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Where does my subscription money go?
Trokarn
Member Posts: 68
I thought that this was a phenomenal answer to why MMOs don't need a subscription and to where your sub money goes, so I made a thread for others to read. Enjoy.
This is a quote from another thread. The post is by Shinami. I hope he/she is okay with me posting this. And the name of the thread is credited to CookieTime.
Originally posted by ShinamiThe answer to your question "How is it possible?" Comes from personal experience.
If a developer optimises gamecode, one can bitstream a lot of code. Bitstreaming means that you make a program consume more client side processor resources in order to turn questions the server ask the client into "Yes" or "No" questions. The placeholder for YES is 1 and for NO is 0 in binary. Bitstreaming is about asking questions, organizing the bits together....and sending them as a packet. YES also means (TRUE) and NO also means (FALSE).
Suppose your connection uses 7,000 bytes per second. One bit equals eight bytes. So we have 56,000 bits per second. This was the definition of 56K. The truth is that when one used dialup (56K), it wasn't 100% 56K and it by the time you did reach the server, you would only have around 1,000 bytes left in the server. (8K)
What efficient netcoding does is allow more data to be send in less packets.
Ok, now we go into servers. As a person who modded RYL for netcoding and even ran my own MMORPG server for three years that had over 8000 accounts registered, we can have a discussion.
The number of accounts in an MMO is irrelevent. 12 million Worlds of Warcraft accounts, or 5 million Guild Wars accounts means nothing to the server world outside of bragging rights. What matters is the total amount of players logged into the server at any given time. You will never have 12 million WoW players or 5 Million GW players logged in at the same time.
As far as bandwtih goes, every player has a MAX CLIENT RATE. This is the maximum amount of bandwith a server gives to a client (one of us playing the game). LOTS OF CLIENT-SCAMS exist....A Good max client rate helps with framerate and ping.
Suppose I have a 100 mbps Upload/Download Connection. Given a Max Client Rate of 7,000, how many players can play simultaneously? The answer is 100,000/56 = 1785.71. In server bandwith you do not ROUND UP, since you will RUN OUT. The answer is always an Integer.....1785. Then there is the fact I need to keep the connection alive....and use some bandwith for the databases...Thanks to multicore computers I can use LESS computers to hold the game world. What it means is that the connection can support 1785 players before everyone gets disconnected from lack of bandwith.
Client rate really means if you have 56K upload on your connection, I have to use 56K upload on my connection to give to you. If you have a Connection with 2mbps upload, tough luck. Im limiting you to 56K but its not like dialup since its continuous and not 1K out of 7K. 7KB in pure text editing....is enough to write 56,000 characters....you can write a book per second!
RYL had five maps....Human Map 1, Human Map 2, Akkan Map 1, Akkan Map 2, Caernevoron (the main battle/neutral map split evenly between the two). I used to use one computer to run Caernevoron and another computer to run the other four maps....with databases accessed from a third computer. Thanks to Technology....I was able to actually reach a point I Could build One computer and run the entire server with all the maps without it lagging from processing.
Suppose I installed a monthly fee, you know to preserve the connection strength of the server....and I decided to charge everyone $10/month. (Yes, im getting into Client-Rate Scamming which many companies do)...
It means that since the average amount of people who play in my server would be around 1000...I would still collect money from all subscribed...So 8,000 x 10 = $80,000 monthly. Due to the fact a SERVER does not need a video card, as its really pure processing..:), One can make a well cooled server and put in a well cooled room....
Client-Rate scamming is something that many companies do. A lot of companies will say "WE JUST UPDATED OUR SERVERS TO PROVIDE MORE ROOM FOR PLAYERS!!!! LOG IN AND HAVE FUN" and you log into the server and find you have more lag, and see more players and crowdedness....
The truth is they DID NOT UPDATE ANYTHING...what they did was lower the client rate, so everyone else gets less bandwith. Everyone gets worse performance and higher ping due to the crowdedness and the parent company makes more money from SUBSCRIPTION FEES. Of course its nice to feel you are loved since it helps people undergo a nice placebo effect.
