Abandonware Goes Free-to-Play In The Old Republic

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This entry is a follow-up to “Abandonware Goes Pay-to-Play in The Old Republic“.

I am sorry, my children, I have failed you. I honestly believed that consumers would look past any flaws that Star Wars: The Old Republic may have had. At the time, I honestly believed there was no way the game would actually go free to play in under a year.* (In my defense, I would like to point out that, at the time of writing the article, I had not played the beta.) How could BioWare possibly deliver a Star Wars game that doesn’t sell on the merit of its intellectual property? What about all that goodwill built up in the previous installments of The Old Republic franchise?

The first problem? They decided to clone World of Warcraft: Wrath of the Lich King. The only major differences are that BioWare opted not to have auto attacks and have an odd “stance” in the form of ranged “cover”. (It does not serve the same purpose as cover in first- and third-person shooters, it only changes the abilities a player may use.) In all fairness, there is a market for players that want that more “traditional” forms of MMO combat. But World of Warcraft has been hemorrhaging players for a while now,* with the general consensus among the MMO communities being that the “dumbing down” of systems (like the World of Warcraft talent tree system) has alienated long-term players and failed to keep the coveted Blue Ocean casuals that left video games for smart phones.

And BioWare’s content development strategy? Well, to be quite frank, World of Warcraft has had a lot more time to build content, as well as refine the speed at which they push out content. One needs to look no further than Mists of Pandaria to confirm this. The expansion is set to launch with the least amount of original player-versus-environment content possible, featuring rehashed dungeons, Challenge Modes that force players to replay the same dungeons, very few raid bosses, and a new focus on “Scenarios”, which are microdungeons based off Public Quest systems, group quests, and rehash world subzones. This is because they’ve made too much content over the years. Blizzard has run out of creative outlets for World of Warcraft because too much content exists and too many loose ends have been tied up. (The subscriber numbers peaked through The Burning Crusade and Wrath of the Lich King, with both games featuring plots that featured major characters from Warcraft III). BioWare, to their disgrace, launched The Old Republic with as much Player-versus-Environment content as the original World of Warcraft. Players leaving Blizzard’s behemoth probably expected The Old Republic to have as much content as the game they left. The Old Republic’s PvE content is only padded out by a an obscene amount of oft skipped spoken dialogue.* BioWare should have chosen a much better gimmick that applied to the gameplay itself to differentiate their game, as Rift, TERA, and Guild Wars 2 attempted.

Speaking of which, that voice acting didn’t come very cheap. A development cost of 200 million dollars is by no means small, even by the “blockbuster” standards of the video game industry.* Unfortunately, it seems clear that much of the awkward voice acting was seen by players for what it was—a needless gimmick. While voice acting is definitely good for games, it was a terrible idea for BioWare to hedge all their bets on expensive voice acting as a leap in “quality”, instead of trying something different or innovative. I have seen a couple of BioWare’s defenders claim that The Old Republic has made BioWare “a hundred million dollars”. (Ironically, it was in opposition of The Old Republic going free-to-play.) Even if that’s true, the game has NOT made BioWare money; it has only recouped half of its development cost. Electronic Arts claimed that they need 500,000 subscribers to break even.* How realistic is this? Time for some math. Assuming 1.5 million sales (based on E.A.’s claim of 1.7 million subscribers) in which retail took no cut of sales, that’s 90 million dollars in the first month. After this, they are left with 110 million to break even and only 500,000 subscriptions. 500,000 subscriptions at fifteen dollars a month…drum roll…7.5 million dollars. Those people would have to subscribe for more than a year for The Old Republic to break even. (14.66 months, to be exact.) 1.5 million sales may be a conservative estimate. But in my defense, I didn’t subtract for the share of revenue taken by the retailer. I also didn’t adjust for the costs of ongoing development, servers and maintenance (which is actually pretty cheap), community management, and technical support. (For obvious reasons, technical support is probably the largest ongoing cost for this game maintenance. It’s also the reason why Nexon makes so much profit on their games—the company is notorious for providing almost no customer or technical support).

(ML: More importantly, these numbers don’t even cover for the cost of marketing. Battlefield 3 had a marketing budget of nearly 100 million dollars, and it’s reputed that Call of Duty: Modern Warfare 3 is in the same territory. It is possible that Star Wars: The Old Republic occupies the same development territory as the movie Avatar, whose combined marketing and development costs were close to 400 million dollars.  Good luck making any money out of that when you can’t convince millions of people to pay a fifteen-dollar-a-month subscription and turn the game into a lifestyle.)

