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Is it just me, or does this article seem woefully uninformed?
Creslin321
Member Posts: 5,359
Questionable part 1: "With a price tag approaching $200 million, SWTOR..."
Okay so this article isn't the first to "guess" at how much SWTOR cost, but it just seems like another stab at the dark...but this isn't really the most questionable part, which leads me to...
Questionable part 2: SWTOR will cost at least $7.5 million a month to maintain
What huh????? I don't think ANY MMORPG requires nearly $7.5 million a MONTH to maintain. This figure just seems ridiculous. I think it shows how uninformed a lot of journalists are about the industry.
What do you guys think of this article?
Are you team Azeroth, team Tyria, or team Jacob?
Comments
well on question 2 lets say a MMO costs 1 milliion to maintain they would only need 66,666 subscibers at $15 a month to break even.. don't know any AAA game that's survived as pay to play with that few subscribers and hasn't gone f2p. So taking into account server costs, all the employees salary, all the development costs, money to lucas arts, on a game this large... i could see 7.5 mil being about right
http://www.mmorpg.com/discussion2.cfm/thread/339443/Video-FollowUp-Guide-For-Enhancing-Graphics-and-Performance-in-SWTORSorry-still-Nvidia-Only.html
The Secret World will run one million to two and a half million a year USD to maintain according to their third quarter financial sheets. This is with a regular subscription base of 280,000 to 490,000 thousand people. Seven and a half million USD a month seems a little crazy. Seven and a half million a year might be inside the realm of possible. They would almost have to be factoring a crazy high plan to repay all debts quickly for something for that to make sense.
** edit **
Sanosukex might be right - the costs for TSW are hosting costs only and do not include any other operating costs.
I can not remember winning or losing a single debate on the internet.
I think that the journalist just took the "we need 500K subscribers to be profitable" quote and assumed that, that meant EA's operating costs are $15 * 500,000. Which is well...an assumption and probably incorrect.
EA probably meant that they need 500K subscribers over some undisclosed period of time in order to recover all their sunk costs.
Are you team Azeroth, team Tyria, or team Jacob?
well 300k users at $15 would net 54 million a year.. so i guess yea it would seem high... although one million a year seems very low to me for development and maintenance. And if it only costs a company 1 million a year to maintain games like this I think $15 a month is a little steep... but I dunno sure a lot more goes into it than people think.
http://www.mmorpg.com/discussion2.cfm/thread/339443/Video-FollowUp-Guide-For-Enhancing-Graphics-and-Performance-in-SWTORSorry-still-Nvidia-Only.html
I ran some numbers on NCSoft's finances and found this...
If you add their bandwidth costs and depreciation (any physical assets, which will include servers), you get about 3.35 million USD per month.
Now consider that NCSoft has FIVE active MMORPGs under its banner, and depreciation will account for MUCH more than just the maintenance on an MMORPG...let's say that NCSoft pays
3.35 million / 5 = 670K a month per MMORPG
And probably much less than this. Because remember, the deprecation costs are for ALL of NCSoft's assets, including development machines, testing machines, desks, air conditioning, copiers etc. etc.
$7.5 million a month is ridiculous.
Are you team Azeroth, team Tyria, or team Jacob?
The Secret World will run one million to two and a half million a year USD to maintain according to their third quarter financial sheets. This is with a regular subscription base of 280,000 to 490,000 thousand people. Seven and a half million USD a month seems a little crazy. Seven and a half million a year might be inside the realm of possible. They would almost have to be factoring a crazy high plan to repay all debts quickly for something for that to make sense.
well 300k users at $15 would net 54 million a year.. so i guess yea it would seem high... although one million a year seems very low to me for development and maintenance.
I ran some numbers on NCSoft's finances and found this...
If you add their bandwidth costs and depreciation (any physical assets, which will include servers), you get about 3.35 million USD per month.
Now consider that NCSoft has FIVE active MMORPGs under its banner, and depreciation will account for MUCH more than just the maintenance on an MMORPG...let's say that NCSoft pays
3.35 million / 5 = 670K a month per MMORPG
And probably much less than this. Because remember, the deprecation costs are for ALL of NCSoft's assets, including development machines, testing machines, desks, air conditioning, copiers etc. etc.
$7.5 million a month is ridiculous.
REDICULOUS!
I can not remember winning or losing a single debate on the internet.
This smells of meme. Great! Another one for me to remember.
I want a mmorpg where people have gone through misery, have gone through school stuff and actually have had sex even. -sagil
If I had to guess, I would say based on the number of active servers that Warhammer Online has well below that.
One thing I didn't really think of was the fact that warhammer has limited to no development, and according to EA and Bioware, they kept the full team intact to keep content coming. That could get really really expensive
Every man and his dog seems to be writing sensationalist SWTOR stories lately...