It requires less than 1% of all the money collected monthly to maintain an MMORPG server. Most processes are automated...:) The first 1 million Guild Wars players paid full price for three games + expansion. That is $200. This means $200 million dollars....and that along with promotions and their in-game store which gives you more options without having a gameplay advantage (like more character slots (I have 12) and more storage panels (I have max), really did a lot for the game. Before the In-game store came, people had to BUY 2 copies of Guild Wars, make 2 accounts, unlock everything on both and trade between accounts. It was a pain in the ass...Today one can just buy Guild Wars trilogy for a second account.
The point is that thanks to technologies today...Today a Server Computer can hold 16 - 24 cores
and requires less power to run than servers back then that were on one core. You can use one computer with instances of the server running on different cores to control different parts of the world and the Entire 15 server Ragnarok Online world with 50,000 server population can be done with one of those server machines and reach near 100,000 people per server with no problems.
In short....any MMORPG that takes 1 month of Fees, has enough money to actually keep the servers alive for 8 - 10 years....1 million subscribers who pay $50 for the base game and 15 for the first month is 65 million dollars. A year of fees..is enough to keep a server running for a lifetime. In short, MMORPGs are just moneymaking scams for the most part....to convince you that you SHOULD PAY TO PLAY and then make you FEEL GOOD that you are PART OF SOMETHING.
Before GW 1 came out, everyone said that YOU HAVE TO PAY TO PLAY AN MMORPG OR IT WILL DIE. After GW1 came out, everyone said "OH GW IS NOT PERSISTENT. SO IT DOESNT COUNT" but Instanced Games take more bandwtih to actually run than non-instanced games.....so when GW II is released and you have a full persistent game...if it succeeds...
The world no longer has an EXCUSE to hide behind. No longer will anyone be able to defend why a game needs monthly fees to survive. This is why I want GUILD WARS 2 to succeed.
Comments
Well this puts in into a technical side understanding and overhead cost which alot of people dont understand. But people will say its to pay for development of the game. You think Blizzard with its supposed 12 million players and can only put out one expansion every 3 years with about as much content as a quarter of the game if not smaller with the money they make they could make 5 games on what they get a month in sub fees and pay for all the devs to make them and still have a few million left over.
To me games like GW and now DDO, Lotro, and Champions even EQ2x is taking there games this rout to try and see what they can do for less and putting the money they make into improving there games with smaller release content and making larger content releases to be charged for but leaving that option to still pay an online fee for all the extras. Even tho GW isnt a F2P/Freemium game it still to me started to show truth in games dont need a fee to be played online. To be truthful that type of payment scale has been around for a while the B2P games take Diablo it uses the same set up kinda but on a more lobby setting even NWN1 and 2 use a lobby system with persistent game worlds that some times have upto 100+ players in each and the cost of servers is set to the players who have them up for years.
Then look at private servers running games such as EQ, WoW, Aion and so fourth they have sometimes upwords of 1000 to 1500 players per server and dont charge a thing to play on them. Even remember playing on a free shard of DAoC that had anywhere from 100 to 1000 people playing on it all the time the server would be taken down once a week for a 10 minutes and as far as I know is still up today running as a classic server and still has as many players and no charge.
Point is I feel its time for companys to go the route of B2P or buy as you go like Lotro/DDO have done for games to come this way they dont make players feel like there having to pay rent on something else they supposedly bought but didnt or at least thats what the companys tell me when I call them and say things like I bought the game plus all expansions why do I have to pay to rent this service that I dont use all the time.
Sherman's Gaming
Youtube Content creator for The Elder Scrolls Online
Channel:http://https//www.youtube.com/channel/UCrgYNgpFTRAl4XWz31o2emw
It depends.
Like in Vanguard, your 15 dollars goes to supporting SOE's other MMOs and SOE's MMOs that are still in development. Which is really great, as it supports SOE.
In WoW, it goes to Blizzard's huge underground vault that is guarded by high-end security. Unlike Vanguard, a good bit of money goes to supporting WoW as well and helps with Blizzard's new MMOs. I think Blizzard may also be trying to create real life murlocs too, paying large sums of money to scientists to create the first murloc. Blizzard will make a breakthrough in science. I definitely want a pet murloc.
