Lord of the Rings Online

So it is neither morning nor Saturday when I sit down to write this.  I am about to cheat massively at my one post per day thing… primarily because tomorrow is going to be pure hell.  I have to get up and around early because I have a wedding to photograph for a friend.  I am completely terrified at this prospect but I figure I will make it through one way or another.  However with all the mess going on tomorrow I simply will not have time to do my leisurely two hour jaunt through blog post land that I normally do.  As a result I am writing up my post on Friday… and since I am impatient I am going ahead and publishing it today as well.

Defense of Subscriptions

Over the last few days since the joint announcements that Wildstar and Elder Scrolls Online will be subscription based, I have seen a lot of negativity floating around the blogosphere.  You have one camp claiming this is the revival of subscriptions, and a diametrically opposed camp claiming this is a fluke and long live the free to play revolution.  Personally I can see a place for both in the game industry and I feel like we will see lots of both in the future.  Subscriptions are not going anywhere… because quite simply put high quality games have high dollar amounts associated with them.

Most of the games we now think of today as heralds of the free to play “revolutions” started their lifespan as a full functioning subscription based game with a $60 box cost and a $15 a month subscription fee.  This is the case for the Turbine games (Lord of the Rings Online and Dungeons and Dragons Online), the Cryptic games (Star Trek Online, Champions Online), the Sony Online Entertainment games (Everquest, Everquest 2, Vanguard, etc) and the new darling of the free to play market… Rift.  Each and every one of them experienced a decently long period of selling boxes and racking up monthly service fees before ultimately converting over to some sort of a freemium model.

Purely Free to Play

I was brainstorming with my friends, and quite honestly we had a hard time listing off significant MMOs that have launched as free to play.  There is a whole string of poor quality Asian market games that are too long to ever mention.  The only game I can really think of that does not have a subscription fee or box cost associated with it is Neverwinter.  Dragon’s Prophet to some extent is in the same boat, but it is still technically in open beta… and was also an Asian market transplant with a good deal of the costs simply being regionalization.  Neverwinter is most definitely a sub par gaming experience, with a good deal of incident costs hidden into the system and at least for me… overall forgettable gameplay.

As far as buy the box we have Defiance and Guild Wars 2… both of which appear to either be struggling or at least having a good deal of growing pains.  Trion has recently set about a massive restructuring of the company that involved dissolving the offices that supported Defiance and pulling that staff into the main offices in Redwood.  Guild Wars 2 has also going through a series of changes trying to deliver content at a more frenetic pace to try and keep paying customers glued to the screens.  Additionally with each update comes a slew of items that can only be acquired by unlocking the in game loot boxes.

My main issue to date with the Defiance and GW2 experiences is that while they are rolling out regular episodic updates… they are essentially throw away experiences and are only available for a limited time.  Defiance is really too young to fully judge, but they are about to release their first real DLC pack.  It will be interesting to see just how much content that adds to the game.  Guild Wars 2 on the other hand, seems completely tied to the concept of an expiring series of “living story” events.  In neither case are they really expanding the game on a regular and permanent basis to add value to that initial box purchase.

Paying Initial Cost

Rich game worlds with hundreds of hours of content cost an extremely large amount of money to develop, produce, market and ultimately distribute.  While I was disappointed when Wildstar announced its model, because ultimately it meant the cost of entry was just too high for someone like me… that only casually had interest in the game in the first place… I fully understood the decision to have a subscription.  Box costs and subscription costs help pay off the excessive costs of game development.  It has been said multiple times that the average blockbuster game costs far more than the average blockbuster movie.  Additionally the development of the game is a much longer drawn out process that someone has to bankroll until it finally sees a profit.

Lets take Elder Scrolls Online for example and try and work through some hard numbers.  Please understand that I am creating a pure guesstimate based on what I was able to pull together from Google.  Zenimax Online studios is in the Baltimore Maryland area, so there are certain broad assumptions we can make based on average costs in that region.  According to Wikipedia they moved into their current offices in 2008, and based on the E3 PS4 presentation, Elder Scrolls Online is slotted for a first quarter of 2014 launch.  That means that Elder Scrolls Online will have in essence been in development for roughly six years at the time of launch.  Please understand I am trying to just pull together some rough figures, it might have entered development before that and potentially after that.

The Hard Costs

Over the course of those six years, if you figure an average of 100 employees made an average of $45,000 a year… you get $27,000,000 in salaries alone.  Some employees will make more, likely some employees will make less.. and over the course of those six years you would have had significantly fewer than 100 and likely now in pre-launch mode significantly more.  From google we can see that the average price of office space in the Baltimore Maryland area is around $17 a sqft.  For sake of coming up with a figure we are going to say their offices are likely around 30,000 sqft, so taking that over the course of the six years you have $3,060,000 in rent.  Factor in a leased digital internet line ($300/mo), water ($400/mo), electric ($1000/mo), and gas ($400/mo) you have a vague guesstimate of $151,200 in utilities over those six years.  Finally if you figure roughly $3000 in computer equipment for each employee, you are at roughly $300,000 not factoring in ANY servers at all.

