no further than… the PlanetSide 2 Reddit forums, apparently.

Ouch. WoW down another 1.3 million

As reported by MMO-Champion, the subscriber total was 8.3 million at the end of the quarter, a loss of 1.3 million subs since Q4 (which had its own 400k loss). For those keeping track at home, Blizzard had 9.1 million subs back on August 3rd, 2012, during an eight-month lull of zero content at the end of Cataclysm, i.e. pre-Mists of Pandaria. That is a net loss of 800k this expansion – with a 1.5 million sub rollercoaster in the middle – and the lowest subscriber count WoW has had since 2007.

By the way, RIP to MMOData.net, which has not made an update in nearly nine months now. How can we pontificate without graphs? Sigh.

I went and signed up to listen to the investor report as there was not a transcript available, wondering where MMO-Champ got the rest of those bullet points. Plus, you know, Press™:

Nothing could go wrong with this.

Nothing could go wrong with this.

To save yourself 38 minutes, just trust me when I confirm MMO-Champ got all the relevant information.

What did interest me though was hearing how ultra-conservative Activision Blizzard is. I mean, that sort of thing isn’t a particular trade secret, but when Bobby Kotick explained that the company wasn’t interested in the mobile sphere because the Top 10 titles change every year, I cocked an eyebrow. Call of Duty and WoW still have a lot of viable milking years ahead of them, but this is the same company that gushed about their $1 billion Skylanders franchise that didn’t even exist two years ago. If CoD: Ghost ends up pulling a Warfighter along with the further expected losses (their words) in WoW subs, you can almost imagine a scenario in which they conserve themselves right off a cliff by the end of this year.

But, alas, the money machines continue unabated.

Finally, I sort of chuckled at this part of the WoW presentation:

  • There has been less engagement by casual players.

Well… yeah. What did they imagine would happen when you release one of the most alt-unfriendly expansion in the history of the game? And then proceed to put everything behind a triple-gate of dailies and rep, all but remove leveling dungeons (only to put them back), and then essentially stop all production of 5m dungeons for the rest of the expansion? Oh, and don’t get me started on the continued embarrassment of no-pop servers languishing.

At this point, all I’m really interested in is Hearthstone (as hopefully a cheaper Magic: Online) and maybe Bungie’s new game; Titan has been too much of a cocktease for too long to even get a rise out of me anymore. Otherwise Activision-Blizzard might join the ranks of EA as a big-budget publisher who only produces one title that I am remotely interested in, with all the “risky” indie ventures soaking up the money I leave on the table.

And as Doone points out, that’s probably the best thing for everyone involved.

Unsubscribing, Take Two

I may have reached the end of my second run of WoW.

As was the case last time, there was no clear death knell, no final straw, no slap in the proverbial face. Forensic evidence would probably suggest that my decline in activity can be traced back to the 5.2 announcement. At that point, I stopped bothering with LFR, knowing that I could endure the same long queues for 20+ better ilevel gear in a few weeks. I was also pretty much geared in all 483s anyway, much to the chagrin of my less fortunate guild survivors.

5.2 reinvigorated several things for me, including reaching some of the reputation milestones on alts that I would have dismissed out of hand as ridiculous previously. There were some underlying truths about myself I started to realize however:

