Why Subscription-Based MMOs Make Sense
Posted by Ben Zeigler on August 24, 2008
For the year or so, there’s always been discussion about how the charge-per-month scheme for MMOs is “broken” or “on the way out” or “dead“. For some reason, the consensus is that free-to-play or microtransaction-based schemes are far superior to subscription-based models (despite the success of WoW, City of Heroes, and many other games). There are two basic rationales for this position: The failure of subscription-based MMOs, and the success of alternative funding models in certain markets. Both of these need to be discussed before being used as “proof”.
So, why do high-budget western-focused subscription-based MMOs fail? People in the industry pretend this is mysterious, but it basically breaks down into two causes: mismatch of development cost to market target, and bad execution. For an example of the first one, you should look no farther than Vanguard. It was always a mystery to me why ANYONE thought that a game targeted at “people who thought Everquest was too easy” could ever be profitable. A similar mistake right now is to go for the market of “people who play World of Warcraft” with no other specifier. If you just go after the generic players of WoW, without having an idea of who those people are, you’re going to fail because of WoW’s market position. The other way to fail is clearly illustrated by Age of Conan. Age of Conan is focused on a valid market (based on the initial success), but the lack of depth and technical inadequacy is probably going to eventually hurt it. Even so, it will probably be a profitable game. It’s not really that hard to make money with a subscription game, but it IS hard to make money with a crappy subscription game.
Now, if the subscription model is so great, why doesn’t it work well in South Korea or other markets? I think it comes down to culture and different ideas of community. I’ve always felt that paying a subscription to an MMO is very much like paying dues to be a member of a club. The concept of country clubs, school clubs, and other private clubs are very common in the United States (and other UK-derived cultures), and MMOs feel the same to me. When you pay a montly fee, you feel more like you’re part of a community. The message boards of any active (or heck, inactive) mmo will illustrate this perfectly. These people feel very strongly they are part of a community, and that’s a huge part of why they come back every month and play. Also, the number of people who stop playing an MMO and don’t unsubscribe probably has something to do with the fact that they don’t want to leave the community, even though they don’t actively play. When it comes to free-to-play games, I feel a much weaker sense of community and commitment, and it’s more of just a “thing you do” instead of part of “who you are”. In general, Americans (and more often men) like to belong to explicitly defined social communities with strong rules (like fraternities or fraternal orders), and MMOs with a subscription fee are a natural extension of that.
My theory is that this is different in South Korea or other cultures. This is complete conjecture, but my general understanding of Korean MMO playing is that it’s more of an extension of existing communities, then a tool for creating a new community. Most players play together in the more-social PC Bangs, as opposed to alone and at home. Also, they may not be as used to paying monthly fees for club membership (no idea here, anyone have first hand experience?), so paying a monthly fee would have no social meaning, and would just be viewed as an expensive business transaction, and free-to-play or pay-for-use make a lot more sense than pay-for-month.
So, when does using a subscription model make sense for an MMO? It makes sense when you’re targeting a market segment that prefers discrete communities that are gated by a fee (ie, most Americans). Other business models make sense when targeting other players (more casual players, extensions of existing communities, non-western cultures), but when targeting what would be called the “western MMO audience”, you’re not going to find a model that works as well as subscription. Dungeon Runners is a good example of why free-to-play doesn’t work, because it appears that western players of Diablo games have no interest in microtransactions, but instead prefer to play Diablo 2 for free.
If you want a very clear comparison between subscription and other models for MMOs in the western market, look no farther than the NCSoft Quarterly Report. What do you think made NCSoft more money? 137,000 subscribers for City of Heroes/Villains, or 5.4 million users for Guild Wars? It turns out CoH made them $5.5 million this quarter, while Guild Wars made them $4.9 million. To make as much money with the Guild Wars model as with the City of Heroes model, you have to have more than 50x as many users, which means 50x the marketing, 50x the distribution costs, and 50x the support. This is not the way to make money in the Western market.
17 Responses to “Why Subscription-Based MMOs Make Sense”
Sorry, the comment form is closed at this time.