NextGen Sub model or B2P launch? A Desperate Thought Experiment

The blogosphere is abuzz with next gen subscription analyzis. MMOGC reminds us that subscriptions aren’t in fact back and she’s not alone in her suspicions. While some MMOs in the past were forced to revert to f2p, by now we have reason to believe such moves may be calculation. Tobold calls this new generation payment model “The bait & switch business model” and apparently it’s what any smart (and ruthless) business person would do given the current market. Others have chimed in on twitter how there really is no disadvantage here profitwise – subs must win by a landslide. Meanwhile, Tesh is full of eyeroll over the TESO sub and declares personal boycott. While I have a soft spot where Tamriel is concerned, I agree with every last word in his article; I would sign up for that MMO utopia yesterday.

May I raise a question here though? How superior is this route really, compared to the buy-to-play (and cash shop) alternative many expected? Especially given the crazy competition 2014’s AAAs will be facing, somehow I have my doubts this is such a clear winner. If anything, re-introducing a subscription-barrier in this particular scenario seems weird? LET’S THINK OUT LOUD HERE:

Let’s assume for a moment both Wildstar and TESO are going live sometime during Q1 2014, with Everquest Next on their heels in Q2 – and let’s completely ignore that Blizzard too may have a big expac up their sleeve around that same time. For the first time in years, the MMO mainstream is bewildered by too many AAA-choices and as we know, hardly anyone cares to pay for two subscriptions at a time. For the two sub-MMOs that essentially means a guaranteed loss of the usual potential playerbase. Alright, TESO have come up with a 1-month freebie but there are still box prices to pay too and it’s already bad enough these games launch so closely together. I don’t know anyone who appreciates that.

I doubt the mutual exclusivity of this situation is beneficial to either Carbine nor Zenimax. It’s the nature of MMOs that communities will form during the first few months into a game and that after a given time, players don’t care to join games that are already advanced in progress. They might dip a toe in but they’re less likely to settle and therefore less likely to purchase any virtual goods. We’re itchy to make decisions early when committing to new MMOs.

It’s also not very realistic to assume either game may go free-to-play after the first 3 months. The Secret World was special in its swift conversion for various reasons. Assuming a switch is already planned for both Wildstar and TESO, there’s no reason to believe either would switch after 3 months, given the much bigger hype around these titles and risk of bad PR (switches so soon after a launch are generally regarded as failures). Personally, I think a switch is way more likely to happen after 1 year – just like ArenaNet announced the first ever trial weekend for Guild Wars 2 only this August 2013.

12+ months are a lot of water under any virtual world’s bridge. It’s very likely players will test the other game as soon as it goes free – yet, that means they never payed subscriptions on the competition and they’re less likely to have spent a dime yet on virtual goods anywhere. For those switching from one sub to the other halfway through, both titles basically share player base. However: how many players were lost completely to one title due to community, or to both due to box+subscription model fatigue? How would GW2’s buy-to-play model truly compare to this assumed “early gold digging” scenario, considering a heavily contested launch?

An entirely hypothetical, simplified and sadly flawed calculation

Let’s assume 4 million players are ready to jump into either TESO or WS early 2014 and that neither turns out to be a clear “winner” (as I am not interested in that particular outcome). Why 4 million you ask? Given what Rift has managed in the past (pre-switch), that seems a very generous assumption.

2 million subscriptions each during the first 3 months, before players start dwindling. After that, let’s assume 50% of said players remain, while another 50% move on; 25% leaving for the other sub for another 3 months, 25% leaving for a f2p game for good. Between months 7-12, only 50% of overall players are retained while the game is still on a subscription. In this hypothetical scenario, box sales (60$) and subs (15$) for TESO/WS would yield the following for each:

chart1

Variables not accounted for: double subbers and/or box buyers, shop items. The first group adds marginally towards outcome and shop items are less eagerly bought in MMOs with subs. In any case, I am ignoring them for simplicity’s sake but you can add your own number if you like.

From here, it only gets more complicated when attempting to simulate a comparable B2P/shop scenario after GW2 fashion with a (better) shop like Rift’s. Unfortunately developers hardly ever make numbers public when it comes to cash shop habits and revenue – just like we don’t hear about active account fluctuations for subscription games. But since I am feeling lucky punk today, I’ll give it a go anyway and assume two different and hopefully somewhat realistic B2P/shop scenarios.

cölint

(Already I regret this whole idea!)

