I know this is a very general question but I am curious if there are any stats on what it typically costs per sub to maintain it? What is the "mark up" so to speak? Where is the break even point for op ex compared to over all sub levels? I know there are variences between games based on specific engine and server upkeep requirements, as well as bug fixes and game improvements.

I would think that basic maintainance of Servers and Services is not that high. I wonder what the margin is on a $14 US monthly sub.

How do the FTP game do with item malls, etc? I have read this actually produces good profits if not higher profits then a subscription but have never seen any statistics.

Anyone have any idea or can you point to a good source of information? Bein a fan of the industry I am very curious as to how MMO companies balance this stuff.

The cost per subscription probably varies greatly from one game to another.  Note that the company has to bring in far more revenue per subscription than the direct costs of a subscription to cover the costs of game development. 

I too have pondered this question. I'm sure most MMOs could get by fine with a lesser fee. UO was $10 a month when it first came out in '97. Aren't bandwidth and server costs lower nowadays? So I'm thinking MMOs could do fine at $10 per month, but then I'm neglecting inflation here.

Originally posted by dougmysticey

I know this is a very general question but I am curious if there are any stats on what it typically costs per sub to maintain it? What is the "mark up" so to speak? Where is the break even point for op ex compared to over all sub levels? I know there are variences between games based on specific engine and server upkeep requirements, as well as bug fixes and game improvements.

I would think that basic maintainance of Servers and Services is not that high. I wonder what the margin is on a $14 US monthly sub.

How do the FTP game do with item malls, etc? I have read this actually produces good profits if not higher profits then a subscription but have never seen any statistics.

Anyone have any idea or can you point to a good source of information? Bein a fan of the industry I am very curious as to how MMO companies balance this stuff.

I don't know the exact answer, but I think there is a break even point. In other words you must get at least X subs to break even, because there are fixed costs involved in just setting up a server. Basically, if you set up a server and only get one sub for 14 bucks, you're going to lose a lot of money.

Also, I've looked at servers, and it ain't cheap. You'll need dedicated hosting, and lots of bandwidth. Plus, you can't just turn it on and forget it, you'll need to pay people to take care of any glitches. I"m sure you've played a game and tried to log on only to find out he servers are down.

 @leinad312:

Bandwidth prices have gone down since UO first opened, but games now use a LOT more bandwidth in some cases than the original UO.

Originally posted by Ihmotepp

Originally posted by dougmysticey

I know this is a very general question but I am curious if there are any stats on what it typically costs per sub to maintain it? What is the "mark up" so to speak? Where is the break even point for op ex compared to over all sub levels? I know there are variences between games based on specific engine and server upkeep requirements, as well as bug fixes and game improvements.

I would think that basic maintainance of Servers and Services is not that high. I wonder what the margin is on a $14 US monthly sub.

How do the FTP game do with item malls, etc? I have read this actually produces good profits if not higher profits then a subscription but have never seen any statistics.

Anyone have any idea or can you point to a good source of information? Bein a fan of the industry I am very curious as to how MMO companies balance this stuff.

 

I don't know the exact answer, but I think there is a break even point. In other words you must get at least X subs to break even, because there are fixed costs involved in just setting up a server. Basically, if you set up a server and only get one sub for 14 bucks, you're going to lose a lot of money.

Also, I've looked at servers, and it ain't cheap. You'll need dedicated hosting, and lots of bandwidth. Plus, you can't just turn it on and forget it, you'll need to pay people to take care of any glitches. I"m sure you've played a game and tried to log on only to find out he servers are down.

 @leinad312:

Bandwidth prices have gone down since UO first opened, but games now use a LOT more bandwidth in some cases than the original UO.

Do you think that most companies use a Server farm or Co-lo so that have redundant support? It is also cheaper to "lease" server space then to buy servers I would think. If I were to breakdown the Op ex costs post launch I imagine they are:
 

Servers or Server lease with redundant back up

Bandwidth

Direct expense from empolyee costs attributed from maintainance staff and customer service/ tech support staff.

