MMO blogger dives into the theoretical math behind lockboxes

MMO blogger Serrenity, whom many of you will recognize from his clever comments here on MOP too, has a compelling blog post on his personal site today diving deep into the lockbox debate. But far from merely offering another exhortation to stop buying lockboxes, he’s doing some complicated napkin math (and by napkin math, I mean python scripting) to try to understand why publishers are so fixated on selling them.

Since studios are generally not in the business of handing out detailed sales figures and drop rates, Serrenity is forced to calculate potential revenue based on publicly gathered data, which he admits upfront result in rough estimates. “This information is purely extrapolated and used for demonstrative purposes,” he warns.

Using Guild Wars 2’s wiki data on drop rates for the bank access token, he finds that the revenue from selling lockboxes vs. selling that item directly increases 14-fold – almost 1500% higher. And that’s just a minor, relatively undesirable item with a relatively high drop rate; admittedly, nobody’s going to go ham buying lockboxes just for that (we hope, anyway). Plugging rarer, desirable drops that would cost much more upfront (like weapon skins) into his formula sees the estimated revenue soar as high as 12500%. That is not a typo.

Granted, his calculations cannot take into account the fact that it’s fairly unlikely that most people would spend $1200 in lockboxes trying to get a sword, so that isn’t guaranteed money for a game at all. What we’d really need are better stats on gambling-minded whales vs. non-whales to see how much more money whales generate vs. the rest of us who nope right out of anything with a .1% drop rate. Any studios wanna pony up? Other than, you know, Star Citizen?

“It’s not hard to see that lockboxes theoretically generate orders of magnitude more revenue than direct sales,” Serrenity concludes. “From a business perspective, locking desirable items behind chance mechanics just makes good sense. But at this point, trading real money for a chance at a valuable object makes lockboxes seems a little bit more like gambling than video games.”

Source: level-42
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61 Comments on "MMO blogger dives into the theoretical math behind lockboxes"

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Anthony Clark

It’s gambling plain, and simple.
The courts missed it.

I leave games that add these, and don’t buy them if they do have them.

More people need to boycott if any change is to be seen.

dixa
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dixa

It needs to be recognized as gambling and subject to the same regulations

Too easy for a 12 year old to buy a steam wallet card at a grocery store with their allowance and blow it all on lockboxes.

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Sally Bowls

I don’t understand this. At all.

Are there [m]any people who would buy a lockbox key in order to get an Instant Bank Access???

Definition: the expected value of a discrete random variable is the probability-weighted average of all possible values. In other words, each possible value the random variable can assume is multiplied by its probability of occurring, and the resulting products are summed to produce the expected value.

Isn’t the value of the lockbox the “expected value” of the lockbox, the sum of the product of the value times the probability of the item. So lockbox that costs 84 gem has an expected value, in gems, of (.182+25)+(.265*24)+(.201*180) …. I didn’t bother to look up all the prices to see if the EV of the lockbox is greater than the cost. ( I greatly preferred SWTOR’s system where you could sell the contents. You could buy the lcokbox for credits and sell the contents for credits; most times for less than the purchase price but the rares meant it tended to average out a net profit.)

How is looking at one of less valuable of two+ dozen items in a box in any way informative as to the value of the box?

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Serrenity

It was really just a data point I picked honestly, because it was first in the list on the GW2 wiki and had a higher drop rate. I don’t think anyone is buying ‘all teh bank’ access tokens via lockboxes. That’d be silly.

You make a good point about expected value (which is … interesting to say the least — I have part 2 going up today talking about the legality of all of this, and value is pivotal). I made the broad, general assumption that the actual value of the lock-box is going to normalize out to slightly below the expected value because that’s what keeps people coming back–if the actual value met or exceed the expected value – people wouldn’t buy as many lock-boxes. If the actual value trends too far below the expected value, people won’t buy as many lock-boxes because they can’t maintain the fantasy that it *can* be worth it.

Keeping in mind that this kind of math is looking at populations and averages — not individuals.

FWIW, this is the full output from my calc on a rare skin, with a .1 drop-rate

Rare Armor Skin:
800 gems / skin, .1% drop

Direct Sales
Per Item Cost: $10.00
Total Direct Purchase Revenue: $10.00
# Items Acquired: 1

Lockbox Sales
Per Item Cost: $1,253.72
Lock Boxes Purchased: 1007
Total Lockbox Purchase Revenue: $1,253.72
# Items Acquired: 1
# Losses: 1006
Standard Dev: 28.5861067885

Theoretical Revenue increase of 12,527.2%

Again, I know my math is flawed because there are too many variables that I don’t know about but I wanted something to give an idea. I might refactor the script to calculate the expected value based on the data in the GW2 wiki.

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Schmidt.Capela

The math is off because it doesn’t consider the value of the unwanted items the player got. For most lockbox-like deals the average value of what comes in a box is slightly more than the value of the lockbox itself.

Though, of course, just the fact the player was forced to get a large number of unwanted items in order to acquire something he or she desired is already one heck of an ethical issue.

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Serrenity

Right. Because its pretty much impossible to quantify that ‘unwanted’ factor and the probability associated with it. the only thing I could reasonably calculate was revenue that would be attributed in the attempt to get a single item … or to reach a certain number of items in the game world. The better metric is probably the cost per item — which in the rare skin scenario was $10 in direct sales, and I think $1,300 for lock-box with a .01 drop rate.

But even still, the calc is still, by necessity, incomplete.

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Schmidt.Capela

Yeah, it can’t be calculated because it’s subjective, as it depends on whether the player is interested in, or even has a use for, more of the items that can come from the lockbox. If the player is actually interested in any and everything that can come from the lockbox, purchasing them might even be a good idea.

One such example is LoL’s mystery gift. It’s a bit convoluted because players can only purchase those as a gift for someone else, but it’s basically a lockbox that costs 490rp and is guaranteed to contain a skin worth at least 520rp that the receiving player doesn’t yet have; for anyone that wants to have all skins it’s actually a very good deal, people here often pay other players real money for them to give a mystery gift back.

For the most part, though, even “fair” lockboxes are basically a scam meant to make players purchase a lot of things they don’t want or need in order to get the one thing they want.

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thirtymil

What would be interesting (for me, anyway) is to see how the curve drops off as the price goes up. I’m pretty sure if auto manufacturers hid their cars behind a lockbox-type scheme it’d be a massive profit-denting failure (“Oh, you wanted the family estate with luxury extras… shame, you got the 1 litre hatchback. Another go?”). Games are only really getting away with it because, much like the lottery, the cost per transaction is small.

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Jeffery Witman

They have been small costs, relatively, but that’s changing quickly. The MICROtransactions of the past are giving way to much larger cash shop prices and lock boxes are following the trend. The more they see lockbox potentials at over $1000 revenue for a simple item, skin, or service token, the more they will push the cost to its limit (and probably well beyond that limit, too).

They’re not really doing anything new here. It’s just a fancy looking slot machine, except you’ll never actually get any money back.

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thirtymil

Yep, agreed. That’s why I’d like to see what happens as price increases – I mean, some of the limited ESO houses are £80+ – how long before someone puts three of those in a lockbox and asks you to hope you get the one you want?

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Utakata

So the tl,dr of this story is that game companies move their inventory much better in a spectacular fashion through lockboxes than posting it up on their cash shop? That seems entirely profitable in the disingenuous to the “T”. /bleh

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John Bagnoli

Excellent read. Fix the 3rd sentence in the second paragraph.

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Serrenity

Thanks – the downfall of self-editing :D

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NeoWolf

It’s less about its profitability and more about its morality. As I said in the article the other day there are ways of making money and then there are ways of making money.

For example I could make a heap of money growing and selling drugs..but I don’t, because it is morally and legally wrong.
Money cannot and should not be the only defining factor for a person, a business, a compnay or indeed a nation.. there simply needs to be more consideration and concerns for others than how much we can make off them a middle ground if you will.

Lockboxes are a reprehensible money making methodology and everyone..even those who buy them would prefer it if a less douchey method of making money while providing us desireable content existed.

styopa
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styopa

So…how do you feel about states selling lottery tickets?

I fail to see how that’s ANY different than lootboxes.

dixa
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dixa

A 12 year old can’t buy a lotto ticket.

A 12 year old could buy a scratcher from the machine but would not be able to redeem any winnings, their parents or guardian would have to which would alert the hopeful non-degenerate parent that their 12 year old is gambling

A 12 year old can buy a steam wallet card or an Xbox or PlayStation card at a grocery store for cash, gamble on lockboxes and the parents wouldn’t know unless/until the kid developed an addiction to the gambling and started doing something perhaps illegal to gain more money to buy more cards to buy more lockboxes.

