Howdy, Stranger!
It looks like you're new here. If you want to get involved, click one of these buttons!
Quick Links
When will sub fees start to fluctuate? Will it always be $15/mo.?
Jairoe03
Member Posts: 732
So I been reading "Basic Economics: A Common Sense Guide to the Economy" by Thomas Sowell, recommended by a friend and it has got me thinking a lot about prices (yes I only read the first 3 chapters so far). It mentions how naturally prices for particular goods/services fluctuate based on supply and demand and impacts on the overall economy when various forms of price control are enforced.
With this in mind, I had to notice on how subscription monthly prices have practically been untouched, following the same exact model since UO. ($15/mo for 1 month sub, $14/mo for 3 month sub, $13/mo for 6 month sub). I wonder why haven't companies tried experimenting with this model? Could they possibly be blocking out a set of people that might be willing to pay $10/mo or $5/mo for 1 month sub, potentially making more money than using the much higher barrier of $15/mo?
When I try to pitch games to people I know (particularly those unfamiliar with MMO's) mention a sub fee of $15/mo, you can just tell where a person switches their mind/decision. It's an observable obstacle that I see among many people. I know people that have enjoyed MMO's previously and have played them for years but nowadays don't feel like paying for subs, refusing every sub MMO out there.
Can a reduced monthly fee change a person's mind and how many? How come experimenting with varying amounts of sub fees haven't been explored yet? Do you think companies are missing out on making more money with lower sub fees or do you think they can attract just as many people with even higher sub fees ($20/mo)? Thoughts/opinions?
Comments
You could suggest the same for box pricing of games. You notice how they are basically all the same, aside from later sales. I am not sure if it is common knowledge but the game industry has basically an informal agreement to work together on pricing. This is why major game company have the same prices and why indie games can be more flexible on their models. This was started many many years ago and still persists. It is very anti capitalistic and is illegal in some industries in the United States. But just because something is illegal does not mean it does not persist while not being persecuted especially when big money is involved.
The term is called Price fixing:
"The intent of price fixing may be to push the price of a product as high as possible, leading to profits for all sellers but may also have the goal to fix, peg, discount, or stabilize prices. The defining characteristic of price fixing is any agreement regarding price, whether expressed or implied.
Price fixing requires a conspiracy between sellers or buyers. The purpose is to coordinate pricing for mutual benefit of the traders. For example, manufacturers and retailers may conspire to sell at a common "retail" price; set a common minimum sales price, where sellers agree not to discount the sales price below the agreed-to minimum price"
From Wikipedia http://en.wikipedia.org/wiki/Price_fixing
Well for one. Your talking about US pricing. Unfortunately the market and stagnated ever since the nineties bubble. When that burst we had a lot of ups and downs but we are pretty much are at the same point as we were back then. Hence the bad economy (if the economy isn't growing its bad).
However in this economy, food prices, gas prices, and energy prices till went up. So with that inflation did happen. So keeping the price $15/month since the mid nineties is actually a type of price lowering. People pay tons more for cable/cellphone/ pretty much any other service since the nineties.
In all reality, with people's budget today, if you cant spend $15 month on a game that you spend countless hours entertaining yourself with turn around and say its too much, then your just making excuses. Some of these people will turn around and go to Starbucks and spend well over $15/week for coffee.
No where did the OP suggest "price fixing". He just asking why more companies are not trying lowered monthly fees instead of jumping to F2P.
Also game maker are not "price fixing" either. The market determined the prices they would pay for a certain "grade" of game. AAA's would be $59/$69, AA's would be $39/$39, discount games lower.
Now, if the video game companies got together and said, every game made by us will be sold at $99 so that if anyone wanted to play any video game they would be force to pay that price, then you have price fixing.
In response to the price fixing statement regarding box prices, I don't deny an industry norm to set a price at a certain point, but at the same time, if customers are willing to buy it, I don't see nothing wrong as long as demand is there. That is also the difference between video games and the price of "necessities" such as food or gas. If you set the price of video games high, it won't necessarily cause people to starve because they need it to live, its purely a luxury.