Marketing budget

R&D % applied (improvement process and future products in the franchise like expansions)

infrastructure (office space, phones, leadership, etc)

I really wish there was a study on this. I would love to see how this looks. I could probably look over the financials of a publically traded game co but that would not show the direct costs and contribution margins of an MMO game itself as well as what the delta is between break even and profitability.

More than you have or will ever have in your pathetic life  , thats all you need to know.

My guess, about 2 million a month

Originally posted by Turnell

My guess, about 2 million a month

I"ve seen other estimates, adn this sounds about right.

Here's what the servers for Darkfall look like. This sort of high tech set up is not cheap:

$5k per server running 500 users or so

$1k per month to host , maintain, 24/7 live support of server by 3rd party (per server)

$3k per month for 100MBIT on tier 2 Internet Backbone. That should run 500 users

Some more money per month for operating costs, billing, etc. and to run your website supporting your product. Probably another $2k

So to run a MMO supporting 500 players you would, rough estimate, spend about:

6k upfront costs

5k a month in recurring costs for 500 users. Better charge them $10 minimum :)

This is actually a good question, if anyone who works for an mmorpg company can give us some estimate or numbers to figure it out It would be nice, however if server costs are so high how do games like Monster Hunter keep servers up for free for years at a time without a subscription fee?

We can't forget network infrastructure though. You aren't using consumer brands anymore and they will be using a switch if they have more than one server depending on the size they may need several switches usually high quality ones at that if its a large company. Its not unusual for a company even a fairly small one to spend over 10k on a switch as well as a backup. They also pay for ips they generally have a class A ip address for the big ones. If its a private address then they need to have a NAT to allow internet access.

It requires a lot of money to setup your own network smaller mmo's generally lease their servers from another company however they usually don't have full and complete control with them and it makes them harder to update and do maintenance. Often times when you lease equipment if a problem goes wrong they can take awhile to find it. It depends if they use a troubleshooting method such as starting from the bottom of the OSI model and working their way up.

There is a lot to consider.

I think your term "run" rewuires more specification. Do you include your staffing costs? promotion? workers insurance? etc etc

Originally posted by Ihmotepp

Originally posted by Turnell

My guess, about 2 million a month

 

I"ve seen other estimates, adn this sounds about right.

 

Here's what the servers for Darkfall look like. This sort of high tech set up is not cheap:

This is the result when a hillbilly is trying to set up his multiple rigs.

Why are you asking us?

E-mail a dev.

Originally posted by Frotus

$5k per server running 500 users or so

$1k per month to host , maintain, 24/7 live support of server by 3rd party (per server)

$3k per month for 100MBIT on tier 2 Internet Backbone. That should run 500 users

Some more money per month for operating costs, billing, etc. and to run your website supporting your product. Probably another $2k

So to run a MMO supporting 500 players you would, rough estimate, spend about:

6k upfront costs

5k a month in recurring costs for 500 users. Better charge them $10 minimum :)

No it does NOT.

If you are buying server hardware and bandwidth for JUST the 500 concurrent users, you could probably run the server on next to nothing.  Hell, most websites need more bandwidth than a game with 500 users....and I am promising you it does not cost anywhere close to even a thousand to host THAT.

I don't claim to know much about any of this, but I DO know business.  If its costing 5K for 500 users, then subs would be running us about 30$ a month.  Obviously, it takes far less than that....else we'd not EVER have free to play games.  A hefty part of the sub money goes into paying off debt and clearing payroll....just like any other business.  You can also bet a fat portion is set aside as clean profit, part to fatten the corporate wallet and part to fund future projects.  I can almost guarantee that when a company sits down to project its spending....server cost probably barely even makes a quarter or what income they bring in.

Very interesting topic.  When I get some more time later I may do a little research to see if I can dig anything up.