It is gambling just like state lotteries, and it needs to be regulated the same way.

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Stropp

Personally, I think that states selling lotteries is state sanctioned exploitation. A way to tax the gullible.

A friend did the calculations a few years ago and figured out that if a person who spent $10 on lotto, instead put it into a superannuation style account (I think that’s 401K for USians) after about 40 years they’d end up with more than the average highest winning prize. (Bear in mind that is in Australia and when he worked it out the top payouts were only 1 or 2 million. These days they’re in the 20 – 50 range I think. Hardly close to the huge US payouts.)

The point being, if someone was diligent they’d have a almost certain chance of retiring wealthy as opposed to a tiny chance of winning the lotto. Of course, getting people to be diligent with their savings is an entirely separate matter.

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Schmidt.Capela

Where I live, the government actually got into the lottery business to undermine organized crime. One of the main sources of income for organized crime was illegal gambling, so the federal government created a nation-wide lottery (or three) with a larger prize pool than any criminal organization could provide, making it more attractive to the common person.

Gambling is a governamental monopoly here, BTW; the private exploration of games of chance was banned over seven decades ago, thus there are no (legal) casinos, betting houses, slot machines, etc. If you want a legal outlet for gambling here your only option is one of the official lotteries, and those cut down the amount of gambling someone can do because there’s at least a full day between two drawings.

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Utakata

Err…

whYfFDU.gif
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Serrenity

Heavily regulated? 6 in 49 model has published probabilities, money generated benefits the states / people in the state instead of lining Booby Kotick’s pockets?

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NeoWolf

Exactly, here in the UK (and im sure elesewhere) the national lottery gives 40% of all money generated to national or charitable causes that help or improve peoples lives.. I doubt there are many MMO developing studios who can make that claim :)

styopa
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styopa

Regulated?
http://www.pennlive.com/watchdog/2017/09/defying_the_odds_part_1.html
IL’s most frequent winners are 3 people from WI.
They’ve each won $600+ precisely 120 times.
Their total winnings (each) are exactly the same at $45,981.

And fwiw the money generated from lootboxes ALSO benefits the state in higher tax revenues from that business….just less directly. One could also assert that it employs people as well.

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Utakata

So are casinos. And yes you can lose your shirt there as well if folks are that wreckless.

However, lotteries or casinos are not lockboxes. Where one drops money onto a chance for digital items that can only be used in the game those items are procured. So they are not even remotely close that way.

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Serrenity

Oh for me it has a HUGE moral component, but I’m trying to approach from a demonstrable point of view. It’s easy to point to a 15,000% increase in profit and say “that feels greedy” than it is to point at the practice and say “that’s immoral.”

I also don’t consider the two statements mutually exclusive.

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Serrenity

Thanks for the Feature Bree :-) I was thinking we spend so much time on here arguing without specifics, I was thinking “what would specifics look like?” so I figured I would write a script to calculate it. I’m hoping to make it a little bit more robust then throw it up online to let people plug in their own values to see theoretical revenues.

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Schlag Sweetleaf

$

the sum of all fear$.gif
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rafael12104

Awsome. Lol. The zoom in is perfect. Lol!

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Paragon Lost

By and by I love Serrenity’s tie into MtG. A game that when it came out I felt was a plight upon the tabletop rpg gaming community. It drove many tabletop rpg gaming companies out of business because players didn’t want to play the tabletop rpgs, tactical game etc as much.

Why? Because MtG was fast and easy to pick up and required no work for a referee aka GM/DM to play. You bought your cards, sorted em and played. I did play a bit myself but when I saw the impact and what they were doing I quickly sold my cards and walked away from it.

Tied into the growth during the same time of online gaming via GEnie, Compuserve, Prodigy or AOL really put a total smack down hurt into tabletop gaming. Though not as many could afford to do online gaming since we were talking about hourly charges and some of us even had additional hourly connection fees to even connect to something like GEnie to play Air Warrior, Dragons Gate, Gemstone, Hundred Years War, Orbwars etc.

Anyhow great comparison to the whole card buying with MTG, Serrenity. Folks got pretty addicted to buying those damn packs as I recall and you never knew what you were getting. Just like loot boxes. Funny

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Arktouros

Seems like everywhere I turn these days it’s just non-stop complaints about Lockboxes.

