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What WoW CostJune 13th, 2006 |
F13 says that Vivendi said “50m Euros.”
That’s $62.8m at today’s exchange rate.
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What’s more important from that article is that they plan on changing all of their franchises into MMOGs!
Not for Raph 
At least they didn’t say MMORPG.
Are there any links to the presentation floating around?
A few questions I have, when they said “50m euro” is that just the initial development pre-launch (eg no marketing, hundreds of servers etc)? Given its only over the past couple of years the dollar has been pretty weak, wouldnt the $ cost of WoW be far lower than $60m eg 50m euro spent between 2000-2004 as of WoW launch date?
I’ve posted part of the presentation on grimwell.com:
http://www.grimwell.com/phpbb/viewtopic.php?p=31935&highlight=#31935
But it doesn’t really address your question. Even when a better exchange rate, you’re still talking $50M, which is what I’d heard elsewhere. The big driver in that figure is the 4 1/2 year time frame. Most of the time MMOGs try to finish development in 3 years, and that 3rd year is going to be the most expensive because you have the largest headcount. Extend that into an additional year or two, and you can quickly go from a $30M project to a $60M one.
Them adapting other franchises into MMOs isn’t interesting, it’s a given. The question is when they can scale up their development infrastructure to permit it. Right now, they’re still like a python swallowing very very large prey — WoW has completely altered how they operate their company.
I would bet that figure does not include marketing and deployment, which I would expect to have cost a few more tens of millions. The figures I have heard from sources for WoW’s overall cost were significantly higher.
Oh, I should point out that the reason I harp on this is because of what it means for the playing field. Name any other company that is going to spend even just the $50m figure on an MMO. The list of companies that have that sort of disposable cash, plus an IP powerful enough, plus the background networking knowledge they acquired through Diablo — it’s a small list. Add in “the will to spend it” as a required ingredient, and you quickly come to the conclusion that nobody else is making a WoW anytime soon.
Well, I partially agree… for some reason many publishers who have that kind of dough don’t seem all that enamored with the MMOG space (*cough*EA*cough*). But I don’t think it’s a foregone conclusion that to make a “WoW”, you have to spend $50M. Surely you could make a very popular MMO-type game for “only” $30M?
It’s also interested to note that, if you’re an investor looking at a time frame longer than, say, 1 year, even a “failed” MMOG with only 50,0000 subscribers can provide excellent ROI.
Bruce
There are a few companies that have the resources to do so, but none have the confidence to greenlight something of this scale until Blizzard prove that they can repeat themselves. Better ROI elsewhere is one of the reasons.
As for marketing cost, the number probably includes their internal marketing cost, but does not include the marketing spend by the likes of The9 or other co-marketing arrangement. One number I heard is that Coca-Cola allocated about $30m for a co-marketing campaign with WoW/The9 in China (which yield the funny looking WoW/Coca-Cola TV spot that used a Taiwan female trio called S.H.E.). Part of the marketing spend is to package them for distribution. The legal and advisory cost for the The9 deal probably cost more than a $1m alone.
Frank
I don’t think it’s a foregone conclusion that you need $50M to make a WoW. That’s because I don’t think it’s a foregone conclusion you need to make a WoW in the first place, aside from the fact that we all know the perfect storm of elements that existed to drive WoW to market and success.
It’s a question of business need. Does CCP need 6mil subscribers to stay afloat? Does Andy Tepper? Linden Labs?
Sure those games aren’t turning heads of investers. But they’re successful for the companies that offer them because their businesses are scaled to delivering them. And this affords them conceptual freedom that simply doesn’t exist at the $30mil-50mil-75mil range.
If you want to beat WoW, you need to have a strong brand that has resonated with gamers for over a decade, be a rockstar studio that can do no wrong in the minds of those gamers, have a strong history of iterating the best of whatever the genre has to offer at it’s peak, have a talented staff by the scores, and a hands-off publisher that gives you the extra year or three to test the snot out of it, but which also has the worldwide reach to launch in more places than anyone else can.
Forget the $50mil thing. Who else has even two of the above?
They didn’t raise the bar. They created one in a category all by itself.
Meanwhile, scores of other games both old and new will continue to exist and grow in their own rights.
To me it’s not about beating, it’s about managing expectations.
Obviously, I agree with Bruce and Darniaq. I wouldn’t try “doing WoW.” I would try doing something else where WoW isn’t, from a positioning perspective.
And equally obviously, I agree that there’s plenty of good business to be had in smaller size audiences. Hey, I went indie, didn’t I? 
Well, there’s two different questions here:
Can I spend less than $50M on my subscription-based MMOG and still get a good ROI if I only get 50,000 or 100,000 subscribers? Yes, clearly.
