Tuesday, April 27, 2010

MMORPG Economics

I'm always saying that the various online games are stuck in the old economics of game play. Namely, they're still operating on the concept that you make a game, package it on some kind of medium, sell it, and then count your money. Even World of Warcraft is basically that. The only difference is that you then have to pay for access to a service.

Dungeons and Dragons Online has discovered the profits possible from opening the game entirely. Previously, they were trying to operate under the same business model as WoW, which I thought was dumb then, and has since been proven to be dumb. D&D-O was heading towards oblivion until they opened the game, which immediately sent user numbers through the roof.

Still, they then followed Farmville and any number of games from Aeria in a business model built on restricting access to certain parts of the game unless you pay up. I've nailed why this doesn't work, and why Farmville and all of Zynga makes almost none of their money from direct sales, all the while gold and items in World of Warcraft sell for, in some cases, hundreds of dollars.

In WoW, everything people are buying is attainable in-game. When someone buys, there's no way to tell if they bought their way through or if they earned it. That's important. In Farmville, many items can only be purchased with real money, they thus hold no value since they represent nothing but the money behind them.

And that's the key. When something is only attainable with money, they have no opportunity cost in the game. Obviously, classic opportunity cost applies, but not virtual. In WoW, for example, you want the Sword of a Thousand Truths. You can look up online and find that you need to go through a long quest called a raid to get it. You have a 10% chance of getting it on any given raid. The raid takes 3 hours to complete. That means that you can decide if buying the item is worth a possible 300 hours of game time required to get the item in-game.

Everything or nearly everything must be accessible in-game. Only then can a user apply a value to the things for which you are charging. The developer cannot lock up anything behind money or its value becomes nebulous.

WoW may want to consider this. They need to do something, because the population appears to have plateaued at about 11-12 million.

Results From Dungeons & Dragons Online Going Free: Revenue Up 500% (TechDirt.com)
World of Warcraft- Population 11.5 Million and shrinking? (RecklessGamer.net)

No comments: