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.

Originally posted by Kuro1n

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.

Yeah, I figured there were a lot of costs that are hard to put a nail on so that is why i guessed $2 million a month to maintain for about 88k players or so.  I have no idea really, but it must be rediculous, and I suspect any profit made from th $14 a month must fluctuate as well as players come and go, expansions are created, etc.  Anyhow, interesting topic I think. 

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:

lol'd hard

Originally posted by Kuro1n

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.

don't forget the building(s) that these servers are stored in, the manpower to clean and keep the building operational, utilities, security for said building, insurance on everything... and so on

Tree Fidy

Originally posted by Rintintin

Yeah, I figured there were a lot of costs that are hard to put a nail on so that is why i guessed $2 million a month to maintain for about 88k players or so. 

That math puts you in the hole for about 700 grand a month. :)

Payroll would probably make the bulk of overhead provided your servers arent giving you much trouble. Im guessing f2ps (aside from a lower development/licensing cost) do have a larger profit margin than p2p games, since they somehow manage to run on a much smaller scale. PWI got started with three servers and after a year theyre up to five with nationwide (in the US) distribution of prepaid cards. Those guys were even selling those at 7/11s. They probably have a payroll at around 1 mil and im guessing something like around 30k active accounts? No more than 50-60k at any rate... Their developers are in China and although i imagine they send money back home, their operations would be reduced to management, billing, localization, GMs and Hamster pellets (someone has to keep the servers running). 100 grand a month? That would make it something around 2-3 bucks a month from each user just to keep going, and from my experience in the game i can say they probably make at least twice that, even with 3-4 guys playing for free for every paying customer (im sure at least half are paying overall). Now operations in North America are handled by a branch of the Chinese developer. The game had an expansion earlier in the year and theyre coming with a new one before the year ends (if not already) that will add 1 race and 2 classes. All of this im guessing is being paid by Chinese users where the game has been around for 5-6 years. On top of that they license their game to other operators in about a handful of Asian nations, Russia and Europe.

This "small" operation probably has a larger profit margin than Blizzard, even if at a lesser volume. And thats just one f2p, which unlike some other p2p releases last year actually managed to grow. While it seems the game was originally intended as a p2p (in China it even got to have a housing system) im pretty sure development costs were nothing like what western games spend.

This ofc, is all troll math and guesstimates but may help in providing something of a bigger picture.

Edit; Btw, im glad to see DF finally came around to upgrading their servers.

Something to read. : )

http://www.ncsoft.net/global/ir/prfile.aspx?ID=27C7C416-AB3F-4C49-B68B-ACCD3AC78E6A

WoW costs an average of $50m a year.

I remember reading a few stories about it last year.