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MMO Market: Investment or Bubble?

Posted by lordaltay1 Friday May 30 2008 at 3:24PM
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There's no denying that the MMO market is growing by leaps and bounds. Analysts have shown that the MMORPG market is growing at over 30% a year. It seems that almost every week several new games are either announced or enter public beta. With formerly poor Asian countries becoming wealthier, there are literally millions of Chinese, Filipino, and Vietnamese players entering the potential customer base every year. Even in America, broadband access is only now starting to spread rapidly.

But even with the growing demand, are the number of games being announced grounded in market realities or simply on hype? "Bubble" is an unofficial term commonly used in the financial world to indicate any asset or industry who's price rapidly inflates beyond fundamental justifications. Take for example the recent housing bubble that popped in America. For years it was too easy to borrow money which led to lots of people borrowing to buy homes, home prices went up and lending standards went down. It came to a point where someone could get a mortgage with no money down and no visible form of income. By the time the banks figured this out, things had begun to collapse. People who could not pay their mortgages walked away from their homes, leaving the banks with a glut of bad loans and empty houses who's prices began to plummet. To sum it up, over investment based on hype, not on customer demand

You may be asking yourself what any of this has to do with MMMORPGs. I get the feeling that while there is strong demand for online games, the current number of products being developed is far more than the market can handle. Every major success breeds imitators and since World of Warcraft's huge success worldwide, there have been many new MMORPGs announced. Currently there are at least 100 free to play MMORPGs and more are announced every week. All these games are chasing the same general audience, and all their strategies are based on the assumption that enough players will purchase items from "cash shops" to cover all their expenses. No one expects all these games to succeed but I'm predicting a very hard landing. Most of the current batch of games will never make a profit, though they may take a long time to die off. They'll be sold from one publisher to the next at ever decreasing value. Take for example Deco Online which just entered public beta by JoyMax, the folks behind Silkroad Online. Deco is not a new game. It failed and was shut down in Asia. That's when JoyMax bought the license and decided to bring it to North America. In order to protect themselves from lemons, investors like those at JoyMax are starting to offer multiple games at once, so that the successful games can counterbalance the flops. Expect to see more of this. Sites like IJJI, Aeria, IGG, gPotatoe, Game&Game and Nexon that currently offer multiple games will soon offer dozens. New sites with the same business plan will soon follow.

So what do you think? Are there too many MMORPGs being released for the current audience? Is the market really growing fast enough to accommodate all of these games? Share your thoughts below.

Death1942 writes:

yes there are too many.  give it 5 years (1 or 2 of which will be the "horror" years) and it will sort itself out.  what i mean by that is the devs will be forced to make a decent game just to stay compedetive.  the quality will go up as they struggle to keep a foothold in the market.

bad times for the devs in the future and good times for consumers (bar the 2 or so "horror" years).

funny how almost everything follows economic laws

Fri May 30 2008 5:26PM Report
nakuma writes:

awesome writing man. this is definitely true of the MMO scene. everyone vying for space on the customer/gamer's screen and credit card. alot will fail, very few will succeed. bravo on the comparing MMO inflation and saturation to Housing bubble saturation.  i hope to read more of your gems if there are any.

Sat May 31 2008 4:19AM Report writes:
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