Responding to jerlot, you are right in terms of currency spent that value-wise, it has gone down given inflation, but what I'm speaking more towards is supply/demand and competition. There's obviously a huge influx of MMO's since the first MMO's have been released, supply has definitely gone up, but MMO companies have been slow (IMO, of course) to react in terms of adjusting price or at least trying out lower prices. Has demand risen to high enough levels to justify maintaining this price level? From a consumer perspective, it has looked largely untried. What even makes $15/mo the magic number to even begin with?
It's not so much about whether or not $15/mo is too high for some people (or too low) as much as it is about what price people would be willing to pay for a particular product. You can point at how affordable it is but doesn't mean everyone finds X-amount of value in a product equally, in this case, is $15/mo worth playing a game? To some that's a yes and to others that's a no, but if lowered to lets say $5-10/mo, would it make a big enough difference in attracting players or would it not?
As for the highlighted portion that pretty much gets to my point about comparing just how much $15 is valued at in todays market. Essentially people could give up two or three fancy starbucks and go for two or three cheaper coffees a month they could easily pay for an MMO for free.
So with $15 worth so little to people why would lowering the price to say $9 a month make enough difference? How many of those people you told about an MMO and turned it down because of the $15 a month would change their minds if you said $9 month? Will since lowering the price just cut your revenue by a 1/3 that price decrease better have a huge impact. But with that $6 change just wouldnt be enough to warrant it.
I don't necessarily like the "You can give up X amount of Product Z" to offset the monthly subscription of an MMO because it implicitly shows that those people find $15 value justified in some Starbucks coffee and not so much in a month of MMO play. You are arguing two different products that have two different functions along the same $15 line. If I want coffee, I'll go get some coffee, if I'm looking for an MMO, I'll go pursue MMO's, if I desire both, I'm getting both, that's a given. So you have to argue assuming we are merely talking about people with the same demand, the ones that actually want to play an MMO.
What if I'm a video gamer and I'm marginally interested in an MMO, not totally invested (otherwise the $15/mo would be justified), but not enough to pay $15/mo to try it out for several months maybe due to a number of reasons...already subscribed into 1 or 2 MMO's, too casual of a gamer etc. Could I be enticed on a lower subscription fee to give it a whirl for several months? I think its a possibility and maybe worth exploring. With the decline of subscription MMO's in terms of profit (as stated on another thread in this forum), could they try to salvage some of the decline by lowering the price of their game or perhaps retain loyal customers that are currently looking towards another game?
I personally think businesses are having a harder and harder time being able to justify that price hence the decline in sub MMO's, but I don't believe it'll completely die due to people's preferences in payment models. Is there any other type of evolution in subscription that could be tried? Maybe an idea would be to perhaps START a particular customer on a $15/mo plan but as they stick to their subscription, the price of their plan lowers in hopes of retaining customers. Could the possibility of being rewarded for loyalty attract and retain people?
Sub fees are one of the few things that have stayed the same for a long stretch. I think breaking into the $20 range would cause some players a Mental issue. You know how things always cost $19.99 instead of $20.00.
Still recruiting a few more solid players to round out our FFXIV FC.
Contention
Check the site to see what we are all about.
Lets see your Battle Stations /r/battlestations
Battle Station
I do not wish to be rude here but I don't think you understand what price fixing means. It is a common tactic, raising the prices consistently or unreasonably would be price gouging. Price fixing means there is an formal or informal agreement from the industry to charge a specific rate for products, this way all parties involved can make the most money. This happens with newspapers, video games, the music industry does this a lot, movies and so on. There is no tangible value of these goods so the prices are arbitrary and the market does not set these because many games have very low demand and yet charge high prices. When you have a bracket charging all the same price say AAA games charging $59.99 that is a price fixing agreement. They do not fluctuate with supply or demand because of the price fixing agreement. This is the case for box prices and for subscription prices. So to answer the question they cannot lower their sub prices to attract more people or fill a different niche because of this price fixing agreement.
From Wikipedia again Price fixing is to: establish uniform costs and markups; Which is exactly what we have.