For Age of Conan, all the money goes to the graphics engine for Secret World. Funcom implemented in AoC has a huge test for their system, since AoC is a great staging ground to work out the problems and stuff.
LOTRO and DDO actually use the money Turbine earns.All the money goes to supporting those two MMOs. So LOTRO and DDO players actually see their money going somewhere useful.
FFXI/FFXIV (same as LOTRO/DDO)...they too actually get supported
EVE money goes to hookers, beer (or ale or whatever it is they have over there) and parties...the developers for EVE really know how to throw a party
some of the money goes to supporting EVE too, bringing out new shiny features and silently forgetting about old features.
Thats just some examples of where your subscription money goes...just depends on the MMO and company.
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Yes, and none of them go to the developers salaries. They all still live with their parents.
Always read the small print.
You are forgetting the cost of support and the cost of continued development of said game. You can't hire monkeys to make a game; you will be paying at minimum 30k a year for a good programmer. Most companies will have 50 - 100 developers by release of said product. That's 1 - 2 million a year for developers alone. Most support is outsourced however if it isn't then your paying an additional 50 people 20k a year plus paying for phone switch hardware (and a large phone bill). If you outsource it you could be paying as much as 5$ a minute for phone time and who knows what for in-game support. Still a big number. Don't even think about advertising.
One example of how long it took to pay off 10 years (6 years with AV) of development is Darkfall Online. It took them 2 years being live to pay off their game development. That's on top of doing other stuff (military contracts, side jobs) to help pay for development. They only have 30 - 40 developers and absolutly no advertising.
The definition of insanity: doing the same thing over and over expecting different results.
Considering the ridiculously tiny size of the updates on both games...
In my ignorant opinion, it mostly goes to investors.
Not to the folks that work on the game, since they probably receive a fixed salary that has nothing to do with the game success.
Not to increase the development team, since they already have their planned content development team when they received the initial investment. They will be quick to shrink it though in case the subscriptions start to fall.
Not to improve the servers, since investors already approved a server structure that is "stable", works like the fixed salary idea - no benefit from a game success.
The investors made it all possible, but their worry to receive their initial money back and start profiting often limits the long-term vision that is needed to succesfully run a MMORPG over the years, and I'm not talking about changing the subscription model to a F2P or B2P model as a long-term vision.
I think this is good info to know. I will probably join GW2 as i still play the first. haven't payed a sub in some time and feel pretty good about that now.
die.
The biggest cost for an MMO company that's not into slavery is salaries, not hardware and bandwidth. Your $15/month pays for at most 20 minutes of a decent programmer's time. Keeping content updates and patches flowing at a pace that will keep more than a niche audience happy takes thousands of work hours each month. Of course, once you get to the point where you have a large enough player base to keep the game profitable, the profit for each new player is a significant part of the monthly fee.... which can be used to boost the marketing budget to reel in new players, and customer support to keep existing players happy.
The cost of running an MMO really depends on ambition more than anything. Yes, you can keep an MMO running with a skeleton crew, but how many paying customers you can get and keep rely on the service you provide. It may very well cost the same to run a F2P game with 1,000,000 players as a P2P game with 100,000 players. The hardware and bandwith costs of keeping the F2P game going is higher, but far from 10 times higher, and the cost to keep the average player active is much lower.
Anyway, I'm just rambling. The OP seems to claim that the cost of running an MMO is mostly servers and bandwidth and that the subscription fees are ridiculously high since the marginal cost for these for each new player after a certain point is relatively low. This may be true for MUDs and simple MMOs run by volunteers, but in most large scale IT projects, the largest costs by far are those related to employees.
Shinami probably knows more about optimizing network code than me, so I won't try to pick apart the post. The numbers do seem seriously wonky, though. For instance, I'd say that the main bandwidth challenge is not to keep all players connected to the game, but that the amount of information you need to transfer scales exponentially with the amount of players in close proximity. Also, the amount of data for each player increases with the complexity of player intereaction and the amount of logic handled by the server rather than the client to avoid client hacks, so modern MMOs do not necessarily handle more players than old MMOs.
