Defining Success for an MMO
I am going to try not to get too esoteric or philosophical. Lets eschew things like success as defined by making people happy, bettering the world, adding good ideas/concepts to the game design space, or all sorts of totally unmeasurable things like that. For the purposes of this discussion, lets focus a little more on the economic/business success.
TIME: How long does an MMO have to operate to be a success? This question came up when my wife and I were talking about a few teetering MMOs (Age of Conan, Warhammer, Champions Online) and a few MMOs that have already been shut down (The Sims Online, Auto Assault, Earth and Beyond, Matrix Online, Tabula Rasa.). We both agreed upon 5 years.
MMOs take at least 2-3 years to develop, so 5 years is at least double the minimum development time. That seems fair. Some MMOs take a lot longer, but that is generally for reasons other than just the creation of the game (running out of money, small companies that have to shift resources to other projects, etc.). It takes about 5 years for a tv show to reach 100 episodes, and that is considered one of the key break points for whether a show is a true success (and is also really important for being sellable into syndication).
There’s something about 5 years. Its 1 more than it takes to go through college and high school. It is half a decade. I don’t have a purely numerical reason for this. 5 years just seemed right to us.
POPULATION: How many players/subscribers does an MMO need to be successful? On this issue I think it heavily depends. For a big budget, major publisher MMO, I think the baseline is 100,000. But more realistically, if you aren’t over 250,000 that’s pretty disappointing. I think 1 million is the mark for a blockbuster success. And I’ll also add this: if you make a niche title that monetizes itself well with a good business model, I think you can declare success at well under 100k players – even if you had a mega budget from a big publisher. Unfortunately, they might not agree.
For an indie developer, I think the number is much lower. Depending on the size of your staff, I think success comes at a couple thousand players. Through whatever business model you use, if you average $15 a month per player you only need 333 players per staff member to average $50k per year per staff member (assuming a salary range of $30-70k depending on experience.) If your box sales cover your development and servers, that’s pretty darn good. With that math, a 10 person team only needs 4,000 players to do pretty well.
And that’s really all you need to be profitable in the long term – pay your staff, pay yourself, then save for the development of the next game.
Your opinions?
I’m hesitant to put an absolute time limit on calling a game a “success”. The classic example here is EVE Online, which took a long time to come to fruition. I’ve heard that CCP survived a disastrous launch through some help from the Icelandic government. Most people will consider EVE a success now, but it wasn’t obvious at launch.
As for figures, another MMO blog discussed that recently. Using some figures: assuming $15/user/month, a 25% profit margin, and a desire to make back $30M initial investment in 3 years, you need about 220k subscribers.
With M59 we had about 1500 subscribers at peak and we were able to support 5 people, but at a lot less than $50k/year. We had billing system, bandwidth, marketing (such as it was), contractors, etc. that ate into that profit margin.
Success, in part, is a subjective term. Thus why it makes it hard to pin down whether an mmo is able to be considered “successful”. You’ve implied that with your post.
Do we use the same criteria to judge all mmo’s? Also a difficult answer.
You’re on the right track perhaps with essentially comparing MMOs with regards to other mediums of entertainment with regards to gauging “success”. Movies seems to be what you’re modeling it after.
But movies follow 4 branches when defining “success”:
1. Peer Recongition: Film Festivals, Academy, SAG, etc.
2. Production costs met(at launch and monthly/yearly there after) and reasonable profits after that (launch, monthly/yearly).
3. Professional Critics
4. Joe Public Opinion/Interest
So for MMO’s the same can be applied reasonably I think and it again seems to be the model your’s is somewhat built off of.
Any one of the 4 can be used to term a movie/mmo as being a “success” while the other 3 can completely fail.
Of the 4 categories, the most encompassing would be #2 as meeting costs and still pulling
profits indicates #4 is being satisfied and if the game is still making profit, meeting costs over time then 1 and 2 as well are being satisfied.
Your 5 year markation to deem an MMO as a success thus I think is the only factor that is arbitrary and more a symptom of the above #2(which again invariably is also #4).
Brian:
Regarding time, what I meant was assuming an MMO is shut down, how long must it have lived for it to be considered a success?
