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5 Reasons Why Subscriptions Are Here to Stay

Posted Wed, Jan 05, 2011 by jeffprime

There’s been a great deal of talk over the last year of free-to-play and subscription models for online games. With a harrumph and heads nodding in agreement, every pundit is saying that the subscription-based MMOG is dead; gone forever. Even thinking of putting out a new game that is subscription based will only lead to disaster of Biblical proportions! All this talk is utter crap, and I’m here to tell you why. Subscription based gaming will continue to survive and live for a long time, baby.

There are a number of reasons why all this talk of the death of subscription based gaming is premature, but we’ll look at the main factors. Some of these factors may impact the others, and the common denominator is money, which leads us to…

MONEY

Money is the single most important factor in online gaming. Game companies need to make money to survive, despite many trollish fantasies otherwise. Game companies spend a great deal of money to create a game and get it to market. Most MMOGs take at least 2 years of development and cost tens of millions of dollars. Sure, they recoup some of that money when they sell the box set, but they’re still in the hole.

The subscription fee fills that hole and then some, if the game is successful. Getting 1 million people willing to pay you $14.95 a month looks a lot better than getting 5 million people playing for free and hoping they buy some stuff out of your cash shop. To this end, every game company pants with hopeful longing towards World of Warcraft and its 12 million subscribers. Let’s assume for the sake of argument that every single subscriber is taking the least expensive option of $12.95 per month for a six month bloc of time. That boils down to a total of $155,400,000 per month!  Aha, skeptics cry! You forgot about maintenance, support, and all other operating costs for all those players! Well, Blizzard released in 2008 their total costs for operating WoW for five years; the total cost for that time was $200 million dollars, which boils down to $40 million a year. Let’s say that WoW was limping along with only a measly 6 million subscribers during that time using the $12.95 a month option – this boils down to $77,700,000 per month. No wonder they call it WoW; you’ve already made $37 million profit for the year on your first month! (I have heard tales that the floors at Blizzard are all imported Greek marble and the commodes are made of pure gold!) Granted, there’s only one WoW, but these leads us to…

world of warcraft
World of Warcraft = license to print money

CONSISTENTCY

Subscription fees are the most reliable index of the success or failure of a game. Online games are a business and businesses abhor change. They do not want, they need, to have all the possible variables for the past, present, and future mapped out in order to shape their own business strategy. The number of people willing to pay to play your game shows how healthy your game is. Every game can get a rush of people if it’s free, but a game has to have some merit if you want people to pay for it. If the number of subscribers continues to fall every month, the game company knows that they need to fix something asap. Recent examples such as Age of Conan and Warhammer Online come to mind. They both started pretty hot at launch, but as time went by, the subscriber numbers continued to dwindle until most players left.

Businesses require a steady flow of income to be successful, and subscriptions fill that need. Contrary to popular opinion, an MMOG doesn’t need to have millions of subscribers to be profitable. Fallen Earth is a good example. Lee Hammock, ex-Lead Designer for Fallen Earth stated that 50,000 subscribers would make the game profitable, and that 100,000 subscribers would make the game extremely profitable. EVE Online is another good example. With roughly 350,000 subscribers, the game is profitable and new expansions continue to be made. There is definitely a scale for what it takes to make a game profitable. Fallen Earth and EVE Online are niche games; I’m pretty sure that World of Warcraft needs more than 50k subscribers to make a profit.

fallen earth
Fallen Earth disproves the lie that you need millions of subs to make a profit



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