There's obviously a lot of truth to the post, but I can't help feeling it paints a seriously distorted picture of reality by ommission. Reading it was kind of like watching Zeitgeist in that regard.
Sorry, but OP's post contains a lot of misleading or inaccurate information. The idea that studios use subscription fees mainly to cover bandwidth costs is pure fancy; it's immediately recognizable as false. Who uses this as a serious defense of the P2P model? Earnings from subscriptions pay for everything that the box sales do: advertising, customer service, paying the developers, recouping the initial investment, and earning a profit.
For all this nonsense he spouts about "client-rate scamming", where's the proof? He doesn't give any examples of a game that claimed that it upgraded its servers when it actually did not. If it is something that "many companies do", why is it that searching for "client rate scamming" (with quotes) on Google returns nothing but pages where people have reposted or responded to his rant? Doesn't sound like a very widespread problem to me.
There is also his claim that an instanced world requires more bandwidth and not less. It's true that a system in which players may be playing in hundreds of different instances will likely require more processing power, but it will require LESS bandwidth if anything because there is less information that needs to be sent to the client every cycle compared to hanging out in a zone with hundreds of characters around you.
I agree with this but let's be honest now, we are debating about a post made in a different thread... I don't know the exact context that Shinimi made his response in.
Bandwidth were very expensive in the mid 90s when the first MMOs released so they had to take monthly fees.
The prices have fallen a lot but the companies have left the fees because they can.
If you think a little you realize that Wow doesn't use that much more bandwidth for each player than Guildwars that is instanced. You will still have to send a lot of information to and from the player. The fact that GW runds more instances actually means more server load but on the other hand don't you have to send so much info to all players about others players.
The difference isn't huge. And console games are hosted by the developer just like MMOs butt have no monthly fees.
No MMO must have monthly fees, box sales and expansions together with stuff like transfers, extra char slots and so on is enough.
If you had a company, wouldn't you try to charge a lot of money if you could?
Box sales alone cover all the development costs for a good game and likely good portion of the next game or following expansion. Subscription fees turn a good profit into great profit. There is no need to pay subscription fees to keep these games running but because the public is willing to give them more money, they would be stupid to refuse it. Don't blame the ones who sell - blame the fools who pay.
I skate to where the puck is going to be, not where it has been -Wayne Gretzky
This exactly.
I skate to where the puck is going to be, not where it has been -Wayne Gretzky
An executive's pocket where it then gets spent on blow and hookers/strippers.
--John Ruskin
Just out of curiosity do you really believe this or are you just playing the devil’s advocate here? If I am reading what you are saying right, you are saying that a company uses a high percentage of the money they make to reinvest into their game. And while I agree part of the profit does go into paying for new content, I do not think it is on a equal percentage bases. What I am saying is that more profit for the company does not equal more game content for you.
If that equation held true World of Warcraft would be producing at least 200% more content than any other MMO on the market. Since WoW is making $15 times 6 million subscribers from Europe and America a month, that is at least 1000 times more than any other pay 2 play MMO. But where is all this content that blows away other game companies. Wow does 1 major patch per quarter that adds in new Content, plus you have to factor in that Blizzard is just turning on content with patches (for example MC and BWL textures were installed with the game at launch, they just patched in so players can access it, so that is not really brand new territory). Then Blizzard comes out with new territory in expansions that you have to pay for. So where is all this content that all the Blizzard subscribers get, after all you said more profit equals more content. Just looking at WoW compared to other MMOs that statement is false, WoW does not produce 200% more content then LOTRO or Aion. Most of your money is going to profit for shareholders and the board of directors, and future game development. So I guess if you like using your hard earned cash to make a future game and the shareholders richer, then the Pay 2 play model is just awesome.
Also just to add to what the OP posted, there is a great post by 4thVariety on Guildwars2guru.com. Here is the link to the post: http://www.guildwars2guru.com/forum/showpost.php?p=320523&postcount=61
In this post he or she looks at NCsoft quarterly income statements that are provided to the shareholders. In this report the OP points out that Guild Wars a Buy 2 play game makes enough money per quarter to pay for all of the server cost, and website costs for all of NCsoft games. If a buy 2 play game can earn enough to cover the cost of a company’s complete listing of games; I think that pretty much puts a nail in the coffin, of the argument that server costs are high and they need a subscription to cover the cost.