If an MMO is shut down in 1 or 2 years, I think that MMO is a failure. Even if it makes back its initial investment, I think it is still fair to say that money could have been better spent on a different/better MMO that would have lasted longer.
220k subscribers: Ok that’s interesting. So my 250,000 mark is more accurate. Thanks for linking that blog post – good stuff there.
25% profit margin: I have read that Blizzard’s profit margin is over 50%. Do you think that is typical for MMOs, or is that another area where Blizzard has some special magic to have such a good profit margin. I would actually think that smaller companies might be able to match or exceed that due to less bureaucracy, overhead, etc.
M59: Has M59’s subscription fee always been $11/month? And did you have any other value add purchase options as well? Merchandise? If so, were those of any value? You also had box sales as well, right? What about for expansions? (I hope I’m not asking too many secret questions here.)
Storm:
Regarding your 4 branches: That’s why I basically disclaimed #1, #3, and #4. Those are hard to measure and are a lot more subjective.
I focused on the business/money aspect.
In my view, to be a financial success an MMO needs to make back the money spent making it and turn enough of a profit that it was worth someone’s while to devote their money to that game for however many years it operated.
Breaking even, or breaking even with a 5-15% return on investment is worthless. You may as well have just put your money in CDs or the stock market.
For companies that are publishing their own MMOs, I would also add that for your MMO to truly be a success, it needs to make enough money to fund your next game. If you can’t keep the ball rolling, you’re done after all.
Muckbeast wrote:
Regarding time, what I meant was assuming an MMO is shut down, how long must it have lived for it to be considered a success?
As I said, if EVE had been almost any other game without help from the government it would have shut down early. Does that mean that type of game or gameplay is a failure? Given that people consider it a raging success today, that seems to be a poor measurement. Not that I have a better one, or necessarily disagree that some games that got shut down early were real stinkers.
I have read that Blizzard’s profit margin is over 50%. Do you think that is typical for MMOs, or is that another area where Blizzard has some special magic to have such a good profit margin.
As I said in a comment to the post I linked before, a business magazine article said that EQ had a 40% profit margin. The exact profit margins depend on a lot of things. I think the big part is infrastructure costs; past a certain point additional infrastructure isn’t as expensive to establish. Blizzard also already had an existing game development infrastructure before they made WoW, although it had to grow bigger. You also have things like marketing. People point out that WoW is about 20x larger than EQ was. Does that mean that Blizzard has to spend 20x the marketing budget? Not really. For M59, I think we spent a larger portion of our income on marketing, which was mostly worthless, sadly.
I picked 25% because it’s not unrealistic and still a reasonable return on investment. If you can’t make at least that amount then you’re not going to get investment and, as you point out, people might as well throw their money into a bullish stock market.
Has M59’s subscription fee always been $11/month?
It has for as long as we’ve owned it. Originally 3DO priced it at $9.95/month (mostly because that’s what AOL was charging for flat-rate dial-up at the time), then went to a convoluted system where it was $2.50/day but it worked out to a maximum of about $30/month. At the very end they went to $15/month flat rate before other games raised their prices, but that was a dying gasp. When we acquired the game, we went to a lower rate.
And did you have any other value add purchase options as well? Merchandise? If so, were those of any value?
We have a CafePress store that was mostly so people could have some related items. All the items have a $1 markup over base cost, and we never saw much profit from it. The sales probably just about covered the cost of the premium store.
We didn’t offer any in-game services because one of our goals was to “preserve” the game. So, adding an item shop, etc, would have gone against that goal.
You also had box sales as well, right? What about for expansions?
3DO originally had box sales. Unfortunately, they never registered “Meridian59.com” as a domain, so all the URLs on their packaging is useless for us.
We sold “collector’s edition” CDs when we relaunched for $35 each. This gave the people an extra character slot per account. We sold a fair number of those and it helped us get off the ground when we would have been running short on cash. It was a tremendous idea, but it took a lot of work to get it going. Sadly, we changed how the client works so you can’t just install from that CD and have the game auto-patch.
