Lukewarm [SWTOR]

A few weeks ago, I made some predictions regarding EA’s Earnings call.

In particular, I suggested that it would make for an interesting temperature-gauge of the performance of SWTOR.

As I mentioned at the time, the health of an MMO is difficult to decipher in today’s era of mysterious subscriber numbers. Marketing departments seem less keen to reveal any figures after the initial launch, perhaps because the market for ‘themeparks’ has stagnated and there is nothing to boast about any more. Even market-leader Blizzard is now rounding numbers to the nearest million.

Taking a look at the official summary, SWTOR was referenced twice in total:

Extra content and free-to-play contributed $185 million, up 50% led by FIFA and Madden Ultimate Team and Star Wars: The Old Republic. These revenues relate to businesses on PC or consoles, where consumers pay for additional digital content — including virtual characters, map packs and micro-transactions associated with browser based games or MMO’s – like Star Wars. As a reminder, on November 15th we launched our free-to-play option for Star Wars: The Old Republic. Very early indications have been positive and we are pleased with the initial results but it is too early to know how successful this will be in the long term.

Subscriptions, advertising, and other digital revenue contributed $79 million, growing 18% over the same period last year.  The current year includes a full quarter of Star Wars subscriptions, but it was offset by a decline in other licensing digital revenue.  

The reception from the Reddit community was very positive. This is as you would expect – it is a group that has gathered around the game primarily due to their continuing interest and support for it.

However what concerned me was the statement “it is too early to know how successful this will be in the long term”. I believe it to be true, but it seems to not be the kind of statement you would make in an earnings call unless you attempting to manage expectations downwards. My interpretation is that F2P had a massive boost initially that declined in the latter months when players had unlocked all of their desired features or discovered that the random loot packs featured a lot of filler for every Revan’s Mask.

Indeed in my last post I suggested that ‘Abstract game data means that it has a year or so left to live. A little pessimistic perhaps, but based on previous earnings calls, I had envisaged that EA would try and rally enthusiasm for the game by saying how many new account registrations there had been since F2P launch or by providing the frequency of transactions in the Cartel Market, a number that is meaningless when detached from the relevant revenues. In reality they didn’t even do this.

Contrast this hesitancy with the overwhelming endorsement of another F2P game, FIFA Ultimate Team:

The digital performance for this franchise is particularly impressive.  The number of gamers that actually played FIFA Ultimate Team grew 61 percent over last year’s offering.   Additionally, the average revenue per paying user increased by approximately 30%.  Both of these increases contributed to FIFA Ultimate Team revenue being up 136 percent year-over-year and the holiday delivered the largest revenue day in the history of the service.

So Ultimate Team is doing ‘particularly impressive’, whilst SWTOR is ‘positive but too early to [call]’.

It looks to me that Rise of the Hutt Cartel mini-expansion will be the barometer we are looking for. Until then, the fate of the galaxy is looking decidedly lukewarm…

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Second-guessing EA [SWTOR]

The 30th of January 2013 sees EA’s first earnings call since Star Wars: The Old Republic went free-to-play.

This is significant for the MMO industry for several reasons:

1)      SWTOR is believed to have cost $200+ million to develop, making it the most expensive game of all time.

2)      Having launched as a subscription service, it heavily hemorrhaged players from an initial 2 million to around 500k on the last earnings call, a pattern that reflects how many ‘themepark’ MMOs perform in their first year but to the shock of commenters that expected a challenger for WoW

3)      Like many similar titles, it has transitioned to a free-to-play model in order to retain players and boost revenues. Many have questioned the logic of this move.

The MMO blogosphere is a highly tribal environment. Everyone has their favourite MMO(s) and theories why some games succeed and others fail. But in the last few years, we’ve had very little data on which to base our theses. For this reason, I look forward to any data we can glean from this earnings call.

I predict that EA will announce the Cartel Market as a success. I have no doubt that many new players have been attracted to the game and that high revenue players (‘whales’) have invested heavily in cartel packs on the chance to win very rare cosmetic gear.

This survey from Darth Hater (link), although suffering from the usual community website selection bias issues, indicates a decent ARPU from players that decide to pay for goods.

How much real money have you spent on Cartel Coins?
Zero. 50%
$5 – $10 5%
$11 – $20 6%
$21 – $50 15%
$51 – $100 11%
$101 – $200 8%
Over $200 5%

 

How likely are you to purchase additional items from the Cartel Market in the future on a scale of 1-5 (with 1 being “no frickin way” and 5 being “definitely”) ?
5 32%
4 22%
3 23%
2 13%
1 8%

So the overall story is that players have shown a willingness to spend, with many spending big. 

What isn’t clear is whether the game has recovered sufficient subscribers or seeing sufficient revenues to be a future focus for investment in new content, or if this is just a case of milking the cash cow. Players that have been with the game since launch want to see new class story content, but there needs to be a compelling reason for EA to get its wallet out so soon after launch.

Can F2P plug the gap in SWTOR’s revenues? Looking at F2P competitors such as Lord of the Rings Online and Champions Online, this commercial information is closely hidden, so the general consensus is that they are fading out.

