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Blind spots

September 9th, 2007 (Visited 2224 times) Tags:

Austin GDC 07: Are Microtransactions The Future of MMO Games? – Kotaku (from the comments):

BUT there hasn’t been a single Asian game localized for the US that uses an MT model that’s had even a small degree of success here.

Argh! This is such a myth. It is outright false. *head explodes*

Two words: Maple Story. The question is whether it is bigger than WoW in North America, not whether it has had “a small degree of success.”

Edit: some stats I just found from Minho Kim’s talk:

“$1.6m virtual item sales in February, over 600,000 items. And over 1m in item sales in June.” Which would be $2.6m in sales if the pricing averages hold, a 61% increase.

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Nabil said on September 9th, 2007 at 8:55 am:
People forget about Maple Story all the time. Case in point, on another game design related blog I was reading a few weeks ago, they were saying that they’d been told that there would never be MMOs on Nintendo systems, as it counters their “friend code” system. They were told this, supposedly, by a Nintendo rep.
Maple Story is an official bundled game for the Korean release of the Nintendo DS, and will be coming out for the DS in the US reportedly this November.
People need to wake up and recognize that just because your particular circle of friends don’t play or haven’t heard of a game, it doesn’t mean they don’t exist.
Matt Mihaly said on September 9th, 2007 at 9:15 am:
I’ve harped on the issue of these blind spots that self-identified “hardcore” gamers or developers have as much as anyone but I think that there’s another issue involved here besides mere popularity, and that’s revenue. 1 WoW user is worth multiple times 1 Maple Story user. Popularity alone talks to cultural reach but cultural reach is really a secondary goal to revenue (well, profit), no?
–matt
Nabeel Hyatt said on September 9th, 2007 at 11:07 am:
Just to make sure Minho isn’t wrongly quoted, the calculations at the end of that quote (“which would be $2.6m in sales if the pricing averages hold, a 61% increase”) are my own, not his. Minho only gave the February number and the number of units in June.
No matter what, it’s clear virtual goods work in the US… there’s post on this from a couple months ago that’s still highly relevant:
Microtransactions Actually Work, proof from MapleStory in the US
http://nabeel.typepad.com/brinking/2007/03/microtransactio.html
Raph said on September 9th, 2007 at 11:31 am:
Actually, Matt, the typical revenue from a sub-based MMO player appears to be $15-35 — somewhere between 1 and 2.5 subs’ worth — per month.
And once you drop the “play for free” people out of the microtransaction userbase, the ones who actually give money are monetized at, you guessed in, $15-35.
But that leaves out the fact that you can monetize large userbases in many more ways. You can use them for ad revenue, most obviously. There’s marketing data. The average may fall, but there’s a logic in volume, nonetheless.
Steven "PlayNoEvil" Davis said on September 9th, 2007 at 6:42 pm:
Business 1 – lowering cost entry brings in more potential customers as long as the cost of supporting the customers is low enough.
I was not at AGDC this year, but when Blizzard gave their keynote last year they focused on lowering barriers to entry by reducing their graphics requirements.
Microtransactions lower the barrier to entry be reducing financial requirements. Habbo, MapleStory, Runescape and the others are simply following the same logic as Blizzard, but to its logical conclusion.
One could argue that Blizzard moved backwards from Battle.net with World of Warcraft.
Massive downloads are a problem in the US due to the much higher bandwidth costs.. I think the CEO of NHN stated that they brought an MMO over hear and basically found they were losing money every time someone played because of the network costs being 15 times higher than in Korea (from the Casual Game Conference via FreeToPlay, perhaps).
Separating profitability from revenue is also important. World of Warcraft is almost certainly much more expensive to support per player than MapleStory… and certainly than Audition or KartRider!
Finally, the risk of creating these casual MMOs and their break-even point is much lower. Which means more at bats and more innovation.
What was distressing from reading the summaries of the conference was how unwilling the traditional MMO guys seem to be to acknowledge light MMOs, social networks with gaming elements, etc as a legitimate model. Even on the page, it was painful to read.
I guess it is only fitting that the MMO industry is mirroring the changing dynamics in the rest of the computer game industry.
Brian 'Psychochild' Green said on September 9th, 2007 at 10:27 pm:
Looks like some people needed to attend Jessica and my talk on business models. Sucks that we were in the smallest room early on the first day, so not many people got to our talk. Although we didn’t have the first-hand information that were shared about Habbo Hotel and Maple Story, we did talk about how there were quite a few successful business models beyond subscriptions in North America and Europe. I think the talk about Maple Story really puts to rest the question on if microtransactions can work in North America; they do work, much to the delight of us smaller developers.
Matt Mihaly said on September 10th, 2007 at 9:52 am:
Raph wrote:

Actually, Matt, the typical revenue from a sub-based MMO player appears to be $15-35 — somewhere between 1 and 2.5 subs’ worth — per month.
And once you drop the “play for free” people out of the microtransaction userbase, the ones who actually give money are monetized at, you guessed in, $15-35.

Well, I’m going to opine that that depends greatly on the product. In our case for instance, actual paying users are monetized at multiple times that level, and I’m sure it’s also significantly lower in the case of other games out there.

But that leaves out the fact that you can monetize large userbases in many more ways. You can use them for ad revenue, most obviously. There’s marketing data. The average may fall, but there’s a logic in volume, nonetheless.

There’s always logic in volume, but the ad revenue and marketing data don’t, as you point out, make up the difference.
Consider that Habbo’s revenue is about 10% of WoW’s, with approximately the same user base size globally.
–matt
Raph said on September 10th, 2007 at 4:09 pm:
Ah, but consider the return per dollar invested.
Cormac Russell said on September 11th, 2007 at 1:15 pm:
Not Asian, but Magic: The Gathering Online has been quite successful in the US market since it’s launch, and while people pay us in non-microtransaction sized chunks for the actual boosters (since the one dollar a ticket price at the bottom seems too large to qualify), the transactions they engage in with each other take place at a fraction of that potentially.
Matt Mihaly said on September 12th, 2007 at 10:58 pm:
Yep, agreed, but modulate the return per dollar invested by risk (and now we get into completely speculative territory) and I suspect it comes out on Blizzard’s side. I mean, if you had to bet on Blizzard making a highly successful (granted, nobody saw it becoming THIS successful) MMO or a random tiny startup like Sulake or Jagex, who would you bet on?
For every Blizzard that takes an 80 million bet and succeeds there are not that many failures (just insofar as few companies can/will spend 80 million on a single title). On the other hand, for every guy starting in his parent’s bedroom (Jagex) or two buddies (Habbo), there are hundreds of aborted projects.
So I don’t think it’s as simple as just saying “X dollars invested got them Y% take home.”
I know I’m making a bit of a straw man argument in that I’m picking examples of groups that had virtually no experience when they released….
Well, I’m perhaps less sure than I was at the beginning of the post but I still think there’s a lot more to it than simple comparative return on investment between narrowly selected MMOs.
–matt

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