  • A healthy variety of dailies is 100% meaningless. Blizzard seems to think that 15 dailies out of a pool of 90 is somehow more palatable than the same 15 over and over. But… dailies are dailies. Unless a certain daily quest is particularly odious, such as having to kill a hard elite solo (the Pyrestar Demolisher), all daily quests blur together into a gray slurry of virtual obligation.
  • Between the lack of interesting Black Market Auction House wares (which has admittedly improved in 5.2) and the BoP-crafting material economy, it is difficult to maintain interest in even lucrative AH shenanigans. As I continued canceling and re-listing cut gems and other goods day in and day out, I asked myself what exactly I imagine myself doing with this almost 400k gold. Buy something… but buy what? The lack of 476+ BoE weapons particularly was annoying. Yes, I could run LFR a bunch of times or even Honor farm, but all this gold was supposed to save me time, at least theoretically. If time = money, then money = time, does it not?
  • I continued playing long after I no longer experienced any fun because of the possibility that things might change in the future. Which is quite a bizarre feat of circular reasoning, if you think about it. I have 76 pieces of Imperial Silk, for example, because if I suddenly developed a resurgence in interest, my future self would have more fun with all these accumulated mats (which you cannot really get any other way). It reminded me of how I behaved in my Middle School history course: the teacher handed out a week’s worth of worksheets on Monday, and I always completed them that very evening so I could slack off the rest of the week.
  • The Legendary quest backfired big time, at least for me. By the time 5.2 came out, I had 2 Sigils of Power and 14 Sigils of Wisdom. With an average ilevel of 491, I was faced with the prospect of slogging through half a dozen or more DPS queues for the starter LFR raids, getting 476 vendor trash… if I was lucky! And then what? 6000 Valor? The questline might not have been “required” for anything I was doing, but it certainly felt more in-your-face “you are falling behind” than I ever felt before about, say, a raid-only reputation or heroic valor gear, by the very virtue of its accessibility.
  • Once I got over the initial trepidation of skipping a day’s worth of cooldowns and AH re-listings, it actually became more difficult to convince myself to log back on at all. I had already “lost a day” that I would never get back. So… why bother? I skipped logging in one Saturday, and suddenly half the week is gone with nary a fuck given.

As with the last time I unsubscribed, I do not begrudge Blizzard and crew anything in particular. Well, maybe for the shit-hole of a no-pop server that they continue to allow to exist, to the detriment of all the lost souls trapped in Auchindoun-US’s hellish purgatory. But beyond that, most everything else I see as an improvement over prior design. Heroic scenarios sound like a great feature, and would have been custom-made for the 2-3 of my friends that actually managed to log on these past few weeks. Similarly, I am/was looking forward to being able to choose which spec to gear up in LFR, regardless of current role.

But… well. I could quite literally be playing any one of a hundred other videogames right now; games already purchased and with no subscription fee. More than the money though, I am looking forward to having the mental space back. It’s… liberating, in a way that cannot be described to someone whom has not had that same sort of mental real estate spoken for and suddenly vacated.

The Wages of F2P

I finally buckled-down and purchased a 3-month subscription to PlanetSide 2 last night. I say “finally” because I had been waffling back and forth for quite some time on the decision, all of which has resulted in me losing out on +35% XP gains (which translates into faster Cert gains, which translates into character/weapon upgrades) for the duration of the indecision. I have been playing this game 1-2 hours a day for the past several months, so it is not a trivial amount of potential lost progress.

One machine I don't mind being a cog in.

One machine I don’t mind being a cog in.

But still, even with credit card in hand, I felt like I was getting suckered. Since Steam, I never pay full price for anything. And this is a F2P game, right? I know things are designed to part me from my cash. I could technically get everything (non-cosmetic) from gameplay, so why purchase anything? Or, you know, bide my time until the next double/triple Station Cash sale at least.

But… you guys have no idea how much fun I’ve been having with, say, that underbarrel grenade launcher. Or rocket pods on the jets. At what point does it become silly to intentionally have less fun for a long duration for a reward at the end, versus spending that same amount of time having fun with the reward?

Actually, the former sounds like… erhm… daily quests.

By the way, this means, to date, I have spent ~$85 (x3 SC cards, 3 month sub) on a F2P game. Mission fucking Accomplished, SOE.

The Number of Subs Goes Up and Down, Up and Down

As MMO-Champion reports, WoW had “more than 9.6 million” subscribers as of December 31st, 2012. This is down at least 400k from what Blizzard reported at the end of Q3 2012. I’m not particularly interested in spin or theories of causes, because as we all know, these sort of losses are rarely attributable to any one thing.

I do find it useful though, to keep the following in mind: the subscriber count was 9.1 million back in August of 2012, pre-pandas. If this is what decline and a descent into irrelevance looks like, then we’re in for a pretty soft landing.