Note that that according to THIS article, the cost of buying Bioware/Pandemic was $860M, yet a recent WSJ article pegged the cost as $775M. I'm more inclined to believe the Wall Street Journal on that one.
So will every new article in the press try to outdo the previous ones by using bigger numbers ?
Soon they are going to say that EA had to borrow $4.6 billion from China in order to finance SWTOR.
Now they are asking for a bailout.
Are you team Azeroth, team Tyria, or team Jacob?
Anybody have any idea how many people they have working on the game? They said they were keeping everyone for content updates, and I would guess that they had between 80-100 people working on it (yes those numbers are from my nether regions) That combined with keeping over 200 servers active could get very expensive.
The cost of maintenance is directly relative to how big your customer base is. That's why very few games actually shut down. You can always squeeze a profit margin out of them by merging servers, cutting development, etc.
100 people, each at $100K a year (extremely high) = $833K a month
200 servers, assuming per server cost of $54,648(beefy Dell R910), and a 5 year usable life (typical warranty) is...
200 servers * $54,648per server / (5 years * 12 months) = $182K a month
Then add in bandwidth costs...
Assuming that SWTOR uses something similar to what one of NCSoft's game's use that would be like $240K a month.
So that's...
$833K + $182K + $240K = $1.255 million a month
AND that is with the cost of labor (most expensive part), EXTREMELY inflated. And this isn't even assuming that much of that labor will go towards selling an expansion for more $$$.
So yeah, $7.5 million a month is crazy. No way.
Are you team Azeroth, team Tyria, or team Jacob?
If this is true...then how are F2P MMORPGs ever profitable?
I really think that operating costs for these games are much lower than many people seem to think.
Are you team Azeroth, team Tyria, or team Jacob?
1 The term isn't "guess" it's forensic accounting. The IRS, FBI, and the LA Times do it. EA and BW are Publicly Traded companies so their finacial records are disclosed. So The public knows how much was spent over the time period of development. We also know the total size of EA employees and the total number working on SWTOR. They can estimate based on this number the additional costs, office space, equipment rental, utilities, bottle water delivery, executive dry cleaning. Then they do the Algebra, not college level calculus but 7 th grade math. I have seen numbers as high as $500,000,000. One alleged former employee said $300,000,000. So an estimate of $200,000,000 is very conservative (may be way under) "guess" at the true cost.
2 I remember when EA said they woudl need or want 500,000 monthly subs to break even. Like the LA Times article said, at $15 a month that many subs would equal $7.5 million a month. This time it's 5 or 6 th grade math you are doubting. That monthly number doesn't cover just server cost. The cost of production is borrowed money that hase to be paid back, so half the monthly goes to that. If the cost of the game is somewhere between $20 to $500 million it woudl take 7 months to 11 years to pay it back. So half of the monthly is left to cover expenses $3.75 million. Again taking half to cover expenses, equipment rentals, and 5 & 6 figure saleries. That leaves $1.875 per month to cover 6 & 7 figure saleries (people who Don't do the work that produces the product or service the customers pays for).
How do F2P stay in business? Lets say on a mothly sub model you MMO had 20,000 subs, thats a monthly of $300,000 at $15. Now you switch to a F2P and get 100,000 players to spend $5 a month or $500,000. Now lets say you have 4 such MMOs all bring in the same thing, it now becomes $2,000,000. Now if you are a money laudering front, your IRS totals could jump to $40 or $80 million a month, just kidding. No F2P MMO is actually a money laundering front for organized crime, that just the plot of my new novel comming out next christmas.
What do we know? A crazzy amount of money was spent on SWTOR. Only a handful of western MMOs have been able to hold over 1 milion subs for more than a year. And that is essentially what the LA Times said, and as far as can be proven or disporven is correct.
Boy: Why can't I talk to Him?
Mom: We don't talk to Priests.
As if it could exist, without being payed for.
F2P means you get what you paid for. Pay nothing, get nothing.
Even telemarketers wouldn't think that.
It costs money to play. Therefore P2W.
Here you go, hot off the presses:
http://massively.joystiq.com/2012/01/20/the-force-is-with-swtor-ea-stock-bounces-back-budget-revealed/
There's also some good news following yesterday's word of EA's stock hit. MarketWatch reports that several brokers have defended the title, resulting in a 2% bounce back in EA's stock. As part of that, a Pacific Crest analyst raised his predictions of quarter sales for SWTOR from 1.5 to 2.2 million, with 800,000 subscribers. Another analyst claims that over two million units of SWTOR have been sold since launch with an expectation that 75% to 90% of players will stay on as paid subscribers following the first free month.
I am convinced there is only one way to eliminate these grave evils, namely through the establishment of a socialist economy, accompanied by an educational system which would be oriented toward social goals.