On this basis, I suggest the following interpretation of the earnings call:

-More financial data means the game is doing well (ARPU, revenues, # of subscribers, % of subscribers, Cartel Shop sales etc)

-Abstract game data means that it has a year or so left to live ( # of characters created, accounts created)

It be interesting to see how this plays out.

Bernard

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Mediocritas

Doone, ever the originator of interesting debates, has spurred me into writing with his latest piece on the ethics of game design. In the comments section of his post, I allowed myself to indulge in nit-picking, selecting the odd sentence here and there to question.

I would now like to engage with the spirit of the original post, which I will summarise as follows:

Video game designers have a responsibility to minimize the use of mechanics like Skinner boxes which they know to be harmful to their players

Trapped in a Skinner Box

Also known as an Operant Conditioning Chamber (link), a Skinner box is a controlled environment that rewards a test subject such as a rat, bird or primate with food in exchange for taking a deliberate action like pressing a button. Through repetition of the reward for action, the test subject is trained to make the link between cause/effect and the behavior is normalized.

In MMOs it can be argued that players are conditioned to log in every day and complete a simple action (Kill 10 rats) in exchange for a reward. Even though the reward is virtual (‘Experience’, gear or tokens, achievements, cosmetic items) the impact on the player is real, as endorphins and other ‘happy chemicals’ are released. In time, players become bored of killing the same rats every day, however the behavior has become reinforced to the point that many cannot quit.

Meanwhile other common mechanics like random boss drops encourage players to invest countless hours of their time to beat odds controlled by the casino. What could have been achieved in the time saved if Ashes of Al’ar dropped 50% of the time instead of 2%?

Developers make the rules. They have the power to encourage players to log in once a week for 15 minutes rather than every day for several hours. Is the fact that they don’t a reflection of their greed and/or reckless abandonment of their duty of care towards players?

Rewards

If you look around you, you will see that rewards are a deeply engrained part of society. Infants are given lollipops if they don’t cry. School children receive stickers, green ticks on their work and ‘golden time’ if they follow classroom decorum and do their homework. Office workers are promised promotions and bonuses in exchange for meeting performance criteria and towing the company line. Advertising tells us that by purchasing a product, we will be more attractive, more successful and more loved. We are conditioned to view behavior as transactional and life’s rewards to be extrinsic.

If I do X, I will receive Y.

Hedonism

At the same time, we are all accustomed to the idea that what feels good may not always be good for us.

Alcohol is relaxant that reduces inhibitions and can accentuate certain flavors in food. It also has the potential to poison the body, or cause us to lose self-control and take actions that could be deeply harmful to ourselves and others.

Sugars form a key part of the Western diet and directly trigger the release of endorphins. They can also lead to diabetes, obesity and cardiovascular disease.

We recognize that alcohol and processed carbohydrates are not good for us and there are many arguments to say that the industries responsible for their production, like MMO developers, have a duty of care to ensure that they do not harm consumers.

But the reality is today the public is expected to moderate their own consumption. For better or for worse, we are free to make our own mistakes.

In this way I recognize that the reward-bearing mechanics of MMOs have the potential to be addictive and that games which are not played in moderation can be deeply harmful, but I cannot ascribe this responsibility solely to MMO developers.

Balance

Players WANT character advancement. They WANT a variety of content that will support their play style, even if they are playing 3+ hours/day. Indeed the most commonly cited reason for quitting a game is that there was nothing left to do.

Developers are trying to balance their games around short-term and long-term ‘fun’ and experience has dictated that the pacing of rewards is a key contributor to this balance.

I don’t think anyone has got this balance just right yet.

Blizzard has acknowledge that Mists of Pandaria launched with too many dailies. It is worth noting that 5.1 featured considerably less daily quests to undertake and the principle reason for completing them is to experience the story, which is what motivates me to play these games.

Doone mentions Zygna, creators of Farmville, as an innovator in games that manipulate players for rewards, all the while being the darlings of Wallstreet. But the reality could not be further from the truth: Zygna shares have crashed from a high of $15 to $2.40.

This gives me faith that players can differentiate ‘fun’ from ‘addictive’ mechanics.

Conclusion

We all play our part in protecting the vulnerable from the harmful effects of negative behavioural triggers and addiction. Video game developers cannot be expected to make the most compelling content possible whilst constantly fearing that it may be TOO good or that they will need to police its consumption.

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If A Tree Falls In a Forest… [LOTRO]

Another day, another F2P controversy.

Syp has engaged in the debate concerning a $50 hobby horse mount being introduced to LOTRO. Turbine went to the unusual lengths of asking for targeted feedback whilst demanding that this excludes all derision.

The general consensus on the forums is that:

1)      It looks rubbish

2)      It breaks immersion

3)      It’s the first step down a slippery slope

4)      It’s too expensive anyway

 

I have sympathy for the LOTRO players, whose F2P bliss is repeatedly intruded on by the developers, eager to monetize the heavens out of them.