It’s tiresome at this stage because in the end we know it’s not going to change. Like all the outrage on F2P and increased sale prices and DLC and whatever else it’s just going to quietly go away to return as a clever one-liner reference down the line.

Simply put, the business model works. The only way it will change is if it stops working and that’s unlikely at this stage.

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John Bagnoli

Perhaps. But I like to see the numbers. It helps put perspective on both why it works and why people don’t like it.

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Tandor

I agree.

I’m not allowed to say any more apparently.

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MesaSage

.

lootbox.jpeg
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Paragon Lost

“to try to understand why publishers are so fixated on selling them.” -Bree

They try to sell them because a bunch of players some years ago decided that F2P and B2P were awesome ideas (said with extreme caustic inflection), so in order to come up with income, mmo developers fixated on lockboxes and other store items that you can buy with real cash.

Anyhow, off to go read Serrenity’s take on this problem. I tend to like Serrenity’s posts, so it should be interesting at least. :)

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Arktouros

Players decided to vote with their wallets and not support “bad” MMOs and cancelled their subscriptions. Developers weren’t going to just start saying, “Welp I guess we done a bad with this release, better just close up shop on this one, we’ll get ‘er right next time.” F2P and B2P with cash shops (and predatory items like lockboxes) were just a response to keep themselves going as a business. Once they saw the kind of money coming in that’s when things started to get out of hand haha.

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Paragon Lost

Yep it’s Pandora’s Box. I don’t seeing it being closed. :/

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MesaSage

Seems war has been declared.

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rafael12104

Damn. Don’t you hate it when the same meme applies in multiple places?

comment image

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MesaSage

ATM’s have a $300 daily limit?

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Bryan Correll

@MesaSage
Well, you got a genuine lol from me there.

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Paragon Lost

Do they still? It’s been a long time since I’ve used one that I can’t recall. :/ I’d have thought that they’d have raised it some by now.

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MesaSage

It might be old school. I’d rarely test the limit.

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rafael12104

Depends on where you are these days. So, 300 if I am at home. But in Vegas, it is 500. Seriously. That is what I have found recently.

But at least there is a limit. Lol!

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Paragon Lost

Hah! I’m amused that Vegas has it 200 higher! LOL.

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Schmidt.Capela

My bank allows me to set my ATM limits to anything up to about $1000, though I believe it requires the ATM to be one of the new models with fingerprint scanners to allow that large a withdraw.

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rafael12104

LOL! good point.

Line
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Line

Wow, that’s pretty telling with (approximative) numbers.
I’m glad that gambling has no effect on me, but I sure as hell can see why it should be regulated… and maybe banned in the context of video games.

But I’m quite sure that we’ll see loot boxes in many more aspects instead.
Bling bags have been a massive money maker for a long, long time (and I saw some with random bargain bin CDs one time – fucking CDs in a random box! Who would even want to try that?! … Ashens I guess, but yeah)… so when we’ll start seeing the same everywhere else?

Just one buck for a random piece of stale bread! Maybe it will be a nice fresh one, who knows!
Just buy my health insurance, it’s cheap! If you’re lucky you’ll get dental care, but too bad you got the mauled-by-a-rabid-whale one instead! Try again!

Fuck this model seriously…

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Paragon Lost

Would be awesome if mmorpgs all went back to the subscription model. They’d need to raise the monthly subscription fee a little. Folks wanting 24/7/365 access to an immersive, large gaming world with lots of things to do need to be realistic. The costs to develop, maintain, improve and make new content costs, as does the buildings, insurances, hardware, medical, dental etc.

I feel that as long as we don’t go back to the bad ole days of the 1990’s where we paid hourly fees that going with a flat $20.00 to $25.00 monthly fee isn’t unkind or unfair. Also charging for new expansions isn’t a bad thing as long as they don’t get all crazy like some of them have with $100.00 plus dollar expansion options. Anyone who doesn’t see the value is paying for the wrong genre of mmorpg or it’s a bad mmorpg and won’t make it.

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Schmidt.Capela

If I’m paying for a subscription, I expect no cash shop, at all, and free expansions. If I’m paying for expansions then I expect the game to either not have a subscription or to keep it optional and the benefits of subscribing low enough players don’t feel like they are at a disadvantage when not subscribing.

It’s part of the reason I abandoned subscription games. If the game charges a subscription, and atop that charges for anything else, then I consider the publisher (and perhaps the devs) to be too greedy for their own good.

