Gaming's Struggle for Survival in a Tough Economy (page 2of 3)

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Posted December 22nd, 2008 by Ralsu

Increased Price Points for Box Sales and Subscriptions

A company typically hopes to recoup its development costs for a new MMOG through box sales at launch. Subscriptions finance content updates and bug fixes. The standard model in the West sees boxes sell for $50 US and subscriptions of $15 US per month. Another way to finance the production of MMOGs would be to increase the prices on retail boxes and subscriptions.

Rumors circulated prior to launch that Warhammer Online would cost more than the standard subscription model, but Mythic did not break the mold.

The $50 box price represents a sweet spot price point that will drive consumers to buy while still raking in the profit. Owners of Playstation 3 and Xbox 360 consoles frequently pay $60 for their new games, showing that the sweet spot for box sales may be stretching a little. Most AAA MMOGs launch with a collector’s edition (CE) priced $70 US or more. These CE boxes often come with a few tangible perks to justify the extra cost, such as a cloth map of the world or a DVD with promotional videos, but the most common extras don’t cost the developers anything. Most CE boxes include a code to unlock an in-game item. The item is exclusive only to players who buy the CE, but it’s never an item that disrupts the balance of the game, and it certainly costs the developer nothing. The other common perk of buying a CE box that doesn’t cost the developer anything is extra buddy keys. Consumers usually get one to three buddy keys with the purchase of a standard box; CE customers often get seven to ten buddy keys. Thus, gamers pay extra for the opportunity to let their friends try the title and potentially bring in more money to the developer.

The CE for Warhammer Online sold out in most stores and online retailers, even while rumors indicated that Mythic would charge more than the standard subscription rate. Like the box price point, $15 US/month is calculated to be the sweet spot where enough players will subscribe to sustain the game and still create profit. Gamers didn’t react well to the WAR rumor, and the subscription model at launch matched the norm. Still, it doesn’t take much of an imagination to see room for a change in that “normal” model. My first MMOG charged me $9.99 US/month. Then the price went to $12.99 US/month. Now the standard is $14.99 US/month.

The danger in raising box prices is that the new price point might exceed the magic threshold and not generate enough customers to make a difference. The benefit is ensuring that box sales settle all debts incurred in production and allowing subscription fees to finance new content and bug fixes. Likewise, the danger in raising subscription rates is introducing a model that turns away customers and results in no gain. The benefit is generating more revenue to maintain the health of a game after the initial hype dies. As with pay-to-play beta, introducing this strategy in a time when consumers are looking to cut costs could backfire. All the same, don’t be surprised to see this trend begin in 2009.

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