However I have to question whether the idea of the horse is worse than the reality. Let’s assume for a second that the horse successfully makes it through to the live game, whilst retaining its high price point*.

It is going to be very rare.

Consider for a second the common belief (?) that the majority of players in a F2P game pay nothing. I have no evidence for LOTRO, but it could be less than 10% than spend any money on the game.

Now let’s assume that, of those 10% that spend money, the majority of them agree with points (1) and (4) above. So that’s 5% of the 10% that would buy it – or 0.5% of the total playerbase.

If we assume that the players that DO have them, do not keep them activated for 100% of the time. Either due to points (1) and (2) or for fear of the general stigma brought about by the item’s introduction of the game.

The net result is that you are very, very rarely going to see the hobby horse. There are a million other immersion-ruining aspects (#1 – other players’ behavior) that will impact your enjoyment of LOTRO more than the horse.

In this sense, I find this similar to the tree in the forest philosophical dilemma.

Players’ rage is not directed at the actual horse (which they will rarely encounter) but the idea of the horse and what it represents.

Bernard

 

*Something that I doubt. A 50% reduction would be a PR win for the developers, whilst the community feels like they won.

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A Weak Imagination [GW2]

In September, ArenaNet heralded the age of a new kind of MMO. One that eschewed the leveling game/raiding distinction in favor of horizontal progression. This was lauded as “the endgame reimagined”, an escape from the skinner box carrots of old.

Many critics at the time questioned whether this model could work in a market where competing themeparks continue to offer exponential character power progression to hold the attention of their audiences. But ArenaNet stuck to their guns and launched an MMO with a unique philosophy:

“We didn’t want the endgame to be something you could only experience after a hundred hours of gameplay or after you reached some arbitrary number.”

Two months later, this new endgame is starting to look uncannily like the old endgame. From the most recent official blog post:

“We have always worked hard to create a sense of satisfying progression rather than gear grind and this new item progression initiative is no exception. By adding challenging new combat mechanics to end-game content and ways to mitigate those mechanics through gear progression for high-end players, we can add personal progression without making the game feel like an endless treadmill of gear that is just out of your reach.”

In effect, ArenaNet will be offering new content that is gated by a requirement to grind more powerful gear to fully complete it. This is the antithesis of ‘flat progression’ and a far cry from the lofty rhetoric we saw in September.

2 months is not a very long time to wait before adding a feature which is a complete about-turn from your original design goal.

What’s next – the return of the holy trinity of tank/DPS/healer?

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The ROI of One Time Events [GW2]

Summary

Ever the contrarian, Azuriel has recently been evoking strong reactions with his criticism of Arenanet’s use of one-time events.

The Guild Wars 2 Lost Shores event currently being previewed on the PTR, like its predecessor for Halloween, contains a one-off animation that will take place at the same time on all servers worldwide, never to be repeated again.

Surely for MMOs, all new content is good content, right?

Azuriel thinks not:

“Is it a good use of designer resources to specifically construct one-time events (in MMOs)?”

The traditional sort of knee-jerk response would probably be “Yes.” My answer is No.

His arguments focus on the fact that this content is instantly obsolescent and by being scheduled in advance, does not succeed in creating a dynamic world. He also questions how ‘fun’ this content is, particularly recognising that many of the players will experience it via Youtube.

Comment

Whilst I agree with many of these points, my main interest is whether one-time events offer a good return on investment for developers.

If this is not the case, Arenanet is burning money and will have to stop at some point, removing any good will generated by failing to meet the expectations they have created in the player base.

New content requires resources: art, audio (voiceovers and/or SFX, music is unlikely), designers etc. If you bring in additional head-count to do this work, you have to pay for them. If you use in-house resources, you are diverting them from something else (Dungeons? Expansion-work?). Content is never free – there is an opportunity cost in having a character explode out of a fountain once.

One-time events are attention-grabbing in the MMO space. Due to their cost and the risk of a negative ROI, they are uncommon. They generate press and lots of word of mouth, as players anticipate what it will be like, or subsequently share stories of “Were you there?”.

Guild Wars 2 is a new game that is not based on a well-known IP. It NEEDS this press coverage. Furthermore, the business model relies on front-loading revenues from players, so continually growing the player base is crucial until the RMT shop can pay for the overheads of the game.

Ultimately, I am pleased to see that GW2 has been successful and I am keen to see whether Arenanet can maintain the momentum, particularly as my boxed copy entitles me to return to Tyria whenever things get interesting.

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Room for 2 [Link of the Day]

Despite recently focussing on WoW, I am still convinced that there is room in the market for many more themepark MMOs of different types. In that sense, I consider myself a ‘pluralist’,  as opposed to a number of bloggers who believe there is only sufficient oxygen in the room for 1 game, or that the genre needs to be turned on it’s head because it’s currently broken.

With that in mind, today’s link of the day is Going Commando, where Shintar presents the arguments why SWTOR is a fun game and worth anyone’s time.

F2p is on the near horizon, so now is a good opportunity to consider trying the game if you haven’t previously done so.

Bernard

 

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