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Like Saint Thomas... See to Believe!

more about mmos and their communities...

Author: Pelagato

Myth about subscriptions that doesnt die...

Posted by Pelagato Wednesday January 20 2010 at 4:29PM
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Sup all... I was reading around some articles related to economy, stocks and all that stuff in that line, those articles are kinda easy to come by in msn, yahoo, even google, considering the economical situation right now in the world, talking about economics seems to be the new swing...

But let me tell you something, right now I am not really going to analyze world economics, lol, the only reason for me to write down this entry is because I notice the old myth that doesnt want to die, stills around shaping peoples minds in a wrong way... which myth you will ask, well let me put it into the next formula using WoW subscription rates as one example...

(15 dollars)  (11,000,000 subs) = 165,000,000 dollars, or bucks!

People take that as a whole and solely true!!!!!

But let me tell you something, that is absolutely wrong, that is kids thinking, or domestic thinking, the one you do at home. In a more bigger corporate level, things work differently, for the worst of the corporation and for the better of the government. lol!!!

WoW claims to have 11m subs, and let me explain something I just figured out, (with some simplification at some extent), from those 11m subs, the average payment is 14 bucks, not 15, why? Because there is 3 subscription types in the credit card options 15 per month, 14, for 3months , and 13 for 6 months.

(to have one exact number or average payment per subscription, blizzard will need to release those numbers, and I dont think they will give me those numbers to me, but in general this number seems kinda logical)

Now the first step in the equation is

(14 bucks) (11,000,000 subs) = 154,000,000  

here we have the first down,  11 million dolars arent lost,   they never existed at all

the next step will be... TAX!!! (also simplified because there is deductibles, liabilities and such, not that is that great considering blizzard is just a company of entertainment lol, also tax % are averages, as they change each year in the tax rate tables)

154,000,000 - 8.75% City Tax  = 140,525,000  (US will leech some blood out of you)

140,525,000 - 8.84% State Tax = 128,102,590

128,102,590 - 38% Federal Tax = 79,423,605 dollars!

also

154,000,000 - 2% Credit Card, and bank transactions fee, calculated at the time of the 14 dollars transaction (average number too) = 3,080,000

79,423,605 - 3,080,000 = 76,343,605

$76,343,605 / 11,000,000 =  $6.94 per sub

The numbers are raw, and a bunch of numbers are averages, based on information that runs around and not official one, not to mention that some things are rounded and the tax table I use for this was the 2008 one. But in general you got an idea of the picture around, not the old MYTH!!!!

In general blizzard doesnt take the 15 dollars or 14 dollars home per sub... after all the taxes and everything, they only get half of that... or less!

Plz leave some comments if u have more insight on this.. or some more details and data that can help out shine a bit into this matter... Thx

 

 

 

 

guiltyone writes:

 Also take out for employee wages, benefit plans, server upkeep, facility cost, and "employee cost."

Wed Jan 20 2010 5:10PM Report
Kordesh writes:

 Mostly true, but that's a bit much on taxes. Chiefly because most countries/states don't charge a tax on MMO subs yet, fortunately. 

Wed Jan 20 2010 6:00PM Report
ghstwolf writes:

I fail to see the point.  First because the world wide "sub" numbers operate on a broad spectrum of costs depending on region.  Currently the 12.99EURO sub price is worth about $18, and taxes would look almost neurotic with any attempt to generalize their effect (never mind the China effect).

What's more why would it matter?  As long as they make enough to happy continue to provide and support the game, what else about it matters?

I see it all as a pretty meaningless exercise.  I really don't get the web-obsession with figures that don't impact their lives in any tangible way.  Does Avatar's BO matter, does it change how you rate the movie itself?  There's a million such examples and I use the movie example only because I want to show it goes beyond games and applies to almost everywhere on the internet.

Wed Jan 20 2010 6:09PM Report
majinant writes:

ok... so instead of  165,000,000 per month they make 82,500,000 per month after tax. What is your point?

Thu Jan 21 2010 3:17AM Report
Pelagato writes:

Guiltyone have a more extended point... in the end, one mmo monthly subs can be only good to cover their tax rate and functionality costs...

not leaving much for developing extra stuff (usually ending up in the game's death as people quits because the lack of novelty)

Thu Jan 21 2010 10:53PM Report

MMORPG.com writes:
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