The irony of price fixing though it does maintain prices it often leads to 'dead weight' losses because the inability for some products to compete. Aka lower quality or lower demanded products cannot charge less and thus fail.
1) sub prices have varied over the years
2) there are currently games that have sub prices different than $15
3) beyond supply and demand, which is a base concept, is that things become standardized. So for certain industries and certain products a standard price comes into play because it is what people are used to and what they expect.
Look at mobile games. For a long time everyone released their products at 99 cents because it became a standard. As costs to produce got higher and models change new standards like $1.99 came into play beside things such as f2p.
I'm only stating the fact the difference between paying $15 compared to $9 a onth is negligble to most people. If$15 is too high for some people, $9 will be too high for most of them as well. Its simple math.
Say you have 1 mill subs at $15, thats 15 million dollards a month in revenue.
SAy you want more revenue and you think lowering the sub to $9 might work.
So now you have 1 mill subs a $9, that means you now have 9 million in revenue.
This now means you will need 660,000 more subscribers (a 66% boost in subs) in order to make your orignial $15 million a month.
But thats not all. You just boosted your sub based by 66%. Now your operating costss went up and need even more subs to keep your same bottom line.
So with that said, back to the original comment. You tell people about a game that costs $15 a month and they say they wont pay it. Then turn around and say how about $9 a month. I highly doubt 70% of those same people would say , "oh only $9, sure". So your little price drop probably would backfire and probably decrease your revenue and actually create more overhead for your company. If I was wrong about this then companies would have done it years ago rather then go F2P or close up shop.
In almost any other product, paying more gets you more, but outside of a F2P a la Carte model you can't pay a higher sub free to get more, like say you can for NFL ticket or HBO on TV.
I want real premium service offerings, like highly moderated servers where GMs regularly roam the world and trigger events, or even as protagonists stirring up conflict across the land.
Heck, I'd easily pay $19.99 or more for that sort of thing, and I can think of a few more.
Just like there are people willing to purchase the fast pass at the amusement park, there's a market for the premium sub buyer, if only someone would properly try to tap it.
"True friends stab you in the front." | Oscar Wilde
"I need to finish" - Christian Wolff: The Accountant
Just trying to live long enough to play a new, released MMORPG, playing New Worlds atm
Fools find no pleasure in understanding but delight in airing their own opinions. Pvbs 18:2, NIV
Don't just play games, inhabit virtual worlds™
"This is the most intelligent, well qualified and articulate response to a post I have ever seen on these forums. It's a shame most people here won't have the attention span to read past the second line." - Anon
Supply and demand?
Don't get me wrong, i am not opposed to you getting what you want, as long as that does not affect me negatively.
But think about it from a dev point of view.
First, quality is subjective. What you like and think is high quality may be disliked by some other. So are there enough people who agree with you. And how much are this group of people willing to pay?
Business is about ROI. If they can make a higher return on i, investment on some other group, why should they cater to you?
The only reason why they cater to me is because my preference is probably similar to many whales. I am under no illusion that devs are trying to make me happy. If not, i will quit f2P MMOs, and find some other entertainment.
Let's do some math, here.
1000 players @ $15 / month = $15,000 / month of revenue.
To make that same $15,000 / month, if the price was only $10 / month, a company would need
x players @ $10 / month = $15,000 / month of revenue
For those who might be algebra shy, X comes to 1500 players, or 500 more players than they had previously. How many companies feel that they can achieve a 50% increase in paying customers if they cut the price by a third? I'm guessing that not are willing to take that gamble. And losing money is a corporate no-no that costs executives their jobs. (and they don't get to roll around in rooms with the monthly earnings dumped in a big pile anymore).
I'm really rather surprised that the 'standard charge' is still $15. In 2004 (the year WoW began), the average US movie theater ticket price was $6.21 per person. In 2011, the average price was $7.93 per person. which is about a 27%-28% increase. Given a similar rate of inflation, that $15.00 should have been about $19.15 per month (in 2011). The industry standard subscription charge simply hasn't kept up with the inflation rates of similar entertainment industries.
