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An Ongoing Tribute to my own lameness.....

General random thoughts about gaming, both within and outside of the MMO genre.

Author: Jimmy_Scythe

Why There Are So Many F2P MMOs

Posted by Jimmy_Scythe Sunday June 8 2008 at 4:00AM
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So some company buys the rights to either a failed or an old Asian MMO, do the bare minimum of localization and sets up servers in the Caribbean or the Philippines where server space and bandwidth are cheap. This normally doesn't go over too well since the internet infrastructure of Korea or Taiwan is actually much more compact (faster) than that of the rest of the world. My ping to the Virgin Islands, for instance, is probably a lot higher than any given PC baang's ping to downtown Seoul. But when you consider the profit margins, you can't blame these companies for recycling Asian games.

The budgets of most item mall Asian games are nowhere near the ridiculously huge amounts of their Western counterparts made at around the same time. That fact leaves me scratching my head as to why more indie developers haven't entered the MMO market. In a genre where EVERYONE has an opinion or idea about how to revitalize and revolutionize the genre, not one garage developer has seriously stepped up to show the rest of the industry the way. With so much to gain and so little to lose, why not?

This week I'm going to talk about the big myth of MMORPG development. That's the myth that small developers are at a disadvantage. The budget myth. If you sit back and think about it, you'll come to the conclusion that small development houses have several advantages that big development houses don't have.

Let's start with the idea that you need to have at least X million players in order to be considered successful. Success is way more complicated than an arbitrary number of subscribers. My definition of success can be expressed as an equation: (Profits > Development + Overhead) = Success! The gap between profits and everything else is the real measure of success. WoW may have the largest number of subscribers for any western game, but Maple Story made $29 million in the U.S. last year. I'm guessing that it probably didn't cost anywhere near $29 million to make and run Maple Story. So long as you make more than you spend, you're successful.

From this perspective, it's easier for the little guy to be successful than some huge monolithic gaming conglomerate. Think about it. A big production has to run like hell to close the gap of their production and overhead costs while a small setup can pay for their initial production plus overhead within just a few months of release. What's easier to make? $30 thousand or $30 million? This isn't Greek that I'm speakin' here folks.

Don't forget the overhead that these games require. Big studios like Blizzard and SOE have huge server farms that they run themselves. That's a lot of money for electricity (mostly air conditioning), tech staff to watch and maintain the hardware, maintenance and security of the facility itself, storage media for database backups, and the list goes on and on. Consider that each server on the original EverQuest was actually a cluster of 20 machines; WoW has 200 servers in the U.S. alone. That should give you an idea of how costly a big budget MMO can be. Small developers can make small worlds that run on one server cluster composed of two quad core servers, leased for about $900 a month. If your entire game population isn't going to be any higher than 72K players, why break the bank?

How did I arrive at the 72K population? Long ago, I played on a private server (no I will not tell you how to find it), run off of a single quad core machine, that was able to host 1,500 players at peak hours. Now if we double that, we get the standard three thousand population that we're used to seeing. But if we determine that each player only plays for one hour ON AVERAGE, then the maximum population for that server would be 72K. Of course, most F2P players are probably on for about two to two and a half hours a day which brings the total population down by half.

And this time factor sheds light on another consideration of population. Big budget titles generally attract hardcore players that spend four to eight hours a day playing. This places the average server population much lower; somewhere between 9 to 18K players. Divide up WoW's ten million player population by those numbers and count the servers that WoW has world-wide. The larger and more dedicated the player base, the less money you'll be making per server. To simplify even further: The bigger the production, the smaller the profit margins.

Most F2P games are item shop games which means that it's all about customers served rather than subscription numbers. It breaks down like this: Sell around $60 worth of virtual merchandise per player on average. It's the standard retail model with no overt pressure to buy. Let's see... 36k players... Multiplied by sixty... that comes to $2,160,000 dollars! And the server only costs $900 a month? Wait, it gets better.

Most big budget, AAA games like to ride the cutting edge of hardware performance while F2P games usually have last gen graphics or lower. There's a really large number of people that are incapable of reading the system specs on the box. These people also don't look for the system specs on download sites either. Subscription games have to pay someone to tell all these people what they should already know. F2P games, on the other hand, run on damn near every computer without a problem. So big budget games have a limited possible audience for their games and have to suffer though tech support hell for a couple of YEARS after launch. Tech support, that I might inject, requires buckets of cash.

F2P games are downloadable affairs while big budget games are usually boxed retail. Mainstream subscription games have to pay some big box retailer or online download service, such as Steam, for shelf space. Item shop games may have to pay for bandwidth, but they can just as easily distribute through Bit Torrent or release the client to demo aggregate sites like Big Download.

So let's sum up what we've learned so far:

Low Production Costs – Last gen, or lower, graphics, means that you can crank out your game with a small team in a very short amount of time. Theoretically, a team of 5 people, using an engine such as Torque or Blitz3D, could work on such an MMO and have it ready within two years without spending anything but their time. If the people on these boards would put half as much effort into making an MMORPG rather than bitching and fighting about the genre then they would each have their own game in about a year.

Low Start-up and Overhead – With only one or two servers plus a web page, you can open a F2P MMORPG for less than five grand. It would cost four times that to open a dollar store in a bad neighborhood.

Large Profit Margins – Even with a significantly reduced subscription model, like RuneScape or Dungeon Runners, you're looking at a huge percentage of profit to overhead. Five bucks a month from a (paying) population of ten thousand comes to $600,000 a year. On a one server game, you're only paying around twelve thousand a year to keep the game running. That's one hell of a lot of gravy! And with an item mall, the profit margins can actually get larger...

Low Risk – Like I said before, the amount of money required to open a small MMO is laughable compared to other small businesses. If your game tanks within a month or two, your losses are minimal. You still have all the code from your last project so it's a simple matter of reskin, tweak and re-release until you get it right.

So what's the downside? You can be buried by your own popularity. If your game is really good, then your population will expand faster than you can. You can turn this to your advantage, but only if you sell out. This basically happened with Runescape. The population was growing so much that they had to incorporate in order to keep the game running. A popular game is going to attract the attention of buyers with fat bankrolls. If you don't sell, your game is going to die a horrible sudden death due to the creeping costs of added infrastructure.

Of course, with so much money flowing on the low end, who cares if you never break more than 50K players? There's a huge price tag attached to swinging for the fences. The highest price paid is creativity. We need more indie developers trying to carve out niches with games that they want to make rather than clones of the same old shit.

The result of your efforts isn't going to be perfect, or even close to the level of quality that you expect. Anyone that has ever pursued a creative past-time knows this. The painting is never to your liking and the story is never truly finished. But always remember that you don't need to be great to make a living at what you're doing. In fact, you don't even need to make a living at it. You just have to love what you're doing and keep doing it. Besides, even a shitty podcast can gain 50K subscribers. How many people do you think will like the same things YOU like?

Gishgeron writes:

I would gladly do such a thing today, I would even work to get the initial investment money.  What I CAN'T do is program anything.  Thats been what held me back from doing what you suggest.  I've been a game systems designer for years, inadvertently.  I've plotted and created everything from board games to strange and new versions of the D&D format.  I've made CCG's and the structure to a turn based strategy game.

  I've always kind of wished I could code, but the process is so dull for me.  I've always been more at home behind the numbers and creation of the system...rather than the technical side of making it work on a screen.

  Find me some programmers who can make an ideal appear on screen, and I'll get right to that Jimmy :P

Fri Jun 13 2008 12:13AM Report writes:
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