Wednesday, November 25, 2009

Double Dipping: Greed or Necessity?

Whether we like it or not, it seems than mainstream sub based MMOs are switching to a “double dipping” approach where they charge us a sub fee (or an enormous lifetime access fee up front) for access to their servers and then try to get us to pay for additional content and services on top of that. Sony has been doing it for years in Everquest II. They were the first to have paid “mini expansions” in between the release of full expansions, they were the first to have RMT servers where they take a cut of all the action, and they recently added trading card games to all of their main MMOs (EQ, EQ II, SWG) where you can buy booster packs that might have in game items.

These days, it's spreading. Blizzard has been flirting with the double dip for years. First via licensing their IP to Wizards of the Coast to make a card game that could grant in game items, as well as by charging exorbitant fees for services like server transfers and race change operations. More recently, Blizzard dropped all pretense and offered a in game pets for sale on their website. Given the success of the offer, I’m sure we will see similar offers in the future. City of Heroe and Champions Online both offer a plethora of optional costume elements in their online stores. Even Turbine seems to have caved. The free content updates since Moria launched have been positively meager compared to what they did in their first year. Turbine seems to have saved all of their substantial new content up for the Shadows of Mirkwood mini-expansion.

Some commentators have argued that you simply can’t fund ongoing development of a top teir MMO with a $15 dollar a month sub fee these days. I personally find that very hard to believe. Let’s take a successful 200K subscriber MMO. I think it’s safe to say that LoTRO and EQ II are at least in that ballpark, and others like FFXI and WoW have a lot more subs than that. At $15 a month per user, that’s about 3 million a month in revenue (36 million per year). If you release a full expansion once a year, at $50 per user that’s another 10 million dollar cash injection, plus random cash injections over the year due to new users and resubs (who need to buy the expansion to get up to date).

Do ongoing content updates for an existing MMO really cost that much to make? Given that entire MMOs can be made for a few million, you’d think 30 million a year in sub fees would cover one or two new zones a year in an existing game. What about the paid expansions? It’s not as if a sub based MMO developer really needs to make a profit on expansion boxes. As long as they break even, profit will come from the sub fees. Further, if the revenue for boxes alone isn’t enough to cover the cost of making an expansion, then how on earth do so many video game developers stay afloat charging absolutely zero sub fees for access to online shooters or subless “MMOs” like Guild Wars and Borderlands?

From that perspective, the new trend towards double dipping in sub based MMOs seems much more likely to be motivated by greed than necessity. However, I would argue that I presented you with a somewhat false dichotomy. It is neither greed nor necessity that primarily motivates double dipping, it is “common sense.” If you have a product, should you make as much money as you can off of it or less? If you answered the latter, you are running a charity and not a business.

What it really comes down to is this: double dipping will rarely hurt your bottom line. A tourist won’t be around long enough to notice or care whether you are double dipping. A core user is unlikely to leave due to double dipping as long as the additional goods and services seem optional. Nothing short of an NGE shakeup of core mechanics is likely to chase those guys off. The sub income from small number of core users that will get ticked and leave due to double dipping will likely be more than offset by the additional income from those that remain. Now that MMO developers have figured this out, expect to see a lot more double dipping in mainstream MMOs.


  1. Yeah I guess this is the way things are going. I still don't like it, especially when they add it afterward.

    I've been with EQ2 for years so I'm just not going to jump ship because of a fluff item shop. But it does influence my decision on picking up an MMO. So unless I hear some absolutely amazing things about the MMO's SOE will be releasing in the future, I just won't bother to try them.

    Yeah that likely means there won't be many MMO's in my future. :)

  2. MMO's that use both subscriptions and stores are fine as long as the store items remain optional or are services. Cosmetic pieces, character slots, server transfers, and renames are all fine. It is a bit of a slippery slope though. If an MMO comes out in the future that tries to use more of a Wizard 101 or DDO model for paid content but still charges a subscription, then I'm going to pass.

  3. Well, in order to actually develop new products/games, hopefully push some boundaries and have funding for new games, the companies have to do better than just break even. And if they want investors to invest money in order to get funding for new games, they also have to try to increase their revenue.

    EQ2 is a game that I think is far below the 200K mark nowadays. Age of Conan is somewhere around the 100K mark, CHampions Online probably a good bit below that and they are both ahead of EQ2 in XFire statistics. Not a fool proof metric, but probably a reasonably good indicator.

    Abd looking at the MMO market there are really not that many games above 200K, but a lot of them below.

    There are more and more MMOs competing for attention, but I doubt that the potential playerbase with those willing to pay a subscription fee are growing at the same rate.

    Subscription-based games also face competition from the "free to play" type games and there is likely more growth in terms of number of players in that segment.

    I do not think that greed (with the negative connotations of the word) is necessarily the case just because a game company starts to "double dip" as described.

    However, with Blizzard adding a pet store to WoW _and_ charging $10 (and more on European side AFAIK) for a fluff pet I am inclined to agree on the greed sentiment in that case...

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  5. @Aspen: I'm right there with you. When evaluating a sub based MMO, they darn well better be offering me something I can't get anywhere else if they plan to try and double dip from my wallet.

    @BlueKae: I suspect that most of us feel that way. Fluff fine, stuff I need to compete not OK.

    @Sente: you raise some great points. I think that my general logic would hold for any MMO with at least a steady 100K active subs By "in that ballbark" I really meant "100K to 300K subs really knows outside the company."

    However, it's arguable whether a 100K subs is really enough to support a "no double dipping and with ongoing expansion development" model. Certainly below 100K subs the model will break down rapidly. And as you point out with the WoW example, as you pass the 200K sub mark the possible justification for double dipping out of "necessity" rapidly diminishes.