Let’s review what we’ve seen in recent years.

In 2008, we witnessed the failure of 2 hugely-hyped titles: Warhammer Online and Age of Conan. Mythic cut 4 of the 6 capital cities and 4 of the 24 classes just before WAR’s launch, the class balance was poor, and the game client and server were unstable and couldn’t handle RVR. From what I heard about AoC, the Tortage experience from 1-20 was awesome, then the quality of content dropped off. Simply put, neither game was ready to launch.

In 2009, there was excitement for 2 polished games, Aion and Allods Online, coming from Asian and Eastern Europe. NCSoft didn’t localize Aion sufficiently for the western audience – the leveling experience was tediously grindy. AO was supposed to be F2P but just before launch a stacking death penalty mechanic was added to the game that essentially required players to buy a Cash Shop item to remove the debuff.

By the start of 2010, I became increasingly concerned that social gaming might kill investment in MMORPGs. If you’re an investor, why would you risk tens of millions of dollars to build an MMORPG when it’s possible to build a profitable social game for a fraction of the cost and in a matter of months instead of years? Moreover, many believed that WoW had set the bar too high for new entrants.

However, Trion demonstrated with RIFT in early 2011 that it’s possible to launch a AAA-quality game. As Exec Producer Scott Hartsman told me, Trion was willing to wait until the game “wouldn’t fall down” and “had enough for players to do” at launch. I was a huge fan of RIFT, as it brought some innovations to class customization (you could spec with any 3 of 9 talent trees for each of the 4 classes), elegant warfront (battleground) design, and a stunning world. What we learned from RIFT is that a strong launch with a good product is not sufficient to maintain a subscriber base. There were multiple issues with the game, including buggy raid content, gear that scaled too much across tiers (leading to power creep and making it difficult for guilds to replace members who quit), and starting with Patch 1.5, increasingly poor decisions in terms of class balance for PVP. According to Xfire, RIFT isn’t even in the top 50 for online games, just 15 months after launch.

However, there was still hope for 2011, as SWTOR was going live before end of year.

SWTOR launched with neither the polish nor feature-parity of RIFT. E.g. the UI in SWTOR was clunky and could not be customized meaningfully, the auction house was difficult to use, and the game client had performance issues. Justin Lowe from darthhater.com was and is still getting ~15 FPS with a high-end PC. Despite these issues, I enjoyed SWTOR immensely. The game provided a fun combat experience – the animations and sounds made combat feel epic. I loved several aspects of its PVP, including the brilliant design of Huttball (a PVP battleground where you can pass the flag) and the fact that meaningful effects in PVP required the use of an ability with a cooldown, whereas in RIFT many of the most important effects simply proc from button spamming. That said, I believe SWTOR launched before it was sufficiently ready.

From a financial perspective, the launch of SWTOR was the most successful ever. Millions of copies were sold. However, there has been a significant drop in subscribers over the first 6 months. While BioWare has been working hard to deliver new content and game improvements, it’s not happening sufficiently fast to stem to flow of players unsubbing.

Based on what we’ve seen over the past 4 years, here is what I now believe:

It is possible to launch a AAA-quality MMORPG. RIFT proved that It is possible to acquire a significant number (1MM+) at launch for a new game that requires an upfront purchase and monthly subscription. SWTOR proved that However, if a game requires both an upfront purchase price and a monthly subscription, the players are going to be incredibly demanding and unforgiving

Regarding that last point, there’s a factor that significantly impacts a developer’s ability to keep players happy: most of them have been implementing games with a vertical scaling model, which involves delivering:

A huge world, with a lot of leveling content. E.g. zones with quests, instances, etc Increasing tiers of content (heroics, raids) and gear at endgame

This model requires a huge investment for the developer, which in turn creates tremendous financial pressure to launch prematurely to recoup the sunk costs. Moreover at launch, some players will speed-level, tear through the endgame content, then complain there’s nothing to do. Even in a game such as SWTOR where BioWare invested heavily in rich story arcs and voiceovers. And the playerbase in general will expect more new content from the developer to justify the subscription. My gut feeling is that it’s nearly impossible for a developer to continue providing fresh content for a game built on vertical scaling while retaining a sufficient number of subscribers to make it financially worthwhile. The only company to have been able to do this so far has been Blizzard with WoW. Yes, some games such as EVE have gradually grown their playerbase, but they’re still south of 1MM players.

As I discussed elsewhere, horizontal scaling systems enable content to remain relevant over time and therefore provide much better ROI for the developer, which still providing entertainment value for the gamer. I would argue that horizontal scaling systems will actually provide a better experience for the customer, even though many players have been indoctrinated into believing that vertical scaling and tiers of gear create a positive experience.

So here is what I propose as the business model of MMORPGs:

Build games that scale horizontally instead of vertically. GW2 and TSW are doing that Create a business model that doesn’t discourage customer acquisition and/or retention. Charging both an upfront purchase fee and a monthly subscription doesn’t make sense long-term, because it creates too many opportunities for customers to opt out. Any of the following are much better models for the long-term: Having no upfront purchase fee and no monthly subscription, but provide microtransactions for virtual goods. This is the proven F2P model (a la League of Legends)

Having no upfront purchase fee but a monthly subscription. Many F2P games support this by providing a subscription that provides a bundle of virtual goods at a discount

Having an upfront purchase fee but no monthly subscription (a la GW2)

The main point about #1 is creating a compelling experience. Make the combat engaging. Make it social. Make if fun. If you do these things, you’ll grow your customer base. The #1 online game League of Legends has been growing swiftly despite lacking massive content. Riot Games releases new content such as hero classes, but doing so is far less costly and complicated than trying to release new PVE zones, group, and raid content.

Some people might rebutt point #2 by saying that a developer needs to recoup their costs. They do, but part of the reason they are under pressure to launch prematurely and charge upfront is because they are simply building too much content, and the reality is that content will soon be outdated.

GW2 is a great example of horizontal scaling. My prediction is that Guild Wars 2 will fundamentally change the way gamers experience and relate to content. ArenaNet has smartly invested in content that they build once and the players re-play forever: Structured PVP and WvW. In addition, they’ve removed the leveling divide between players via their PVE sidekicking system, full Bolster to max level / gear in Structured PVP, and scaling PVE such that a player never truly outlevels it.

If I’m right, GW2 will model a viable approach for other companies, and we’ll continue to have the benefit of choice as gamers.

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