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The Free Zone: WoW's Subscribers Are Up... Maybe?

Column By Richard Aihoshi on February 11, 2014

'Tis the season for 2013 fourth quarter and full year financial reporting, which means we can update ourselves as to how various publishers and their key titles fared during these periods. It's an unfortunate fact of life that game companies dislike making their numbers more transparent than necessary. That said, a little data mining can often be edifying and interesting. Last week learned about World of Warcraft, and from elsewhere, about the Russian market.

WoW gains subscribers in Q4... maybe

On Thursday, Activision Blizzard announced its latest results. As reported by this site and sundry other publications, it was revealed that as of December 31, WoW “remains the #1 subscription-based MMORPG, with approximately 7.8 million subscribers.” While this figure was up about 0.2 million compared to three months earlier, the company didn't try to spin this small gain into a notable positive.

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However, neither was it completely forthcoming. Its statement didn't include the corresponding total from a year prior, which was 9.6 million. I had to find it elsewhere. It wasn't hard, just somewhat annoying that I had to. If WoW had gained rather than lost 1.8 million subscribers (19 percent), I doubt that information would have been omitted.

In addition, Activision confirmed continuing to define “subscriber” in an unusual fashion.

World of Warcraft subscribers include individuals who have paid a subscription fee or have an active prepaid card to play World of Warcraft, as well as those who have purchased the game and are within their free month of access. Internet Game Room players who have accessed the game over the last thirty days are also counted as subscribers. The above definition excludes all players under free promotional subscriptions, expired or cancelled subscriptions, and expired prepaid cards. Subscribers in licensees' territories are defined along the same rules.

This has annoyed me for years. Why aren't the numbers broken out more clearly, in a manner that's less likely to mislead? What possible harm could there be in telling us that the game has X million monthly fee accounts plus Y million other P2P ones instead of presenting an arbitrarily combined total?

And what if I play the free portion from a game room? According to the above, it seems like this would make me a “subscriber”. I certainly wouldn't think I'm one, not according to the way I interpret this word.

Here's the thing. Using Activision's definition, WoW had 7.8 million subscribers as of six weeks ago, a small bump up from Q3. But did it have more who fit mine (which I suspect readers of this site are likely to share); i.e. who paid a monthly fee? Maybe. Or maybe not.

As an intriguing side note, one of the sub-headings on the announcement said “Company Announces 2014 Outlook Driven by Strongest Slate in its History”. However, its GAAP (Generally Accepted Accounting Principles) revenue projection for this year is $4 billion, almost 13 percent less than 2013's $4.583 billion, which was down from $4.856 in 2012. Using non-GAAP methods, Activision does project growth to $4.6 billion from $4.342 billion, which is still below 2012's $$4.978 billion. While this is confusing, I can't shake the feeling that the publisher anticipates WoW's revenue shrinking again this year.

There's also no mention of expecting Warlords of Draenor to boost 2014 sales. It feels natural enough to infer that the expansion won't launch until next year. While this expectation wasn't exactly uncommon already, it seems at least a little more credible now.

Russia's $1.1 billion digital games market

The same day also brought an infographic from researcher SuperData with some numbers for Russia. The one above was highlighted, but it deals with the entire digital games market there, not just MMOGs,  Once again though, we can pull out some interesting bits.

To begin with, 2013 revenue is pegged at $1.1 billion. This is broken out into six sub-categories. P2P MMO is said to represent 7.9 percent ($86.9 million), and F2P MMO 32.6 percent ($358.6 million). This tells us the latter has 80.5 percent of the MMO market as measured by revenue. We're also informed that there are 16.67 million monthly F2P MMO gamers with a conversion rate of 11.58 percent and average revenue per paying user of $15.79.

For what it's worth, as I noted last time, the same company's figure for P2P MMOs in the US last year was $1.126 billion, which is nearly 13 times more. For F2P MMOGs, it was $2.893 billion, or about eight times more, which represented 72 percent market share. If we factor in that the US has about 2.2 times greater population, its P2P and F2P MMO markets are about 5.9 times and 3.67 times larger per capita.

SuperData says Russia's digital game revenue is nine percent of the total for Europe. If we assume the same ratio for MMOs, the European MMO market was about $4.95 billion last year. If so, this would translate to approximately 23 percent larger than the US, making it number two behind Asia. Since Europe's population is nearly 2.3 times larger, it's difficult to see the US regaining second place.

In the past couple of columns, I've stated my hope that the two highest-profile US-made MMOGs slated to launch this year, The Elder Scrolls Online and WildStar, will both prosper. No matter how well they fare though, as I see more and more information, such as what's discussed above, it's difficult to see them materially impacting ongoing global market trends such as F2P's growing share lead or America's proportional decline as other regions continue to grow faster.

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The Free Zone
Richard Aihoshi has been writing about MMOGs since the mid-1990s, always with a global perspective. As a result, he has observed the emergence and growth of the free to play business model from its early days in both hemispheres.

He is the former Editor of RPG Vault and his column, focusing on free to play MMOs, appears on MMORPG.com every Monday.
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