This time, we will assume 5 million players are ready to jump into either or both TESO or WS early 2014. Why 5 million this time? Because I am generously assuming that B2P games attract a wider target audience than sub MMOs. One reason why GW2 has sold 3mio copies by now is the one-time cost. Some players always stay the hell away from sub games. There is also a second difference, as I will assume 50% of the entire potential player base are “cross-buyers”. It’s rather likely that over the course of a year, a big part of that community will buy both WS and TESO, given it’s a 120$ in total and no more than that (in comparison one game with 12 months of subs would cost 240$). Means, 3.75mio boxes/account sold each. After that, we venture deep into hypothetical morass…but I’m already 11 paragraphs in and it’s too late to stop now!

Cash shop scenario 1) is more even-spread; it assumes that over the course of one year, the total of players per game will spend the following on micro-transactions: 30% spend 50$, 40% spend 20$, 30% spend nothing.

chart2

Cash shop scenario 2) is more radical; it assumes that over the course of one year, the total of players per game will spend the following on micro-transactions: 10% spend 100$, 30% spend 20$, 60% spend nothing.

chart3

As you can see, even with a lot of goodwill and no small amount of simplification, the subscription-model seems superior – by some. We still haven’t accounted for several more factors though where B2P is concerned. Variables not accounted for: whales, cross-shop purchases and box sales after year one. Especially that last part is worth taking note; B2P MMOs have the tendency to keep being sold longer than sub MMOs. Of course that argument is redundant if the sub games also turn B2P after one year, duh.

So that was a lot of effort for nothing?!

What was the point of all this? Well, it looks like especially in the short term, subs are more profitable. Still, the difference between the two models isn’t as drastic, considering there is a huge margin of error in all of my calculations. And this is in fact good news! Why is it good news? Because from here, one could think of ways to tip the scenario either way.

So, help me refine this: was I too generous on cash shop sales or not nearly generous enough? Would a B2P maybe attract twice as many box sales than usual? Under which circumstances could we still see the B2P model win the upper hand? Where did I go wrong the most (real data would be awesome)? I guess that’s where a proper business analyst would come handy, for once.

23 comments

  1. Maybe B2P attract twice as many box sales than usual. GW2 sold 3 million copies until january 2013 (today they have more than 3 million copies sold, but no one know how much). How many copies SWTOR sold? I think it was 1.5 million.

    1. It’s hard to find a source for TOR box sales but it seems like generally you’ll find estimates between 2 and 3 million (VGChartz is suggesting 2.6 million–and I don’t think that includes digital). Obviously there would have been no additional box sales after free-to-play was instated–November, 15, 2012. So, perhaps, it’s not totally unreasonable to suggest that box sales for both GW2 and TOR are similar. I wouldn’t personally suggest that we can extrapolate much from this single B2P vs P2P example though.

  2. Well, one assumption for the sub model that you’re making is that everyone pays for at least three months of subscription. Some do buy the box, play the free month, then quit. Some pay for one month, then rethink and stop.

    For the cash shop model, the expenditure per year seems rather low. Imo, most cash shops or microtransaction models aim to get receptive paying players spending $5-$15 a -month-. A large percentage will try to play free, and a smaller subset will pay a LOT more than $15 a month – GW2’s big spenders have been known to spend $20, $50, $100 a month or more, a few even managed to exceed the $300 limit, I heard, and requested Anet remove that limitation on their account.

      1. Yeah these are all good points. I didn’t include people who will un-sub right away (or never) as they’re basically not part of the 4mio assumed ‘eager audience’. but they definitely would have some impact.

        As for shops spending, I find it very hard to estimate. I wanted to use higher numbers at first myself, but then I remembered reading that a majority of f2p/b2p players never spend a dime – whatever majority means. if this is really still true, then that would affect overall numbers a lot.

      2. I have a sealed Age of Conan box on the bookshelf three feet from me right now. It’s been there for years waiting for a moment when I thought I might have time to play it. Bought it before it went F2P and the moment has still never arrived.

  3. I can’t help feeling that you’re off the mark in talking as if Wildstar and TESO are two roughly equivalent games that are in direct competition with each other.

    The Elder Scrolls franchise is huge. HUGE. The series will be twenty years old when TESO launches. Skyrim sold 10 million copies or more. I’ve overheard colleagues who I didn’t even know played videogames avidly talking about Skyrim. Everyone I know who plays videogames with any sort of avidity is well aware of it.

    Wildstar on the other hand.. I dunno. It gets talked about a fair bit in the rarefied air of the MMO blogosphere, where every MMO gets talked about. But I’m yet to see any sign whatsoever of anyone at all in the wider public having even heard of it.

    In terms of buzz, TESO feels closer to SW:TOR, while Wildstar feels closed to The Secret World.

    I have no idea which might achieve long-term success – could be either, or neither, or both – but I’d be astonished if TESO didn’t get at least 10x the “launch rush” sales of Wildstar.