I'm pretty certain that the move to micro-transaction based fee schedules is fueled in part to help keep up with inflation rates in costs, salaries and other overheads. In addition, since the customer doesn't have a history of micro-transaction costs, they have no way to accurately judge the actual increased cost they are paying for their game. And psychologically, the customer is more likely to stomach an increase of 75% for that service they want 3 times a month because the base price is only $2 or $3. Big percentages applied to small numbers are much less noticeable than the same percentage applied to a larger number.
Logic, my dear, merely enables one to be wrong with great authority.
I would say the concept of supply and demand is working quite well in MMO's. No by and large the sub hasn't changed however other things.
As the number of games increased, the demand for any one particular game has decreased a lot. So the price dropped.... to nothing. Thats where the free to play and b2p have come in.
However the game still needs to make some money and so we have cash shops in all models now, f2p, b2p and p2p. While the sub hasn't changed, the cost to play the games have changed a lot.
I would disagree the about the price dropping to nothing because MMO's are still reaching for the subscription model and for some reason its still starting at the $15.00 mark. I kinda wonder with inflation mentioned in this thread and if a company believes their game is good enough, why they haven't even explored something like $20.00 a month. Its easier to start high and lower the price than the other way around. Albeit this route is also very risky since the launch is one of the most important parts of an MMO's success, it just seems odd that the price has rarely fluctuated. (I don't entirely agree with what has been said in regards to subscription fees fluctuating since its still common place for many MMO's to at the very least start at this mark and then switch to an entirely different model).
Does it really matter if a customer has access to their own history or not. I doubt many care to budget out what they are spending on MMO X or MMO Y, they generally see an item they want and go buy it off the store. It's still places more of the burden on that particular game to even manage to keep up with subscription models on a per head basis. Somehow at the end of the day, subscription seems to be losing the battles so shouldn't subscription models be adjusting their prices to try and retain what they have and make themselves a little more attractable? Even if $15 to $12 is ONLY $3.00, I think most people would prefer to spend less than more, no matter the scales or percentages. What can subscription fee MMO's do to counteract this trend?
Sherman's Gaming
Youtube Content creator for The Elder Scrolls Online
Channel:http://https//www.youtube.com/channel/UCrgYNgpFTRAl4XWz31o2emw
Is why the other asshat arguments fail. Was always $15 and will be for top MMOs
Deal with it or make THIS the fight.
Like someone posted on the first page...whats the point of p2p mmos going lower than 15 a month? 15 a month is already stupid low as it is. You don't even have to give up a product to have 15 a month readily available. And with that you're saying when will sub fees start to fluctuate(i assume you mean fluctuate lower and not higher). Like the person said, say mmos went down to 9 dollars a month. What is the point in that? Someone who's willing to pay 9 a month will be willing to pay 15 a month. Thus they won't increase their sub numbers just for 6 dollars a month cheaper.
Look at Ting vs the big phone companies. Ting literally costs a fraction of what every other big cell phone company charges. Saving a ton of people thousand(s) of dollars a year. Yet why do the vast majority stay with those big cell phone companies? Its because of what they offer. Some offer specific phones that only they carry. Some offer bundle deals with a landline phone bill to make it cheaper. Some offer cable/tv combo deals.
Price isn't the sole factor in mind when people say should i sub to the game or not. In fact its one of the last things since the price is always 15 a month. If it was half that, it would still be the last thing on peoples minds. If they enjoy the game, they'll pay the sub, if not they wont. 6 or 7 dollars a month won't change that.
/thread
Be the Ultimate Ninja! Play Billy Vs. SNAKEMAN today!
Well if you read the first page of this thread, you would also notice the point of this thread wasn't about $15/mo being too high or low but it was about whether or not an MMO can potentially be making more money in the long run with a lower subscription fee (or possibly even higher).
The comparison you made isn't relative. A better example would be if ONE big phone company lowered or rose their price on the same service, did it yield better, worse, or no results? I'm talking about when will subscription MMO's start adjusting or breaking the price standard mentioned earlier when it's been on a decline. Does it make sense for a company to keep doing the same thing or take a risk and try something different? What is the threshold that a company is willing to decline to before considering a change?
