Friday, February 4, 2011

Payback period

If you followed the news about Star Wars: The Old Republic, you might have heard that they retracted a previous statement that they would need a million players to be profitable, and lowered that break-even subscription number to 500,000. How misleading that can be is well visible in the reaction of Keen: Anyone on this planet knows that SWTOR will sell well and do fine on subscriptions. It’s Star Wars and Bioware. If WAR is still alive with even 50k subscribers for this long then SWTOR will do 500k sustained for at least a few months.

I do not think that if John Riccitiello speaks of half a million subscribers to be profitable, he means "half a million for a few months". The important question is how long the payback period is. Imagine that a MMORPG cost $100 million to make. The company sells a million copies at $50 each, and thus already recovers $50 million. Now imagine that they make $5 per player per month. In that case they would need to keep that 1 million player subscribed for 10 months before they break even. 10 months is the payback period for 1 million subscribers for that game. If subscription numbers drop quickly way before the 10 months are reached, it will take longer until the investment is paid back, and in the worst case the game never gets there.

So I have to say I agree only with half of Keen's statement. Yes, SWTOR will probably sell well, because both Star Wars and Bioware are very strong brands, which means many people will buy that game just out of trust. Hell, *I* will probably buy that game just out of trust. But as even John Riccitiello describes the game as "light sabers instead of swords, if you will.", I would say that there is a distinctive possibility that the game turns out to be yet another "kill 10 foozles" MMORPG. If players early on get an impression that this is basically the same game that they are already playing (and I'm not even saying which game that would be, as there are now so many games of that type), just with more voiceovers, then a subscription number curve like WAR had, with an early and steep decline is certainly possible. If players expect the second coming, and all they get is the same game with "light sabers instead of swords", they might get severely disappointed. And disappointed players are not good for the bottom line.

I have serious doubts whether EA, of all people, understands how much larger the demands of MMORPG players for novelty are. EA is used to players who apparently don't mind buying the same EA Sports game again, with only the last digit of the year printed on the box having changed. And nobody ever complained to EA that the latest shooter they brought out basically has the same user interface, controls, and gameplay as every other shooter out there. MMORPG players don't tick like that. I'm not a betting man, but if you'd ask me what the next big thing in MMORPGs will be, I'd put my money on Guild Wars 2, and not on SWTOR.

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