BTW, $15 can get you more bang for the buck in other entertainment options than a MMO subscription could. It can get you a Netflix subscription, or a Kindle Unlimited subscription, or a new Humble Bundle per month, or a slightly old AAA game on sale on Steam, and so on. Subscription MMOs aren’t quite the value proposition they used to be, even if ditching expansion and box prices, removing the cash shop, and foregoing subscription increases.

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Arktouros

Look at what you can get for $15 today gaming wise. Then raise that amount to the amount you want to raise it to and look what you can get with that much money. Each month. Most importantly, now look at what most MMO game developers have delivered in a 30 day period for that $15.

The value for the subscription has never added up and that’s why it’s failed.

The only MMO game I have ever seen that would have been worth it to subscribe to was GW2 during Living Season 1 where their frantic and constant break-neck “2 weeks” updates they added to the game was insane. As a heavy gamer I struggled to keep up with them cause it was that crazy. I can’t imagine what they did to pull it off, but bravo to them.

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Paragon Lost

And yet you’re done with GW2 for the time being as you ate through the new PoF content in what two weeks?

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Arktouros

Yes. But lets examine two important factors.

First, the expansion was about $30. Over all there was around 60 hours of content in the expansion maybe 80 if you’re a whole completionist. So even if we halve the 60 hour mark at $15 that’s around 2 hours of new content per $1. Even if they had charged $60 for the expansion personally I’da been okay with that cause I generally look for around $1/hr for my entertainment. But consider your typical MMO patches that come every month and see if they deliver 15 hours of new content to enjoy let alone more. The answer generally speaking is a big resounding no.

Second, consider the sheer volume of time invested by ANet to deliver that expansion. What took them months (years?) to develop can be consumed by players, even with “average” schedules of 20 hours a week, in a matter of weeks. It takes developers so long to develop content that represents a fraction of play time as the result.

And lets consider if it was a subscription. Would I pay $15 on top of $30 to come check out the expansion? Probably. After beating it in 2 weeks would I keep subscribed after? Definitely not. So while they were looking for that continuous subscription I’m already peaced out and checking out the next new thing to do “holla at me” when the next expansion drops. The math just doesn’t add up.

Comparatively speaking they’re B2P I can log in when I want and check things out but also offer a cash shop I end up spending $70 on the game as well as another $100 for some gems to play around with and it’s like I’ve subscribed for 10 months even if I only play it for one. And that’s the math that gets us loot crates (not apologizing, I love my pupper pack).

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Jadefox

I would love to go back to subscription based mmos. I would also love to get rid of the 1000s of f2p and b2p mmos that are produced like cookies from a bakery.

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rafael12104

Put value back in the sub. That would do it for me. Give paying customers the good stuff, not in a chance roll, but just for being a sub. Stuff like that.

Line
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Line

If MMOs were to go back to the sub model, I’m out.
And everyone else would be, since they’re already dead and buried.

Immersion and a large gaming world died with WoW, even if it wasn’t the intent.
You’ll note that the only ones that still have a sub and are relatively active are also the ones that willingly gutted all of that, and are nothing more than corridor simulators with three/four other people.
WoW and FFXIV are just a glorified Warframe, with a sub on top of the box, the expansions and the cash shop.

Things are expensive.
Lo and behold, plenty more don’t need a sub to survive and took over what’s left of the MMO space.
There’s absolutely no value in paying. You’re just supporting worse games with worse models because it feels good to spend more for the same product.
This is a real thing, and is actually remarkably close to the lootbox mentality… with more brand loyalty, of course. Don’t even need predatory gambling when you can skip it entirely and get the extortion money directly.

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kimowar101

this way of thinking is exactly why we have loot boxes

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Paragon Lost

“And everyone else would be, ” -Line

Can’t take you serious because of the above.

Also, $20.00 or so, or the current $12.00 to $15.00 is not expensive for a hobby, one that basically gives you 24/7/365 access to a wide array of content in an mmorpg. I have no investment in other types of mmos, if those bullshit pay models work for them and the players are happy with them, so be it.

My problem is it was players like you who helped drive the F2P business model into the mmorpg genre. The mindset that they don’t want to pay anything basically. You expect whale players to prop up the game so that you can play it free? People with free income are I think growing more and more disgusted by that and some are changing hobbies, walking away from the mmorpg genre.

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