~Albert Einstein
Well, I have my own little buisness, internet website that sells video games in russia, and each month I spend around 3000 USD to keep it up, and a i have only 1 person constantly employed. And my website is a tiny bug compared to SWTOR. I bet its more than 300 developers, designers, accountants, customer supp., commercials, buying reviews, content managers... than you gotta pay rent for offices, buy/rent servers, buy software, 7.5 mil, seems to be an accurate figure for me... Otherwise Blizzard shares, with it's 10 mil subscribers and 7.5 mil month cost would be sky rocking...
I don't know about the $7.5 million/month figure. I do know that if they're using Oracle database infrastructure, that the licensing for that is ridiculously expensive. Factor in licensing for LucasArts, a team of 400 devs/admins/suits...I can see it being fairly expensive.
Dude, come on! That's going against the narrative that the haters are trying to create! You can't be posting this.
Like I said before in another post, I heard that 200M figure discuss on Gamebreaker.tv 8 months ago on their Swtor show. It can't be that surprising.
Read my blog http://sanmonocobra.blogspot.com/
Maybe this might shed some light on the assumptions. Who knows?
"Most MMOs require around 250,000 subscribers to cover the direct operating expense of the server farms. Given LucasArts' revenue split, SWTOR would require around 400,000 subscribers to break even. That means they make money at 500,000 subscribers."
http://www.eurogamer.net/articles/2011-11-30-lucasarts-to-take-around-35-percent-of-old-republic-revenue-report
Well for 4 years of development and customer service it cost Blizzard $200 million. Broken down into months that is $4.16 million a month, $7.5 miilion seems a bit high. However, factor in all of the extra voice actors they need, licensing(both hero engine and SW IP), and paying for a new building and you might get closer to that $7.5 million.
I don't know what the actual ingame server count of SWTOR is but that could potentially be low. Physical servers are most likely clustered to support additional game systems such as mail, auction house, instances, and zones. I would guarantee all of the servers are running off of some sort of blade chassis with 10GbE compatibility. If this is all virtualized via VMware or some other competing product that count could be correct.
But...
Take into account storage (which is expensive) for each cluster, 10GbE compatible layer 3 networking (aka Cisco Nexus). Most likely a coup disastery recover site, stoage backups...
That could get expensive fast.
Porn has voice acting, who doesn't skip it?
I think that could well be what the writer has done.
When EA have said is that they need 500k subs to be substantially profitable. I assume that this means profitable on an on-going basis and ignores the cost of making the game.
$15 a month (ignore the plans) will generate $7.5M. 35% to LucasArts according to some analysts - call it $2.5M. A team of 300 @ 100k a month (not that bad a number as it has to cover wages, taxes, medical, pension, holiday pay, dental and sundries such as servers - so if you have an IT team the $100k covers the bandwidth) is $3M a month.
This would mean that for a cost of $3M a month EA make $2M or 60% - which, if you read their reports is there typical profit margin. Obviously folks can tweak the % to LucasArts, the team size, the $100k, the average sub is less than $15 etc. etc, but I think this is 'in the right ball park'.
And using something like the above suggests that the game will break even with about 300k subs for a team of 300. The % paid to LucasArts being a drag on profitability, without it 200k would cover the costs.
As to what it cost, as previously posted there is what it cost Bioware in $s. what it cost EA - who paid $620M to buy Bioware and Pandemic, and what it cost EA shareholders who absorbed an extra c. $240M in stock options. So the figures will be all over the place. Add in how LucasArts may/may not be being paid - cash? is it covered by the royalty? profit/risj share agreement? and the bottomline is 'a lot' and only really an issue once it is established that SWTOR is making a profit. Box sales / digital downloads alone are not going to cover the costs thats for sure. (One analyst estimated $60M profit from 2M sales - digital + boxes to retailers (not end customers) which seemed an OK estimate imo.
So yes I agree - bad article.
Sure NCSoft numbers does NOT include developers pays, health insureance, taxes,etc <-- in developing a game that are highest costs.
That's why it is possible to keep running P2P mmo with very low numbers (WAR Online, Vanguard, etc) and it still will be cash flow positive BUT
if you try to keep mmorpg servers running AND provide constant updates / patches + work on expansion then you need ALOT of money.
How f2p games menage this? Many of them have bad quality updates (or very small) , those who have better usually have very big playerbase.
Then you have to ADD money required to run TOLL-FREE support line for US, UK, Germany and France and Bioware have dedicated site in Ireland just for that. Then you need to pay GM's for hundreads of servers.
Then game has to pay % of loans and /or certain profits to investors.
+in case of Swtor % of money go to LA
Actually bandwidtch and server costs are one of lowest.
Well initial investment for them may be very high (setting up huge server farm) but after it is small in comparision to for example what you have to pay to devs.
Still 7,5 is number taken out of ass, but I think keeping Swtor running AND getting new content produced and bug getting fiexed, support ,etc is quite high and may be millions per month , though less than 7,5 imo.
Full VO and cutscenes when BW is working on new story content just make it more costly.