So far in things I can quantify you are talking about a guesstimate of over 30 million dollars on only a very few factors.  There are so many factors that we just cannot come up with a number for.  For example it was said that Star Wars the Old Republic took roughly 200 million dollars to develop… and that a majority of that was voice acting time.  This is something I simply cannot come up with anything sort of an estimate on.  All the voice acting rates I found online were so widely varied that they were meaningless especially when you consider the names that folks are getting are the Steve Blum’s of the world that are sought after for damned near every gaming project on the planet.  I don’t really know how detailed the voice acting is for ESO, but every demo I have seen to date gives me the impression that the game is fully voiced… which would lead me to guess bare minimum 100 million on the hundreds of hours of voice talent.

I’ve heard before that it costs roughly 1/3 of the total cost to develop a game… the rest of the costs go into marketing and distribution.  So at this point we are already sitting at around 130 million not factoring any tool licensing costs, or server infrastructure and network costs.  If that represents only a third of the total costs of the project… no wonder games NEED to sell boxes and charge a subscription to break even… let along fund future development efforts.  Essentially a AAA game experience is really damned expensive.  If you figure a company receives at most half of the $60 box cost… it would take selling over 3.5 million boxes just to make up for 100 million of the cost.  The reason why that $15 a month is so important is they are getting the entire portion of it.

Someone Has to Pay

Ultimately if we want nice games… someone has to pay for it.  Either these huge gambles can be paid off in box costs and monthly subscriptions… or they can be financed on the backs of a handful of “whale” players.  But ultimately there is no such thing as a free ride.  Game development and game infrastructure have large fixed costs that simply cannot be justified away by a players desire to not spend a dime.  We have nice free to play experiences in essence because players that came before you… paid for the cost of going there first.  They helped to pay off the loans that these companies I am sure have to take out to bankroll this kind of protracted effort.

AAA game studios simply cannot afford to build games out of the goodness of their hearts.  They have to pay ultimately hundreds of people just like you and me to build and support the games.  These are not nameless faceless corporations… they are businesses just like the one you likely work for… with a human resources department, and social security tax deductions and payrolls to make.  This is a real job for someone, and we can’t expect them to get some beer and pizza and knock out a game in their free time.  Overall the game industry pays some pretty shitty wages as compared to the IT industry as a whole.  I know for a fact that I make well more than any of my friends that currently work in the industry… and have pretty much since my first job out of college.

It is almost expected that part of the benefits package for these folks is the fact that they “get” to make games for a living.  Thing is though… they had to gain their skills the same way all of us did, with lots of hard work and sweat equity and now they work in an industry with next to no job security… because it all hinges upon the whims of whether or not gamers like us ultimately purchase their product.  So ultimately… all of these things factored in… I have ZERO problem with the concept of buying a box and paying a monthly fee when it is something I am committed to.  My friends in the industry need to eat, and pay rent, and survive on a day to day basis just like I do.

Free to Play

The free to play model seems to work extremely well at financing the daily upkeep and expansion of an existing game.  I think it has been the savior of a lot of games that have filtered their way out of the popular consciousness and were no longer drawing in active subscribers.  It is awesome being able to fire up an account you haven’t played in years, and revisit old characters.  While you are there more than likely you will spend at least a little money on the game.  Essentially it is the model of “some money is better than no money”.  The thing is, like I said above each and every one of these games that we vaunt so highly as free to play successes all had their time of box sales, expansion sales, and monthly subscription fees to pay back the excessively expensive development costs.

Do I get frustrated when a game that I have purchased the box for… and paid multiple months worth of subscription fees goes to free to play?  Hell no… because while I might bitch and moan on a regular basis about various aspects of gaming… I LOVE the games I play.  Whatever helps a game I have cared about succeed is ultimately going to be good for me personally in the long run.  The games that reward me in some way for being there in the early days and helping pay off the huge debt a company brings with them after a game release…  I love those even more.  But I go into their free to play conversion knowing that ultimately they will be better off in the long run with incremental sales.

Additionally players who start at the beginning of an MMO will always have a tangible lead on players that start later, especially if the game converts to free to play.  You have a head start in the economy before it stratifies, likewise you understand the lay of the land and where to acquire the best stuff.  When Rift went free to play my account had so much stuff unlocked thanks to longevity of play that a starting player would not have had.  For the explorers you get the feeling of actually discovering things before they are common place and on every website.  So while you might have had to pay for the box and subscriptions, you are getting something for your trouble that no one will be able to take away from you.

The games that did not have a box fee and a subscription however have to claw their money out of you somehow.  So while I get annoyed at loot boxes and item purchases and artificial gates to my gameplay… they are just trying to survive however they can, because ultimately at launch they were millions and millions of dollars in the hole at day one.  I feel like launching as free to play is going to forever doom a game to jumping through coin slotted hoops as you play the game.  Rift right now is the best player experience but I feel like it is only that way because they had two years and an expansion of relative success to pay off and fund a fully functional staff during all that time.

Wrapping Up

So if in a few years time… The Elder Scrolls online… that I have used as an example all the way through this post… decides it is beneficial to it to go free to play.  I will greet the change with open arms, knowing that ultimately this is going to be the thing that keeps a game I hopefully will love healthy and open to the public.  Going to go ahead and wrap this up, and likely get it posted.  I hope you guys have a great weekend and that I can survive tomorrow.  Sorry for breaking my own rules and cheating a bit by double posting on a Friday… but expect that I will have a normal post on Sunday.