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The Secret World’s Other Shoe, and Jay Wilson’s Apology for D3

A little over a week ago, I pointed out that Funcom’s The Secret World was not selling all that well; Funcom’s own public press release highlighted a (presumably optimistic) scenario in which they sell half a million boxes and have ~120k subscribers after a year.

As reported by Kotaku, that other shoe has dropped: 50% of Funcom’s staff has been laid off.

Some of these initiatives are part of normal procedure following the launch of a major project, such as adjustments to the customer service staffing based on the number of customers in the game as well as adjustments to the production team as the project goes into a post-launch phase following years of intense development. Many of those affected on the customer service team are on temporary contracts which is common for a live service such as ‘The Secret World’ where customer service demand shifts based on the game’s population levels.

Even the “good news” part of that – the developers/designers were less affected than “temp” customer service reps – comes across as bad news to my ears. After all, if the MMO was doing better, then one would presumably want to retain a robust CustServ department.

Not to put too fine a point on it, but I wonder whether or not we should start using layoffs as a metric of MMO success. Obviously subscription numbers have been used as the de facto measurement for years, and I imagine it correlates with layoffs pretty strongly already, but I think most of us recognize the dissonance between claiming “Game X failed” while it still remains profitable. I mean, for god’s sake, Warhammer Online is still kicking it with a subscription¹. EA is not keeping that thing alive out of the goodness of its heart. In fact, arguably, keeping Warhammer alive is unnecessarily cruel.

Or… perhaps we would all be better off not bothering with arbitrary success or failure designations entirely.

…nah, this is the internet. There can only be one!

Speaking of immortals losing their heads…

You will be forgiven if you have not been following the “Example #38417 of How Social Media Will Ruin Your Day” Diablo 3 news story, staring Jay “And Double It” Wilson.

The short version is that one of the developers of the original Diablo (David Brevik) made some comments about Diablo 3 in an interview, and essentially said he would have made different decisions. More or less. The current developers of Diablo 3 did not like that too much, and Jay Wilson thought it was a good idea to respond on Facebook by saying, and I quote, “Fuck that loser.” You can read the Kotaku write-up if you like, as it includes snippets of the interview in question and a screencap of the Facebook post itself.

Looking at the other comments, I’d say Eric Bachour’s “You’d think that guy wasn’t responsible for Hellgate: London. Lol.” was the more epic burn.

In any case, Jay “Fuck that loser and Double It” Wilson has an official pseudo-apology up on the Diablo 3 boards. I do not expect you to actually click on that link, because most of it is PR bullshit (redundantly redundant much?). Well… alright, if you skip the first four paragraphs, things get more interesting. Or you can simply read this handy list of bullet-point quotes:

  • “We believe it’s a great game. But Diablo III has flaws. It is not perfect. Sales mean nothing if the game doesn’t live on in all of our hearts, and standing by our games is what Blizzard does.”
  • “If you don’t have that great feeling of a good drop being right around the corner — and the burst of excitement when it finally arrives — then we haven’t done our jobs right.”
  • “Out of our concern to make sure that Diablo III would have longevity, we were overly cautious about how we handled item drops and affixes. If 1.0.4 hasn’t fixed that, you can be sure we’ll continue to address it.”
  • “Part of the problem, however, is not just item drops, but the variety of things to do within the game. “
  • “As it stands, Diablo III simply does not provide the tools to allow players to scale the game challenge to something appropriate for them.”
  • “Later in the development of Diablo II, the ‘players 8’ command — which let people set monster difficulty — was added to address this issue, and we’re considering something similar for the next major Diablo III patch to allow players to make up their own minds about how hard or how easy is right for them.”
  • “The Auction House can short circuit the natural pace of item drops, making the game feel less rewarding for some players. This is a problem we recognize. At this point we’re not sure of the exact way to fix it, but we’re discussing it constantly, and we believe it’s a problem we can overcome.”

I have a spoiler alert for you Jay: that last bullet point ain’t going to happen. Not only is that cat out of the bag, it has been skinned in more than one way across all nine of its lives.

I played a few hours of D3 since the patch, and I have noticed three things:

  1. “Normal monster health increased by 10%” = +5 terribly boring seconds per mob.
  2. I can tank Act 3 Inferno elites in the same gear/skills I was 2-shot in pre-patch.
  3. Gold prices have gone from $2.50/million down to $1.06/million.

That last one is a real shame, as I was hoping to cash out my ~5 million gold and (combined with the few bucks from earlier sales) maybe purchase a month of WoW ahead of MoP. Then again, that would be kind of silly to do given the Scroll of Resurrection’s free server transfer bonus, and GW2’s imminent release notwithstanding. Oh well.

Kind of wonder if that dude who paid $200 for my friend’s 2H sword is still playing the game. I do not know which possibility would be more sad for him/her.

¹ Warhammer says it is F2P on the website, but as far as I can tell it operates more as an unlimited duration free trial than true F2P. For example, you cannot go to the capital cities, cannot engage in any economic transaction with another player, and are limited to “Tier 1 scenarios,” whatever the hell that means (it’s been years since the one month I played).