Can I spend less than $50M on my subscription-based MMOG and still get millions of subscribers like WoW? Less certain, but I think it’s still possible. But it would have to be a very compelling game.
I think it would also have to be a crazy stroke of luck.
hmmmm interesting, sounds like they are doing for gaming what henery ford did for the Auto. Assembly line games? Does this get us back into the NPC being bland thread again? Because I’m thinking the Mcdonaldization of the MMO game space would leave a lot of room for niche (does this now make a 35m game with “Only” 200k subs a “niche game? yikes)games that have more dynamic content than say the third game offering of Blacksmith Jones, who not suprisingly says the same thing.
Big macks are great when your a kid, theyre tasty and filling. Its later when we get a bit older and sophisticated that we maybe pine for the good old days when grandma made you a special meatloaf sandwich. (Sorry its almost lunch here in Cali lol)
It’s already obvious just how “easy” MMOGs are now. It’s almost impossible to find a complete and accurate list of them anywhere, such is the pace at which new ones come out. And these new ones are often overlooked by good amounts of players as well.
The novelty of the genre is sorta gone now. It’s up to the games themselves to be relevant on a game-by-game basis. As such, understanding the basis of that relevance is much more important than just being able to make one at all.
It’s amazing how far we’ve come in just five years
Here is a good list of all the larger MMORPG games.
Anyway, not surprising to see it cost them so much to make WoW. And you’d have to be insane to go head-to-head with WoW at this time (if SoE couldn’t keep up with WoW with EQ2, who else has a hope?). Maybe 3 years from now the story will be different. But I’m afraid that (because they pulled in so many new-to-MMORPG players) WoW is going to be like the original EverQuest — still with a large and dedicated following 5 years after release.
you need to have a strong brand that has resonated with gamers for over a decade, be a rockstar studio that can do no wrong in the minds of those gamers, have a strong history of iterating the best of whatever the genre has to offer at it’s peak, have a talented staff by the scores, and a hands-off publisher that gives you the extra year or three to test the snot out of it, but which also has the worldwide reach to launch in more places than anyone else can.
.
Sounds like OSI in the late 90’s. Pardon me while I weep bitter tears for the rest of the day. ;__;
Note: That’s a $50M budget for a game stared 5(?) years ago. Game budgets seem to be rising about 20%-30% a year. Starting an equivalently ranked game now would require a budget of pow(1.2 to 1.3, 5) * $50M = $124 - $185M.
SOE is taking the cable-TV approach by bundling a number of MMORPGs under one payment. This approach is difficult to compete against too. Only a handful of VW companies (namely NCSoft) can match this.
As Sir Bruce’s chart shows, 3 companies control 80%-90% of the market. The scraps are left to the 100+ smaller MMORPG companies. Don’t expect this trend to change any time soon.
Looking over the list Moo linked for us, I can’t help but notice that except for Warcraft or Guild Wars they seem to be free trial or free to play (with option to pay for additional content.) I also notice that many of the new crop can’t seem to tell me why they are different from WoW/EQ2/SWG/FF even wandering around their web pages. (I added Final Fantasy to that list as many are graphicly in that Manga family.)
MikeRozak wrote: As Sir Bruce’s chart shows, 3 companies control 80%-90% of the market. The scraps are left to the 100+ smaller MMORPG companies. Don’t expect this trend to change any time soon.
It’s been pretty much this way for some time no? What was Underlight to EQ for example?
I wouldn’t try “doing WoW.” I would try doing something else where WoW isn’t, from a positioning perspective.
…and whats scary people will try to “do WoW” again and again…. so much money will go down the drain because current production model is absolutely incompatible with making small quick bets.
DariangQ wrote:
It’s been pretty much this way for some time no? What was Underlight to EQ for example?
Probably the same sorts of ratios. In the end, a few companies always dominate a software category. I suppose the biggest difference is that the barrier to entry has gotten much higher, much like the barrier to entry for OS’s is so incredibly high. Right now there’s Windows, MacOS, and Linux. 10+ years ago there were some attempts at competition, with BeOS, not to mention variants of Unix from Sun and SGI (which still exist, but greatly diminished). Linux wasn’t terribly large 10 years ago either. In the 1980’s there were tens to hundreds of OSs… Commodore’s, TIs, DOS clones, etc.
Addendum to my last post: I expect that a company that already has a decent MMORPG or two under its belt will have a lower cost of entry since they won’t (a) take as long, and (b) waste as much money. SOE, for example, has a really solid engine in EQII, and could release a new MMORPG more quickly and efficiently than a brand new company with $100M in its coffers.