Guild Wars 2 may be one of the games (along with, in my opinion, Diablo II) that got voice acting “right”. The voice acting in Guild Wars 2 isn’t obtrusive, it isn’t part of every quest, and when it is used, it seems more meaningful. Moreover, it didn’t drive ArenaNet into making Guild Wars 2 subscription-based. They plan to recoup their losses the same way single-player games do, using the retail purchasing model ($59.99) and supporting ongoing development and customer support with a free-to-play-inspired cash shop and game currency (that can be traded amongst players). ArenaNet may be ahead of the herd, depending on how devastatingly high the development costs are for Guild Wars 2 and future games in the MMO genre.* Of course, the cash shop is pretty overpriced and Guild Wars 2 is EXTREMELY limited without using it. (There are only five character slots, and you cannot change servers once you choose one. Not without paying in a little more.) Maybe ArenaNet just happened to check out something else E.A. put out.

I know I’m beating a dead horse at this point, but the subscription model is dying. World of Warcraft only gets cheaper to develop when they lay people off,* but it has been consistently losing subscribers since the beginning of 2011. As Blizzard struggles to get control of customer service and development costs in order to offset subscription losses, the North American free-to-play market will likely grow significantly now that South Korea has outright banned digital item sales.* As more of Nexon and Perfect World Entertainment’s shovelware comes to the North American market, more and more of World of Warcraft’s subscribers will begin to wonder why they’re not playing any of the multitude of “free” games out there. While there will occasionally be games to push the envelop of quality for “free games” (Path of Exile, Firefall), the vast majority of them will be as ethical as the E.A. strategy of forcing players to pay to win.

The days of consumer willingness to pay for an MMORPG and a monthly subscription is certainly ending. Even if Call of Duty: Elite Premium and Battlefield 3 Premium have been successes, the programs at least emerged under the guise that they would not be “required.” Players are being turned off by the fact that MMOs require a monthly “investment” from the get-go. It should not be a surprise that Guild Wars 2 is getting so much hype for “breaking away” from this model, even though Guild Wars followed this same model and was less overboard with cash shop requirements. Don’t believe me? This quarter, World of Warcraft subscriber numbers dropped by a million and The Old Republic subscriptions dropped by an indeterminate number. They were “offset” by one major release (The Secret World), which may be heading to the free-to-play realm as well, and already features a cash shop. And certainly, The Secret World did not sell more than a million copies. Blizzard fans believe that World of Warcraft should be “expected” to lose subscribers during these kinds of lulls in content release, and that Mists of Pandaria will bring those players back…except Blizzard had never reported subscriber losses until the launch of Cataclysm. Subscribers will certainly rise for Mists of Pandaria, but I don’t expect the subscription MMO market to expand very much, and what market growth occurs will likely drop away in the following months.

Perhaps this move to free-to-play was inevitable for The Old Republic. When competing in the retail and subscription video game market, The Old Republic is an average game with average graphics and a whole lot of voice acting. But in the free-to-play market, The Old Republic is a superstar of quality. I definitely made the wrong call in believing that The Old Republic would become E.A.’s cash cow in the same way World of Warcraft is for Blizzard, but I’ll willingly walk into the fire again: I think The Old Republic will be a major success in the free-to-play market. The cash shops of free-to-play games and even Guild Wars 2 are pretty obscene: Twenty-five dollars for a twenty-dollar deluxe edition upgrade, five dollars for an inventory bag slot, ten dollars for a character slot. These tools are designed to nickel-and-dime players on a dollar scale. In addition, E.A.’s pay-to-win strategy with Battlefield Heroes works, despite its ethical questionability.

E.A. stock has been in a freefall for some time now, to the point where rumors that Nexon was seeking to purchase Electronic Arts boosted the company’s stock,* and the company needs the kind of boost that a free-to-play The Old Republic will likely provide. It will help EA’s Origin platform gain some ground on Steam in the massive digital marketplace. Where The Old Republic has failed, some successes will be gleaned, and you should expect EA to charge you for every success they have. EA couldn’t afford to have The Old Republic fail, just like they couldn’t afford to have Battlefield 3 or Dead Space 3 fail. The console reckoning will be hitting big-budget titles the hardest, and E.A. could be out of business if they don’t get a coveted alternate revenue generator they desperately wanted with The Old Republic.