The SWTOR Figures Thus Far

You have probably already heard about the 1.7 million subscription number, 2 million boxes sold, and so on surrounding SWTOR’s launch. What I am finding a bit more interesting are some of the investor call break-downs as gathered by Darth Hater. For example:

Q: What are your plans at expanding the global market?
A: We are looking at the Asian market. Expanding into Australian market on March 1st. We’re looking specifically at opportunities to expand in the Asian market.

Q: How long will it take to get into the Asian market?
A: Australia/New Zealand is the low-hanging fruit. Think in months rather than weeks. Individual Asian markets will be announced in the future, we’re bound by confidentiality agreements. When WoW was introduced in 2004, they were in Korea shortly after, and 9 months after in China. It was easier in those days – server outages were considered par for the course, that is not the case today. We hope to execute as well in Asia as we did in the NA/Europe launch.

Q: You’ve previously said you need about a half million subscribers to be profitable, is that still the case?
A: At 500,000 subscribers, we’d break even. At a million, we’d be making a profit but nothing worth writing home about. As it scales up from there, we’re talking about a nice profit. At this point with the successful launch, we can take the worst case scenarios off the table.

The ability for SWTOR to launch in Asian markets was one of the biggest concerns I had with the game from a success standpoint, as you may recall. Indeed, if/when the game is released in China, that will be the moment beyond which we will be unable to talk about its subscription numbers with any sort of coherency – not because it will necessarily be super-popular over there, but because, just like with WoW, millions of Eastern subs obfuscates armchair analysis. Remember Nils saying “[…] I would now say that EA could be happy if they had 500k subscribers one year after launch”? Would it “count” if there was some Western mass-exodus down to 250k but 2 million Chinese subs?

In any event, there are still legitimate questions about how the game will perform 3 to 6 months down the road, when there is less ambiguity surrounding whether 1.7 million was as-of December 31st or as-of the investor call (and what “most” means in the context of “Most of those 1.7m are paying at this point”).  Then we have Frank Gibeau who says:

In the next phase, our goal is to grow the number of subscribers with frequent releases of content that make the game even more exciting. […] We plan on delivering another major update, even larger than the first, in March.

It is kind of interesting, on several levels. Can Bioware keep such a pace for any length of time, or will there be a drought soon after March wherein the reserve content drys up? Do frequent patches even drive subscription growth to begin with? Blizzard’s Mike Morhaime said back in November that patches were mainly about reducing churn, not growth. Maybe it’s different for games below market saturation? And speaking of games and markets, let’s not forget at least a half dozen high(ish) profile MMOs will also be dropping this year, including the mythical Guild Wars 2 and Mists of Pandaria. No doubt there will be some impact, eh?

Time will tell, but so far so good.

P.S. If you had bought EA stock after it dropped 3% in mid-January, when people were laughing about SWTOR’s “disastrous launch” based on that one analyst, you’d be sitting on a 10.22% return on your investment a little more than two weeks later. Or, hell, a 6.1% return between yesterday and today.

P.P.S. Christ. BRB opening eTrade account.

SWTOR Will (Probably) Be Fine

With the 1-month honeymoon coming to its end, and a series of “amateur-hour” missteps combined with other bad news, the general feeling seems to be coalescing around SWTOR’s present or future inevitable “failure.” While everyone is entitled to their own insipid pessimism, the sorts of reasoning being provided are a little weak.

1) Absurdly High Standards

There are two main flavors of absurdity under this umbrella. The first is simply ridiculous, the sort that sees WoW going from 12 million to 10 million as a failure, a sign of collapse, of crushing moral defeat. Or, going from 32 to 26.667 times the size of EVE, the MMO yardstick whose robustness is the de facto definition of success. I agree that WoW deserves the subscription loss, that it is directly linked to Cataclysm, and further that WoW may never recover those subs and/or continue a sub decline for the foreseeable future.

However, let’s be honest here: if that is the sort of yardstick we are using, the entire MMO market is an abysmal failure.

The second, lesser form of absurdity is identifiable in this quote from Nils:

[…] I would now say that EA could be happy if they had 500k subscribers one year after launch.

In other words, SW:TOR failed. And it failed for EXACTLY the reasons we, the blogosphere, had predicted for at least 2 years prior to launch. We should be proud – and sad.

For comparison, EVE is the second largest Western MMO on the market at, by last count, 375,000 subs. Between 25% and 62.5% larger than 2nd place is a failure? Really?

You know what, though? I think it is important to have a discussion about what “success” really means – just like with “casual” and other loaded terms, having some kind of idea where people actually stand would reduce the effects of talking past one another.

2) Vague Definitions of Success

“Success” is largely arbitrary, and depends on the goals one sets for oneself. If you set out to run an 8-minute mile and can only get to down to a 9-minute mile, you have “failed.” That you improved from a 15-minute mile to 9-minutes is irrelevant in an objective sense.

Success in a market sense, is a little less arbitrary – you are either making money or you are not. According to the information we have available (circa last May), SWTOR needs a minimum of 375k subscriptions to break even, and ~500k to be reasonably profitable. So in the Nils quote, SWTOR would be a success at 500k.