I completely agree on your second point. Aside from the EQ2 engine, SOE has an entire infrastructure that lowers their barrier for all new titles. They’re ahead of the curve than most, if they can just find that sweet spot.
With that you bring up a great point. In addition to the other factors that converged for WoW, it should be noted that they did this almost from scratch. I don’t know they were able to use much of the Battle.net back end for WoW, nor how much of the ground-up work contributed to the far higher costs.
I suppose the biggest difference is that the barrier to entry has gotten much higher, much like the barrier to entry for OS’s is so incredibly high.
This is the part I don’t necessarily agree with.
Unlike OS’s, which have traditionally been acquired with the purchase of hardware (Linux does not thrive with the average consumer for example), MMORPGs are all voluntary purchases made after consideration. As such, the barriers that exist for such things would with or without WoW. There’s the resource contraints of delivery, planogram/limitations at retail, limits on advertising budget (getting the message out) and so on. Even selling as a digital download faces the same constraints, with virtual storefronts have the same space limitations and still needing advertisement.
WoW didn’t really change any of that. I’ve long felt it was the environment of consumerism and retail establishments that were the biggest barriers, for new games, whether AAA or indie (ie, a retail chain not wanting to list an item unless the company selling it planned to spend “enough” money selling it). Foot traffic or eye traffic, it’s sort of the same thing, both controlled by the dealer, not the provider.
Interesting, I was reading something recently (cant remember where, forgive my old age) related to the somewhat archic distribution systems games use and how thats an area thats not been researched much (by academics), or rather and more likely it has, but is perhaps is not something thats been made transparent to the “game” industry by the “distribution” people. Understanding those types of metrics and data points are standard practice at large marketing firms/retailers.
“Even selling as a digital download faces the same constraints, with virtual storefronts have the same space limitations and still needing advertisement.”
Barriers to entry between Brick and Morter store fronts and eCommerce sites are entirely different and unique most of the time, they used to be much more significant and disparate but over time and with the normalization taking place along with the increasing connectivity of the general populace (read, increased comfort level) these differances are diminishing. However there are still unique barriers which will always be present.
The upside of the electronic distribution of goods and services and the advertising of such is that measuring the effectivness and efficiancy of your product, presentation, and its distribution is about 99% more accurate. Little bits and bytes, even the connectivity of one consumer to a product, is easier to capture than say, watching people pass by, and go into a store in a mall (foot traffic count). Mainly because browsing through a storefront window creates no data points.
If my grandfather buys his penny loafers online, and they have caprutred basic data about him as well as his purchase guess what kind of targeted marketing AD he’s going to recieve in his email inbox next week? A targeted marketing AD that is now more often than not completely autogenerated based upon algorithims in a consumer database…
This is why the most efficient system of digital download for games moving forward will likely be not only be good at getting a game on someones system, but a very valuable tool indeed, should someone combine certain database/data mining principles with it. On the most basic level its not the “downloading” of data that is most valuable sometimes moving forward the “uploading” of data helps correct for (or rather disperse) peoples notions of what people like and why. Usually with 99% accuracy. Knowledge is power (and sometimes significant cash), and in this case (Games) the power to improve games, for game players, (or at least avoid making mistakes).
Question: Whats the typical set aside (%) in a game budget for Advertisement/Marketing? Im wondering if its similar to say, the movie industry (which has a fine tuned well oiled machine of a distribution system) or Book publishing.
“They’re ahead of the curve than most, if they can just find that sweet spot”
I said it before and I’ll say it again(and probably get horribly flamed and shamed again): Someone needs to make a Western Themed Gunslinger MMORPG, I’ll even give you the name and the first expansion: Wild West World: Quest for El Dorado…I dont mind if someone steals the idea, as long as they reserve the name “Clint Eastwood” for me on release hehe…just make sure theres no Elves. (bet you cuild fit in some goblins in the ruins of El Dorado though! (or even undead)
Marketing people wield too much power. Not only do they control your desire, they control what you get.
Years ago my first job was with a wholesale company who’s main product was tobacco. The top cigarette seller at that time was Winstons, by far and away. When cigarette company reps came in and told us that in almost a year Marlboro would become the top seller and replace Winston, even telling us the exact month it would happen, we laughed. How could they know? We lauhged some more. It happened on the exact month they said it would. We didn’t laugh anymore. As I looked back I noticed that Marlboro had that very successful cowboy “Marlboro Man” add running full bore on TV, while Winston was almost completely lost in the advertising arena on TV.
And to think that cigarettes had added “flavor” in the way of extra nicotine, one has to wonder who’s brain child that was. It’s not hard to imagine marketing people involved in that too.
But it’s not like someone’s actually trying to kill us, ya know?
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