That pic made me lol btw. 

Originally posted by Gishgeron

Originally posted by Frotus

$5k per server running 500 users or so

$1k per month to host , maintain, 24/7 live support of server by 3rd party (per server)

$3k per month for 100MBIT on tier 2 Internet Backbone. That should run 500 users

Some more money per month for operating costs, billing, etc. and to run your website supporting your product. Probably another $2k

So to run a MMO supporting 500 players you would, rough estimate, spend about:

6k upfront costs

5k a month in recurring costs for 500 users. Better charge them $10 minimum :)

 

No it does NOT.

If you are buying server hardware and bandwidth for JUST the 500 concurrent users, you could probably run the server on next to nothing.  Hell, most websites need more bandwidth than a game with 500 users....and I am promising you it does not cost anywhere close to even a thousand to host THAT.

I don't claim to know much about any of this, but I DO know business.  If its costing 5K for 500 users, then subs would be running us about 30$ a month.  Obviously, it takes far less than that....else we'd not EVER have free to play games.  A hefty part of the sub money goes into paying off debt and clearing payroll....just like any other business.  You can also bet a fat portion is set aside as clean profit, part to fatten the corporate wallet and part to fund future projects.  I can almost guarantee that when a company sits down to project its spending....server cost probably barely even makes a quarter or what income they bring in.

You need to do some more research. Website hosts will not let you run games on their servers. Hosts that will let you run games on the servers charge more than website hosts.

So just comparing bandwidth doesn't work.

Game server hosts

Free to Play games are not "free". They make money in item malls.The reason the prices seem outrageous in item malls is that the profit from the items has to pay for the bandwidth for all the people that try the game, but don't make it to the item mall.

It does not matter how much the hardware costs per month...

_________________________

Yes that's right the cost of maintaining/renting hardware is insignifigant to the cost of a full team behind an MMO.

I found this link to help continue the discussion. Has a good list of game server hosting companies.

http://mmorpgmaker.vault.ign.com/phpBB2/viewtopic.php?t=1573

Does not appear to be that costly. It depends on how many concurrent users in an MMO the server can handle.

im sure most MMOs could make a fine amount of cash having subscribers pay only $10, however they do their research and know they can get people to pay at least $15.  Its all about demand, and theres plenty of it.  they know what theyre doing.

it would cost a model t car, a couple jars of beer, and a toddler

http://vids.myspace.com/index.cfm?fuseaction=vids.individual&videoid=38473390

Originally posted by smoothmoovs

im sure most MMOs could make a fine amount of cash having subscribers pay only $10, however they do their research and know they can get people to pay at least $15.  Its all about demand, and theres plenty of it.  they know what theyre doing.

You would think of all the games out there WoW would raise their prices.

For every dollar they raise their prices, they will lose players. However, they have so many players that the ones that stay and pay the extra dollar will bring in a butt load of money.

I'm surprised they don't go up at least a Dollar, to 15.95 or something like that.

After all, WoW is the MMO that is in the most demand.

You'd also think other MMO's would drop their prices, although it may be that this just doesnt' affect players that much. In other words, if I want to play LOTRO, I'll pay 14.95, and even if it were 10 bucks I'd still pay 14.95 for WoW if I preferred that game.

Originally posted by Ihmotepp

Originally posted by smoothmoovs

im sure most MMOs could make a fine amount of cash having subscribers pay only $10, however they do their research and know they can get people to pay at least $15.  Its all about demand, and theres plenty of it.  they know what theyre doing.

 

You would think of all the games out there WoW would raise their prices.

For every dollar they raise their prices, they will lose players. However, they have so many players that the ones that stay and pay the extra dollar will bring in a butt load of money.

I'm surprised they don't go up at least a Dollar, to 15.95 or something like that.

After all, WoW is the MMO that is in the most demand.