The OP goes on to say the number one cost is staff, which ever business owner on the face of the earth can tell you the number one cost to any business is employees. Then the rest of course would go to investors, IE the board of directors and shareholders. That is the point of any company to make money so the owners or investors can have a great life style. Yes they can provide a great service and even enjoy working with people, but in the end it is about the money for the life style. No one would put up with the stress of running a business if it did not offer that as a reward, everyone would be an employee because it is a lot easier and has less risk. This is what you need to keep in mind when you decide to pay that $15 a month, most companies will do as little as they possibly can to keep your business. They are not going to willing increase their expense unless they have to in order to keep you as a customer. So as long as people are willing to pay $15 a month and not ask for a significant increase in content production, the companies will take it and just make more profit.
Also for anyone wondering how Guild Wars can cover the cost of all of NCosft games, it is pretty simple. I ran an IT business and the largest customer I serve has 800 to 1000 clients accessing the server during business hours. That is a lot of bandwidth traffic that would easily rival what a game server would do for bandwidth traffic in any given day. I do weekly checks on the servers as preventive maintenance, so the server does not have any down time, besides late at night when I do updates. I get paid for this job way above market right now, he could easily find someone to do the same work for at least 15k a year less then he is paying me (the economy has really hurt the IT field). Then his other cost is of course replacing the server ever two years, which is the industrial standard. Since I purchase the servers ever two years, I know that the server cost him less than 1% of his income, and that is for a server that can handle over 800 clients without any issues. Then if you factor my wage in with the hardware upgrade he spends 4.3% of his income on his IT at least server side (if you factored in desktops it would be way more than that).
Technology has advance so much in the last few years, with virtual servers and with the hardware advancements. This has caused the cost for IT for business to drop significantly from what it used to cost them 10 years ago. Then if you factor in the deflated economy and how there are people where I live with a masteres degree in computer science just barely making 60k a year. Now is a cheap time for business to run their IT, employee cost are down and with the advancements in technology cost of the hardware is down. With that in mind I hope you can see how it is very feasible that a buy 2 play game could cover all of NCsofts costs for IT.
ya but many mmorpg studio actually loss money. You make the assumption the game is never updated.
and why would the game studio keep the server up if they are not making any money.
if they are not looking for continous income, they might as well make single player game.
Yes, I'm sort of playing the Devil's Advocate since the OP was reaching too far in the other direction. None of what I said is false, but the flow of money is over simplified. Of course, for most regular employees working with a game, it's as simple as: If the game is profitable, you get to work and get paid. If not, you get fired (or moved to another project if it's a sensibly run large corporation). How many people work on a project is directly related to how profitable it is, and expectations for profitability, though.
Anyway, if a game is losing money, or struggling around the break-even mark, but investors see potential in it, a lot of the subscribers' money will directly, or indirectly be poured back into the game, but of course if you have a cash cow on your hands like Blizzard has with WoW, or NCSoft/ArenaNet had with GW, and probably will have with GW2 this line of thought becomes irrelevant.
From the world of FPS games...
Modern Warfare 2 had a budget of 40-50 million dollars plus 200 million dollars for marketing alone. It made 550 million dollars within the first five days.
...to the world of MMORPGs.
World of Warcraft had a budget of about 100 million dollars. That is 4-5 years of work before release date and income? 12 million players world wide... The box sales alone cover making a two new of World of Warcrafts even with the marketing budget added. Unless they spend as much in a month as the original game cost to make, they could make a new WoW every month.
It is all profit.
I skate to where the puck is going to be, not where it has been -Wayne Gretzky
Customer support is quite simply the largest expense. Even in seeminly utterly unsupported games customer support is the largest expense.
Customer support is so expensive in the corporate world that somone having to use it once or twice a month would mean that you probably wouldn't make anything from that persons sub for that month.