Do you truly think $9 dollars wouldn't attract more or retain more customers as opposed to $15? Generally if I put a wanted product on sale at a 33% reduced price, more people generally take in the product even if it is perceived as marginal, there is some kind of impact. If this didn't work then Steam wouldn't be so successful because people would blindly just buy into quality regardless on whats being charged, regardless of who its from.
In the case of video games it does matter. If the price that is set for a subscription truly doesn't matter as you said, where there is no clear difference between $9 or $15 sub fee per month, what stops them from going up to $20 or $25 per month then? Why hasn't that avenue been explored as well if price isn't considered by the customer? You could possibly be wrong in saying that it doesn't because there's only so much people are willing to pay before people feel like they are being overcharged.
As soon as a new subscription mmos start charging $15 a month (which is currently the standard) they automatically start competing with WoW no matter what they say or do with their game. And they will keep losing over and over. These new sub based mmos that claim to be AAA quality mmos could lower the subscription price (maybe 10 per month? just to throw a number) and that price will automatically remove them from competing with WoW. Now they will just compete with each other, all the new games fighting for the crowd, offering the most, and both will have a higher chance of being successful with that model (outside of the WoW numbers which they will never get). If they come up with the same price monthly price as WoW, and offer 10 times less content and quality, no wonder why they convert to f2p later on....
I say jump off the WoW wagon by lowering the sub price.
I never said anything about 15 a month being to low or to high. i said it is pointless to fluctuate it because if it goes any lower it will have no effect. as i said, people who are willing to pay 7 a month will be willing to pay 15 a month. the only direction of fluctuating that will have an affect is up and it will have a strongly NEGATIVE affect on subscription based games if they were to start charging 20-25 dollars a month. it really isn't that hard to understand.
yes i truly think 9 dollars a month wouldn't attract more or retain more customers as opposed to 15 a month, its fucking 6 dollars a month. Seriously if i wanted to i could find 10x that by keeping an eye out for quarters on the ground. A mere difference of 6 dollars is not going to make someone keep paying for a game or pick it up in the first place.
Again you're being extremely obtuse. You say whats if there's no difference from going down, whats stopping them from going up...that should be obvious. I'm seriously n ot going to sit here and explain just why that would be bad. That's like expecting console games to just shoot up from 60 dollars to 100 dollars and not expect any backlash and vasts majority of players boycotting video games.
Also before you say the jump from 60 to 100 dollars is much more drastic a jump than 15 to 20-25, learn how percentages work.
Be the Ultimate Ninja! Play Billy Vs. SNAKEMAN today!
Am I being obtuse or are you just taking personal experiences or opinion and utilizing it in an argument. I'm merely just trying to be objective as possible while expanding the possibilities that could be out there. You cannot truly say a $20 or $25 dollar sub fee would actually have a negative impact merely because it has never been tried. Given if a game acquired enough quality or perhaps a game didn't include a box price at all, maybe they could justify the higher sub fee. Who knows until someone tried. Yes, its all theorycraft but this is kind of what forums were about, sharing of ideas and opinions.
I mean no one has yet even was able to truly justify why the price is even set at $15/mo aside from the fact that it was just the standard. Standards generally do change and I wouldn't mind speculating when that will occur. There has been obvious major shifts in payment models with clearly divided sides. Again, how else are P2P MMO's able to compete when their subs are on a decline? A company can only do the same thing for so long until an adjustment HAS to be made. What do you think they should do if they were to try and retain the P2P model in some shape or form?
Its much easier to scoff at the ideas that haven't been tried because that was the norm the whole time but I don't think its as unreasonable as you are making it out to be for sub fees to go elsewhere. You can spout % all you want, but a $15 barrier is still higher than a $12 or $9. Just because you don't care for the prices doesn't mean there isn't someone out there that actually does care. That's generally how social sciences work, it takes in the account the group, not necessarily one's personal experience and opinion to justify large scale phenomenons.