« The Top 10 Games That Made Me The Gamer I Am Today | Home | Random Bytes #6 - “R.I.P., Mr. Gygax” »
Are You Paying Too Much, Too Little, or Somewhere In Between?
By Cameron Sorden | March 4, 2008
John Hoskin asked an interesting question in yesterday’s Loading…: “Do we pay too much for our games at $15/month?” He then goes on to argue that $15 per month, if anything, is too little for the entertainment we get from our games, if you consider what else you can get for the same price. From Loading:
On the other hand, I feel that $15 a month is a bargain that were it most other entertainment mediums would be considered priced far too low for the value delivered. Let’s take a look at the cost of playing your favourite MMOG.
- Retail Cost: Let’s go high and call it $60. This is the price of the box or digital download.
- Monthly cost: Let’s go with $15 since it is close to what is being charged for nearly every game.
Your cost for the first year of unlimited access to this entertainment is: $225. Oh, but it should be $240 I hear you cry. Bzzzzt! The initial purchase also includes the first month of play, so there are only 11 months of subscription fees plus the retail cost. It costs you $18.75 a month to have unlimited access to something that you consider entertaining.
And some more:
I for one, believe that not only are the monthly costs of a MMOG fair, that they are actually too low for the value delivered. EverQuest and Ultima Online did every developer who came after them a disservice when they priced their products so low. They set a bar that is difficult to move. They were a new entertainment channel and a high price may have killed the industry in its infancy, but still, $15? I can’t do anything for $15, well, except play hundreds of hours my favourite MMOG each month.
I have to disagree, to an extent. For gamers like me, John, or you (probably), those prices are great. They’re rock bottom low. They’re a real steal of a deal! But for gamers like my fiancee, who logs into World of Warcraft for a few hours every other week, it’s a lot less attractive. But she pays the monthly subscription in case she feels like logging in to play with me once in a while. Gamers like her subsidize gamers like me, which is what keeps prices artificially low for me and artificially high for her. I get far more than what I pay for, and she gets far less. So really, John’s answer is only looking at half the equation– the fairness of the price depends on how much you play the game.
It gets more complicated when you consider that it really costs two things to play MMOGs. There’s money (the obvious one), but you also need something else– time. It’s a fundamental principle of online games that time invested equals the amount of rewards. To keep up with the Joneses (however that’s defined in your game), you need to spend both the $15 monthly fee and however many hours per week that the “best players” spend playing. And lets be honest– these games are about keeping up with the Joneses. If you ain’t got purples, you ain’t nobody. Even if that’s not how you play the game, that’s the point of it for many people.
So what we really have is three classes of players: Those who pay their $15/month and play enough themselves to keep up with the Joneses (Class A players), those who pay their $15/month and don’t (and don’t care about keeping up)(Class B players), and those who pay their $15/month, don’t play enough to keep up with the Joneses, and do care about keeping up. They simply go to gray markets (IE gold sellers and power levelers) and drop a little cash to make someone else spend the time necessary to keep up with the Joneses (Class C players).
As far as network and use costs go, B and C players subsidize A players (A by far incurs the most usage costs). As far as customer service costs go, A and B subsidize C players (C by far incurs the most customer service costs, I’d bet). The server population breakdown also probably looks like this: B > A > C. So the costs incurred by A and C get shuffled off to B, who pays far too much. A and C pay far too little. All of this happens because of the way incentive structures are set up (time = advancement, RMT isn’t built into the game). If you lose too many B, your game won’t be able to support A and C and both customer service and stability will suffer, prompting you to lose A and C. In many cases, the presence of B is reliant upon people just not canceling when they’re not using the service or sticking around for friends. Additionally, you’re losing revenue from gray market transactions which go to third party companies that aggressively increase your customer service costs. I believe that this is a fundamentally flawed business model for the long term.
Instead, you need to build your game around monetizing A and C and forgetting about B (since B doesn’t care anyway). This is a major deviation from the past practices of relying on B to drive your game while A and C get the most use out of it. This is part of what companies are trying to do with RMT, but you still have similar problems if you don’t provide a way for players to transfer time and money within the game. Consider one such dual-currency system proposed by Matt Mihaly here.