Practice doesn't make perfect, practice makes permanent.
"At one point technology meant making tech that could get to the moon, now it means making tech that could get you a taxi."
John Smedley made a mistake in an interview at the height of EQ's success and went on the record saying that it operated at a 40% pure gross profit margin. The interview coincided with another hike in sub fees.
It's a great scam that people have accepted...sort of like insurance.
My youtube MMO gaming channel
I'm quite interested in Blizz's bandwidth costs, and if they are significant relative to their income. I tried to work out the figures but got stumped because I have no idea the average bandwidth that a connected client would use. I'm also a bit hazy on the average number of connected clients.
[ Deleted paragraph about bandwidth because it was so wide of the mark. Eish, I'm embarrassed to have posted it in the first place. So glad at this point that I re-read my own posts.
Can't find blush emote ;-) ]
So, could some network programming gurus step in here and tell me how much they think that a Blizz client will send or receive (whichever is bigger, *not* the total) in a month.
Oh, and to the dude talking about gross profit margin ... if you really mean gross profit, that has a specific meaning. This is the ratio of the cost of your raw materials relative to the total amount of money you receive from selling the product made therefrom. I used to work at a now defunct roadside eatery in the UK. If our gross profit in any given month was less than about 72% then our net profit was 0% or less. This means that if the cost of our food was more than 28% of the price we sold it at, we lost money. A 40% gross profit margin sounds evil, but taken out of context means nothing.
R
OP is incredibly ill-informed.
First and foremost the development costs of MMOs are reaching the $50-100 million dollar range. Let's go on the conservative end of things and say that this MMO only took $50,000,000 to make. At $50 dollars a box, if 1 million people buy the game you make $50 million. Right? Wrong... no MMO company I know of self-publishes and self-distributes.
Publishers will take 30% of ALL money the game makes. Distributors will take around 10%. This doesnt' even take into account the cost of producing a hardcopy of the game (we will ignore that since a lot of people are just Direct2Drive now).
So right away that $50 million you made is actually more like $30 million. You are still $20 million in the hole in terms of development costs.
Most companies will try to keep their development team on after launch to produce additional content, expansions etc. We will use a conservative number here and say that there are 150 developers with an average salary of 50,000 dollars (this is a really low number, the average is actually probably 60,000+).
This comes out to $625,000 a month to pay your workers. Not to mention running overhead on the facilities like rent, electric, any catering, etc.
Next is all of your Customer Service and Tech Support... this will EASILY be an additional 200 employees possibly more. They will be paid an average of around 30,000. An additional $500,000 a month.
Not so bad right? WRONG again.
Now we have to cover costs of investors and any loans we received during development. We will assume this is about 10% of development costs so $5 million. So let's take a look at this.
Our development costs were $50,000,000. We made $50,000,000 in box sales. Our publishers and distributors take 40% of that leaving us with $30,000,000. Our investors and repaying our loans will take an additional 10% or $5,000,000. Now we're down to $25,000,000.
Paying our employees salaries and our overhead is a VERY conservative $1,125,000 a month starting with launch. The first month of gameplay is free.
At the start of the second month we collect our first subscription fee of $15 (assume all players go at 1 month intervals instead of package deals)... only half of the original people who bought the game continued to play. We make $7,500,000... 30% of that goes to the publisher. Leaving us with 5,250,000. We will use 2,250,000 to pay the salaries of our employees for this month and the previous month. This leaves us with a net total of 3,000,000 for the month.
At this point in time we've made a total of $28,000,000. We are still in the hole 22,000,000. If we maintain a subscriber base of 500,000 players and do not LAY off any employees we will break even in 6 months, or 8 months after the launch of the game.
From this point on everything we make will be profit, so about $4 million a month. We will use this money to pay bonuses to our employees for working like slaves for the last 5 years. After that we will hire more employees and transfer some to start working on the expansion for the game. Some employees will continue to bug fix and add content to the base game. We will also start working on a second IP or game.
Or if our subscriber numbers drop we will fire everyone and become a ghost studio.
Server costs are nothing... the above is why there is a monthly fee you cheapos lol