Monday, April 19, 2010

The Most Profitable Content

I think what I find most entertaining about all this Celestial Steed stuff for $25 is that the Wrath of the Lich King Expansion sells for $40.

Now consider how much development time (YEARS!) went into the Expansion and how much went into that Steed (maybe 1 artist for a week?). And by all accounts, they've sold at least a couple hundred thousand of the things.

  • $25 x 200,000 steeds = $5,000,000

OK. So let's say it took 3 artists an entire week. And we pay them each $100 an hour.

  • 3 artists x $100 = $300 per hour
  • $300 x 40 hour week = $12,000

Now I'm going to triple that amount just because I want to be conservative. I think 3 artists at $100 an hour is generous, but there might be some extra hidden costs. Heck, it probably cost another $12K just to list on the Blizzard store.

  • $5,000,000 Revenue / $36,000 Investment = 138:1 ROI (Return on Investment)

It's a bit like printing your own money.

What next?
My example is a bit unfair in that 200,000 people wouldn't have bought that steed if Wrath of the Lich King had never been released.

Or put another way, Wrath was needed to keep people playing. And now that people ARE playing, they can start paying for premium content.

The cynic (which I am) would say that means that more development time will be spent on these luxury items and less on other content.

That's my take on the Steed. By itself, it's merely cosmetic. But I think the precedent it sets is that we'll see less content "for free" in patches and more "for fee" enhancements.

I think the danger for a company like Blizzard is when they start to look at these "for fee" enhancements as the primary revenue stream and not the actual content updates. Once that starts to happen, I think it may quickly turn into a situation where you pay for "keys" to access certain dungeons and other content.

Perhaps not an entirely bad idea on it's own, but it could make for an interesting trend where the most valuable people in your guild aren't the most skilled -- but the ones able to afford the premium content.


Klepsacovic said...

Once additional money is needed to advance within an expansion, WoW will fall. It won't die; nothing short of pulling the plug will kill it, but it will fall.

The 'free' content must continue to be developed and developed well. It's what gives context. 200,000 people won't pay $25 for a shiny in a shitty game. Or as you said "Or put another way, Wrath was needed to keep people playing."

sid67 said...

See my follow-up post. I don't know if I agree. I think if it cost $5 for an "Ulduar Raid Pack" that includes 10/25 man and a 5-man Dungeon, people would line up to buy it.

There would be people who don't care because they don't raid that will pipe up that "people should pay for what they use" and even think it's a good idea that Raiders will "pay more".

Then you have the actual Raiders in your guild who will say, "Give me a break, it's $5. Just pay for it and let's get going." Either that, or kicked out of the guild because they aren't willing to "invest" in the raid.

Carson 63000 said...

"..more development time will be spent on these luxury items and less on other content.."

That's a very risky road to travel too far down, though. The only reason these luxury items are so profitable is that the real content has attracted and maintained such an enormous player base. If that starts to slide, due to neglecting the content that made the game a success in the first place, I think Blizzard will find it hard to pull out of the slide, and suddenly the $25 horses will find themselves in the remainder bin.

sid67 said...


Oh absolutely. I left it unsaid in the entry, but I think that's the danger in these kinds of profitable ventures.

How long before the Activision CEO and board of investors starts to pressure Blizzard into more and more of these "profitable" items.

It's a slipperly slope of "quick gain" versus longer term investment in THE PLAYERS.

That's what the "free" content provides you. It's an investment in keeping those players playing.

But if the other method is found to be so much more profitable, it might be too hard for them to resist the temptation of the a much more lucrative (abliet short-sighted) model.