You'd also think other MMO's would drop their prices, although it may be that this just doesnt' affect players that much. In other words, if I want to play LOTRO, I'll pay 14.95, and even if it were 10 bucks I'd still pay 14.95 for WoW if I preferred that game.

Actually, WoW remains being the biggest by keeping its prices low, forcing other start up mmo's to be at least as low as WoW despite how much more it takes to make a fully polished MMO. WoW dominates by having low subscription fees and by making their game mechanic work by being a huge time sink.

Look at AoC and WAR, both supperior games but you don't need to devote your life to them to progress... meaning that people who are coming from a game that involves devoting your entire life too, too small. Players from WoW power level their way through new games and complain about lack of content. WoW business model - Give players the grind they desire and keep prices too low for other start up mmos to be financially viable. Monopoly = Vivendi. Game over.

WoW must have like 200 people working on it and salary alone each month must cost like 6 million.

I was going to start a new thread but low and behold I googled my question and found this thread already started. I am not in the gaming industry so have no idea what various investment or monthly direct costs would be, please help out. I also do not have an MBA so those with business or economic degrees, I am assuming there is a more specific formula to calculate this.

ROI = Vf-Vi/Vi

where Vf equals money saved/earned and Vi equals your initial investment.

So let's consider this, please change the numbers and recalculate if you know more accurate numbers. Using Tabula Rasa's rumored $100 million price tag (may only be $20 million, lol, who knows). In 2007-8 it was estimated there was 88k paying customers (see article below). We'll estimate that 200k bought the game initially. Obviously, these are gross assumptions, but it is a starter, as players come and go, some paid a month or two, and more may have purchased it originally, etc etc.

Money going out:
Initial Investment:                                                                                                                         $100,000,000
Monthly cost to maintain, server upkeep & hosting, pay support, devs, etc                     $2,000,000
 

Money Coming In:
Initial Sales: $50 box, say $25 directly back to developer: 200k*$25 =                             $5,000,000
Monthly revenue from subscriptions: 88,000 * $14 =                                                           $1,232,000
 

Therefore the game would be bleeding money of over $700,000 a month with the possibility of never paying for itself, that is why it was shut down. Even if the monthly maintenance was closer to 1 million (based on Frotus' estimate), it would take over 400 months to repay the $100 million dollar initial investment. So essentially, what we need to know is what it costs to maintain a game monthly including the cost for hosting, server maintenance, customer service, development team, keep the water in the crapper flowing, etc.

I am guessing those in the industry have done the math and have estimated that each players costs X amount per month (Frotus's estimate is $10 a month per player), and thus $15 has persisted because a player pays for themselves and provide some profit back to the company. It is when that is no longer true that servers begin to close and or the game dies. In the Tabula Rasa example, though I am sure my numbers are incorrect, it had to be something to that effect to cause them to let the game die.

Obviously, companies can save direct costs by reducing the number of devs, close servers, reduce CS, etc to increase profit margin, and so every game will very as to the exact number of players needed to maintain itself, but I think this gives a rough estimate. Another wrench in the monkey is that some players may have multiple accounts, so though there may be 88k subscriptions, based on 75k players so one player leaving actually reduces the revenue multiplier by a factor of more than 1. Anyway, I acknowledge my numbers are crap so don't flame me for it, if you know better please offer more accurate estimates. I think it is an interesting question and it would be interesting to know what the range of subscriptions must be to maintain most games.

http://www.massively.com/2008/02/21/q4-2007-ncsoft-s-subscription-numbers-and-tabula-rasa-s-financial/
 

TL;DR, read the first part.

The more users the more the cost... theres a average amount of bandwidth every user will use every month and except for that you need to protect your server against stuff such as DDOS atks and such things, you also gotta have GMs and other staff taking care of exploiters and ppl abusing different things as well as a small group of developers to fix bugs. ETC ETC ETC ETC ETC ETC ETC ETC ETC ETC ETC ETC.... Theres a neverending list.