What that does is it says, “Forget about B. They’re not the people who really care about the game, and they’re not the ones we want to monetize.” The system he suggests make sure that both A and C, your heaviest users, are fairly monetized for the enjoyment they get from your game, with no money lost to third parties, usage fairly monetized, and customer service costs due to fraudulent transactions nearing zero. In this system, you’ve made sure that your heaviest users pay for what they get and your company can shift it’s focus to what the real goal should be here: converting B players to A or C type players. By doing that, you’re not only maximizing your profit and minimizing your costs from the people who play your game the most, but you’re also generating new value for your company on a regular basis by converting B’s to A/C.
Still with me? In short, the current system screws people who don’t play much in favor of people who play too much and screws game companies out of lots of money. If you’re reading this, you’re probably not paying enough for your favorite online game, but there is an upside. If you were appropriately monetized, it’s likely that costs would come down. Basically, you might actually end up paying less in a system like Matt describes.
And if you’re a B (and some of you probably are, actually), this whole article should make you downright angry. Why are you subsidizing people who have the free time to play 10 hours per day on your dime? Stand up for yourself and get ready for some changes.
Topics: Random |
March 4th, 2008 at 2:03 pm
What makes sense to do is to charge gamers by the hour… but can you imagine the outcry?
March 4th, 2008 at 2:59 pm
I’m mindful of gym membership modelling - a dormant majority funding the occasional attendance of a minority, and a thankfully tiny proportion of overusers. Attendees are monetised via cafe, class and court charges, and if everyone turned up at the same time, the system would crash…
March 4th, 2008 at 5:37 pm
Well written response and I agree. Also, you need to factor in the cost of internet service as well, you can’t play an MMO without one, and for most of us that isn’t free. You can argue that you’d be paying for internet anyway, and for some people that’s true, but for others it isn’t. I know the only reason I upgraded to DSL way back in the day was because I was sick to death of lag in EQ.
Paying by the hour would make the most sense, though there would be a huge outcry from the very vocal minority of basement dwellers who play 60+ hours per week. Some of the first pay-to-play MUDs were pay by the hour, and lord were those expensive. MMOs would have to do a pretty cheap hourly price, though somehow I doubt we’d be blessed with the rate the chinese are paying . . .
March 4th, 2008 at 6:45 pm
It’s not a minority that would complain about an hourly rate or a raise in the monthly price. It’s about the 5 million that would quit if any price increase were to happen.
$15 a month is alot to the casual player. WoW had more casual players than raiders.
Raising the cost raises the barrier to the end game that only 8% are playing. Blizzard is not about raising the barrier they are about ease of use and removing the barrier to entry.
March 4th, 2008 at 9:28 pm
Great read Cam.
That said, even the folks who only play for 10 hours total in a month are getting a great deal. $1.50 per hour is less than the amount most people spend on coffee each day.
There is “subsidizing” as you call it in just about every type of entertainment. People who pay greens fees because they golf five times a year subsidize the members of the local club, and so on.
The bottom-line is that it is about value. Obviously $15 is a fantastic value for MMOGs, or if anyone really wants to argue it, for World of Warcraft. The market dictates the true value and at $15 a month WoW is still the #1 selling PC game every month.
March 6th, 2008 at 1:43 pm
I play 10 hours a week on average and my wife plays perhaps 3 hours per week. I still consider the prices I pay to be good even though I don’t play it as often as some. Its cheaper than a movie and you don’t have to pay for a baby sitter.
I personally don’t want the model to change though I can offer an alternative to just going per hour or avoiding player B:
12.99USD for up to 10 hours per week
14.99USD for up to 20 hours per week
16.99USD for unlimited
with their system set to move up and down the billing scale depending on your play time automatically. Just a thought…
June 20th, 2008 at 5:43 am
Its a lot more complex than just that, keeping up with joneses is a concept used primarily to goad players into FEELING emotionally attached (obligated to play) to the game.
MMO companies do in fact earn a lot of money because they use keeping up with joneses to “encourage” (I think the better word to use would be to FORCE) people to keep returning, to plan for long term goals. THAT is what will eventually get them hooked to the point when they will not care how expensive the game is, how bad it is, how much they ruin their lives in order to keep up.
If you would please, have a look at one of my own articles addressing this issue.
http://digg.com/pc_games/2_lessons_in_heroin_gaming_MMORPG