    1. Good point, Carson. But to be fair I’d say TESO feels less hyped than TOR and Wildstar feels more hyped than Secret World. So perhaps they are a little closer in comparison than you suggest. Both games are almost dark horse contenders against the juggernaut of hype that is EQNext–more similar to TOR levels of hype than either of the former.

    2. The Elder Scrolls do have a lot of IP inheritance to spend… but at the same time, it’s just fundamentally a very different game. The single player offline ES games are far removed from an MMO, and I’m pretty sure that there’s not going to be a huge overlap. I suspect that there will be more MMO veterans playing the game than Elder Scrolls veterans.

      1. Really? I remember playing Morrowind and being struck by how much the game felt like an MMO without the other people. I didn’t play much Oblivion and Skyrim felt a bit less like an MMO, but I remember that feeling very strongly in Morrowind.

        It’s probably a moot point, though. There was no RPG for Warcraft before WoW, but I still firmly believe that WoW sold well on the foundation of the Warcraft (and Blizzard) brand. I suspect TESO will see some success on that strength.

    3. @Carson
      I dunno. I find it very hard to tell at the moment who is a front runner as perceptions of this vary so greatly depending on whom you ask or where you go on the internet. WS has created a lot of buzz, it has the wow-factor, it’s polished, it’s new – it may very well be more popular. at the same time, TESO has its own hype due to being a popular, old franchise and Tamriel does have a lot of fans looking forward to revisiting it. WS is a step into the void compared to that.

      All that considered, I still think TESO would’ve been a lot better off with B2P. as Tesh said too, many ES fans aren’t MMO players and introducing a sub-barrier on top of everything else, will lose some of them for sure.

      1. I don’t like the Elder Scrolls games myself but I work in an environment where few of my co-workers play any kind of video games and even fewer play RPGs and I would say only WoW would have better recognition among those non-players than Skyrim. It’s a brand that transcends the genre. So yes, TESO potentially has a far larger market than WildStar.

  4. Ack… too … much… maths! =P

    No point in trying to work it out right now given they can change their minds right before launch (or even after). It’s more just watch and see what happens. I’ve never liked the subscription model which is the main reason my entire guild stayed well away from WoW, and I’m not about to start now. I simply have better things to spend my money on.

    1. What’s better than video games?! Unless you mean other video games. :b

      Begs the question then: what if Wildstar and/or TESO are exceptional video games? Still no fifteen dollars?

      1. I, for one, am happy to spend money on games when I have some to burn. I absolutely detest spending money *renting* games, which is effectively what subscriptions are. If I spend money on a game, it’s because I want to play it whenever I please, for however long I feel like, in perpetuity.

      2. I guess I’m just too used to renting online games that this doesn’t bother me, as long as I feel I’m getting my money’s worth. I’m fine with paying a sub for a great game but I don’t multisub.

      3. I am the anti-Tesh. I actively like to pay subs to games for which I feel a strong affinity. It makes me feel I’m a member of a club. I pay my SOE subs regardless of whether or not I play the games right now because I like to be an SOE “member”.

        I’m old enough to remember FOOM, Bantha Tracks, Cerebro and all the other pro-am fan clubs that we proto-geeks used to pay money to join. A sub is just another iteration of that.

  5. In addition to what Carson already pointed out, it has to be kept in mind that TESO will also launch on the PS4 and the XBox One. This move provides a drastic increase in potential players.

    1. MMOs on consoles have never been huge success stories, at least in the western markets. Even the biggest one, Final Fantasy XI only bragged about having a maximum of 500,000 subscribers, which is less than the original EverQuest had at peak. In addition, console players are generally resistant to paying subscriptions. So, I wouldn’t expect the console releases to actually provide a huge bump in playerbase.

      1. Yep, right now I’m still doubting the console success a lot. which makes it all the more annoying that TESO’s launch was postponed because of the new console launches (and god knows what else will be affected because of cross-platforming)….. /eyeroll

      2. I think it’s actually more than EQ had at peak. Hang on, let me wiki…yes, wikipedia has “more than 450,000 subscriptions by 25 September 2003” for EQ.

        From memory I believe the highest figure they ever quoted was in the 490k range.

  6. Your math resembles that of aa post I made last year that included a quote from Carbine Studios’ Jeremy Gaffney, of all people. As you said, all we can do is make wild guesses as to the revenue streams of some of these games.

    I’m wondering where this “free” month in TESO is coming from. As far as I could tell from the announcement, they are simply including a month’s subscription in the box price, which is pretty standard for sub-based MMOs, and one that I believe WIldstar includes as well. So is your three months of subscription actually four months of playing, or really only two months of subscription payments?

    1. I’d love to get into a discussion based on real figures but while almost all MMOs refuse to release any meaningful, hard information I can’t see the point. It’s frustrating in the extreme.

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