The MassivelyOP staff was discussing the
SOE Daybreak armageddon recently, and given the total absence of public data relating to who or what was ultimately responsible for the wide-ranging job cuts, we were forced to speculate. Some believe the company stretched itself too thin across its vast MMORPG portfolio. Others opined that everything from early access to SOE’s parent corp struggles to EverQuest Next and Landmark being in some sort of theoretical development hell were at fault.
Personally, I see the firm giving away expensive content — i.e., F2P — as the larger problem.
Is it sustainable?
Correct me if I’m wrong, here, but doesn’t F2P by definition rely on a tiny subset of users to foot the bill for everyone? Whales, for lack of a better term, are the big spenders who put a smile on Dave Georgeson’s face when I listened to him evangelize the new business model at GDC a couple of years back.
But what happens when, for whatever reason, your tiny subset of paying customers moves on? Are they and their giant wallets part of the usual MMO churn and therefore easily replaceable? If not, you’re left holding the bag for ongoing support and infrastructure costs of a triple-A MMORPG filled with non-paying players, to say nothing of what it costs to develop new content, or in SOE’s case, entirely new MMOs.
Sure, you may have a million people dabbling in Norrath at any given point, but if only a thousand of them are spending money, is that sustainable? It doesn’t appear that way, unless a buyout and the mass exodus of key personnel fit your definition of sustainable.
The prevailing wisdom among my colleagues was that no, no, SOE’s latest round of layoffs can’t possibly be related to F2P because the firm willingly converted its entire catalogue to the model after it saw initial success with EverQuest II. In reality, though, F2P in the west has always been a response to desperate times.
Desperately seeking players
How many AAA MMORPGs have launched as F2P titles? ArcheAge? Neverwinter? That’s all I’ve got off the top of my head, and leaving aside those two disasters (one of which was inarguably designed for subs and retrofitted with an ill-fitting F2P saddle at launch), every other big league MMORPG launched with fixed player costs, whether it was the traditional box fee and sub model or just a client fee in the case of B2P games like Guild Wars 2. Why is that, do you think? Is it really the oft-repeated and flimsily supported “companies are tone-deaf” supposition?
Why is it that AAAs like The Secret World and Elder Scrolls Online are keeping their client costs as opposed to giving themselves away? The two companies behind these games couldn’t be more different. Funcom is a tiny studio that has been through several rounds of financial difficulty and associated staffing cuts over the last several years. ZeniMax, on the other hand, is owned by a corporate behemoth and in possession of one of gaming’s most profitable IPs. And yet both companies are choosing to charge up-front box fees for their flagship games going forward, as opposed to the heavily monetized free trial approach espoused by SOE as the way, the truth, and the light.
Lest anyone forget, the free-to-play business model took hold of the western market due to the desperation of Turbine. With apologies to Funcom and its early Anarchy Online efforts, Dungeons and Dragons Online was the first western MMO to fully give itself away, and it did so because that was the only way that Turbine could convince more than five people to play it. The thought, presumably a correct one given DDO’s continued existence, was that if you could somehow hoodwink a few hundred thousand people into playing your game — and more importantly lay eyeballs on your storefront — a few thousand of them might actually spend money.
Turbine did the same for LotRO, and the rest of the industry got in line as the F2P dominos fell one after the other. There were and still are some notable holdouts, but by and large the industry now throws itself at anyone who happens by in a puppy eyes attempt to eke a bit of profit out of huge user numbers.
Yep, MMOs are still niche
Why are MMO companies so desperate, though? Well, it’s because there aren’t enough people playing these games. And why aren’t there? Well, because MMORPGs are in fact niche. They’re time consuming, they’re not particularly accessible when viewed against other game genres, and so on and so forth. In other words, there are a limited number of people in the world who are willing and able to play MMORPGs, and yet the post-2004 MMORPG industry thought it was a good idea to pump out game after game after game, all of them competing for what is essentially the same smallish playerbase.
In the real world, when there’s too much supply and not enough demand, prices fall accordingly, companies go out of business, and we’re left with the cream of the crop. In the MMO world, devs and executives decided to delay this inevitability by selling digital goods that can be mass-produced with a key press. This propped up otherwise failing and forgettable games for a time. But it was always a stop-gap measure, and the problem of MMOs being a niche genre with too many games, too many devs, too many executives, and too few players remains unsolved.
I feared for SOE and its peerless stable of titles the moment I heard that acquisition announcement last week. The ridiculous name change coupled with that picture of the SOE logo being removed from the HQ in San Diego made me an incredibly sad panda.
Successful companies don’t get bought out by the Columbus Novas of the world. SOE was clearly overspending and quite likely losing large amounts of money due to both players who don’t pay for what they consume and due to the development of new titles including H1Z1, Landmark/EQN, and even PlanetSide 2, for which SOE built its own engine and about which CEO John Smedley recently remarked that it has only just become profitable despite launching in 2012.
We’ll never know all the details, of course, but it’s crazy to imagine that giving expensive products away for nothing and relying on the continued generosity of big-spender minorities didn’t play some part in the chaos.