Tuesday, January 22, 2008

WAR is expensive

Sorry for today's deluge of post, I'm reacting to mails and comments. Due to popular demand from the one reader I have whose name I can't pronounce, I'm linking to some old news from Keen and Graev: Warhammer Online will quite possibly cost more than $14.99 per month. Insert huge outcry and everybody quietly paying up here.

Fact is that $14.99 is a completely arbitrary number. There is no relation whatsoever to cost. From financial data from Blizzard we know that about half of the monthly fee is pure profit. World of Warcraft would still be quite profitable at $10 per month. World of Warcraft would also still be quite profitable at $20 per month, even if that would obviously cause some people to quit. WoW is even profitable at 0.45 Yuan / RMB per hour (about 6 US cents), which is what the Chinese players pay. I pay €12.99 per month for WoW, which at the current exchange rate is $18.86. The choice of payment model (monthly or hourly) and price is done by marketing people based on local customes, economy, and historical developments. There is nothing whatsoever which would make $14.99 per month the one and only possible price for WAR.

Making WAR more expensive as WoW could even be a subtle marketing trick. "Look, our game is better, that's why it costs more!". If the price difference to WoW is small, lets say WAR costs $16.99 per month, EA can probably get away with it and lose only a very small number of potential customers. If you buy a MMORPG and play it for a year, you still pay less money than if you buy a regular video game every 2 months. Counting on a dollar per hour of entertainment basis MMORPGs are extremely cheap. Even watching paint dry is more expensive, if you have to pay for the paint. Movies, books, magazines, everything costs more per hour of entertainment than World of Warcraft does. Total profits of the video game industry are declining, because too many people spend too many cheap hours in WoW instead of buying new expensive video games that can be played through in 10 hours. And then of course there is inflation, prices go up all the time, although if you are young and only interested in the price of computers you might not have noticed. Expecting the monthly fees for MMORPGs to remain stable forever isn't very realistic.

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