But what of the analyst who sent EA stocks tumbling 3% based on “disappointing sales” and churn rates? Since we don’t have access to his data or methodology, it is difficult to appraise his conclusions. However, the very next day EA stocks went back up 2% after three separate brokers said SWTOR is “performing in line with expectations.” One of them went on to say:

Evan Wilson of Pacific Crest wrote Friday that he has raised his sales estimate for “Star Wars” to 2.2 million units from 1.5 million units for the quarter, and said he remains “comfortable” with his 800,000 subscriber target when the company’s fiscal year ends in late March.

“Admittedly, we set our expectations as if Star Wars was to be a good, not great, MMO,” he wrote. “Fortunately, we think the company did too.”

Hardly a ringing endorsement, but there it is. There is a line between the soft bigotry of low expectations and aggressive schadenfreude – the challenge is finding it. “Good, not great, MMO” might be a bit too low for even my standards, especially given write-ups like these in the LA Times (turns out SWTOR officially cost $200m). We will know more about the numbers in February when EA’s financial statements become available, but I am inclined to say that if SWTOR can achieve/maintain 500k-800k subscriptions for the year it will undeniably be a success.

3) Endgame Concerns

About a week ago, Tobold was discussing Richard Bartle’s feelings towards the SWTOR endgame (which are rather interesting, by the way). Down in the comment section, Tobold said something I wanted to highlight:

In short, I know why I prefer leveling in SWTOR to leveling in WoW. I don’t know why I would prefer raiding in SWTOR to raiding in WoW. Do you?

It is an interesting question because by all accounts, we have no idea what the average WoW player is doing. Looking at Cataclysm, only approximately 17.28% of the Western audience killed 1 raid boss in T11 content, and ~12.69% killed 1 raid boss in T12. Even if my methodology¹ is flawed, it is likely we are looking at a game in which over two-thirds of players do not participant in raiding, i.e. the “accepted” endgame. So… what are they doing? Heroics? Battlegrounds? Goldshire RP? Everyone seems to agree that the WoW leveling game has been irreparably destroyed, and yet there seems to be no other explanation as for what the vast, vast majority of the playerbase seems to be doing.

In this respect, SWTOR’s raiding endgame seems as likely as not to be irrelevant. Perhaps the social mechanisms of organized raiding trickle down to the masses, perhaps raiding increases player engagement, perhaps you need hardcore gamers to bind a community together long enough for a population’s sheer gravity to take over. These are open questions. Until we get some usage statistics from Blizzard though, I feel comfortable enough suggesting that the depth of SWTOR’s endgame is not particularly important to its overall success/failure; it clearly is not in WoW.

Retention is a function of social ties, which inevitably take place primarily in the endgame, but they are not about the endgame per se. As long as Bioware steps up its guild infrastructure plans and its Show & Tell aspects, as I said before I see no particular problem with retention at whatever sub level they achieve.

Flowers, Sunshine Aside…

The real challenges SWTOR faces are more systemic in nature.

Nearly everyone has expressed concerns when it comes to the full voice acting, for example, but I am much more concerned about the related problem of localization. According to that LA Times article I linked earlier, SWTOR is only localized in two languages (German and French). In contrast, WoW has been localized into eight: German, French, Spanish, Brazilian Portuguese, Russian, Korean, and both Traditional and Simplified Chinese. While SWTOR catches somewhat of a break when it comes to the aliens speaking gibberish that can be Cut & Paste, just imagine the ridiculousness that is recording all other voice work in three separate languages (plus male/female differences!), let alone additional languages in the future.

This is relevant because, quite honestly, WoW could shut down all US/EU servers and still probably maintain 5+ million Asian subscriptions into perpetuity (Aion inexplicably has 4 million after all). Meanwhile, SWTOR does not have access to the Asian MMO market and thus has much shorter reach. Assuming, of course, that Star Wars is even a hot commodity over there to begin with.

The other systemic issue is the gravity of the game itself. While I believe SWTOR will probably be fine in maintaining at least ~500k subs (and be successful as a result), needing at least 375k subs to be worth the $200 million endeavor is somewhat worrisome. All MMOs probably have some kind of break-even point, well-publicized or not, but generally speaking a game company grows in relation to the success of the game. The question arises as to how long EA would tolerate sub-375k performance before more drastic measures were enacted. Given EA’s rather public rivalry with Activisn-Blizzard when it comes to Call of Duty vs Battlefield 3, I am inclined to believe they will go to heroic lengths to keep SWTOR in the fight should it fall, but it may well go the other way too.

In any case, things are shaping up to be an interesting year.

¹ I actually think my methodology is better than the sort of Armory audits appearing on MMO-Champ as of late. The problem with Armory audits is the “white noise” of alts. Since I extrapolate based on guilds, it is much more likely that a raider’s alts are filtered out rather than included, and thus not diluting the figures. Of course, hasn’t been updated since WoW started hemorrhaging subscriptions, and so finding the current US/EU/KR/TW baseline is impossible, thus possibly skewing the percentages of T12 and beyond.