M59 never charged for expansions. Given how people don’t really consider the cost of expansions as being a price for playing the game, it didn’t really benefit us. People even claim that M59’s $10.95/month is “almost” as much as the $15/month of other games.
(I hope I’m not asking too many secret questions here.)
Naw, I’ve shared this information before. I don’t believe the industry works best if people are overly secretive, either. If this info helps someone else, all the better. Just remember me if I become homeless.
Good points, I think there’s one major variable missing here though which is the consistency of the player population – the more the overall population of players fluctuates the less profit you have (hiring/firing staff…opening/closing servers all expensive).
Another thought – the definition of an MMOs business sucess can change dramatically if it’s part of a subscription package like the SOE station pass. In fact I”m surprised more companies don’t use this subscription model. A game that might not survive on it’s own charging a separate monthly fee can still be very effective in helping to “keep” players subscribing to the overall package.
> Brian wrote:
> As I said, if EVE had been almost any other game
> without help from the government it would have shut
> down early. Does that mean that type of game or
> gameplay is a failure?
I think to answer that question I have to keep the framework of this discussion in mind. This is about defining business related success for a specific, individual MMO. This is not about types of gameplay, artistic success, creativity, growing the genre, etc.
So yes, if Eve online had been shut down early it would have been a failure. That’s basically the definition of failure from a business perspective – being unable to keep yourself running short of a government bailout.
> All the items have a $1 markup over base cost, and
> we never saw much profit from it.
I think merchandise is one of those things where you have to be REALLY BIG to see much benefit at all. I’d say you need 200,000+ people minimum for merchandise to really have much noticeable benefit.
> they never registered “Meridian59.com” as a domain, so all
> the URLs on their packaging is useless for us.
Hmm. When I go to meridian.com it bounces to your site. If you don’t own the domain, how is that arranged?
> I don’t believe the industry works best if people
> are overly secretive, either.
I agree. The lack of transparency makes our industry look pretty amateurish. Some of the VC people we have met with in the last 6 months have outright said that to us. Its a pretty rough thing to answer since we don’t have any ability to control that.
> If this info helps someone else, all the better.
> Just remember me if I become homeless.
Will do!
SERITH: I totally agree about the station pass. To this day I do not understand why NCSoft didn’t make use of that when they had CoH, Dungeon Runners, Tabula Rasa, etc. all going. I may never have canceled my CoH subscription if I could have hopped between all their games for something like $20 a month.
“Success” is a label that needs better definition before I’d really commit to one theory over another.
If you’re referring to a financial success, it’s pretty obvious that the answer is that the game made more money than it cost to produce and maintain. The time frame becomes close to irrelevant because, like EVE Online or Anarchy Online, it could have found some way to hang in there until it became profitable.
If you’re referring to an artistic success, then whether or not the game survives introduces whole other levels of debate as to whether it succeeded to convey its message or if public acceptance was more important in this case.
The really difficult thing with gauging an MMORPG based off of how long it took until it closed is that very few MMORPGs ever have. Ultima Online is still running and releasing expansions today. The Realm, Meridian 59 (Hi Psychochild!) still going.
Perhaps a better question would be along the lines of why they’re ever shut down? After all, if Eve Online and Anarchy Online can survive a disastrous launch (with a little help from government aid) perhaps any MMORPG can.
A bit late checking back here, but I should say we did the smart thing and acquired the meridian59.com URL from the person who had registered it. 3DO used something like “http://meridian59.3DO.com/” which is useless for us, especially since 3DO isn’t around anymore. But, anyone seeing the older ads won’t find our game if they just enter that URL, takes a Google search at least.
And, I think my issue is summed by with what geldonyetich says above. You’re focusing on financial success, whereas I’m talking about game design success (as measured by keeping people entertained). EVE would have been a financial failure if it closed down shortly after launch, but that doesn’t mean its a game design failure as I pointed out above.
Yes, I am talking about financial success. In my defense, I noted that in the post that started the discussion. I think talking about game design success is basically impossible, since it is pretty much pure opinion with no hard facts at all to even use as a foundation.
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[...] However, there is information that is publicly available that suggests a MMO might run with an operating profit margin of 25% for a new and / or indie title while market leaders can see that rise up to 40% or [...]
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