This post started out as a rant about CCP probably being in financial straights due to over-expansion of it's workforce and a drop-off in the rate of increase of subscriptions. However someone posted the CCP financial statements for 2010 (not leaked these documents are public) which clearly shows that although profits are down a small amount on rising revenue, the financials of CCP are fairly healthy. EDIT: People with a lot more idea how to read these things then I have concluded the opposite, CCP is in financial trouble. The profits are on paper only after capitalizing all development costs. Loans are due soon and CCP needs cash.
One thing that has really bugged me about the many misteps of CCP lately is that the numbers just don't add up. Lets look at $99 licensing fee controversy. Thinking it over I can only really think of about 10 to 20 possible customers for this. Things like EVE-FILES, EFT, Capsuleer (I know it doesn't exist anymore) evemon, dotlan, ombey's maps, eve-search, Battleclinic, a couple of killboard apps, and maybe a few others. As I said, about 20 customers. Even assuming there 100 possible customers you are still looking at less than $10,000 per year. This equates to about 1-2 months of salary for a lawyer or a developer, probably much less then the cost of implementation. CCP has revenue for EVE Online of $57,433,934, this represents less than 0.02% of that. Does not seem worth it.
Also lets look at the idea of vanity items within EVE. There is a really great slideshow from EA called Playing To Win. It describes the challenges of getting players in a free to play game to pay for items in the store. At first they only had vanity items, and they had a lot of them. Hundreds of different shirts, pants, shoes, accessories giving millions of possible looks were available. In the end the revenue generated from the just over 1.25% of users who used the store was about $0.25 per user of the game per month. IOW the entire vanity item store in EVE would be expected to generate, if it had hundreds of different items, (360,000 users * 0.25) $75,000 per month or $900,000 per year. This works out to about 1.5% of boost to overall revenue. Assuming that there were 9 or less developers/lawyers/artists/game-designers/GMs working on this feature it might just barely be worth it. But this is assuming that 1. there is a huge variety of items, and 2. users can see the things that are bought. In fact, CCP had to know that many of not most users will be turning of CQ from the get-go due to systems requirements and the desire to multi-box. So the number was most likely going to be much much lower. This also explains the 'Door' screen when you turn off CQ and the refusal to promise to keep the no CQ option in the future. They need your eyeballs to see your character or there is no hope.
As for selling 'Pay to win' items, those that give a player an advantage the numbers clearly make no sense at all. As shown in the above mentioned slideshow, going to a 'Pay to win' model resulted in generating approximately 2x the revenue per player, or about $900,000 additional revenue. However, unlike battlefield in the example, if there was even a 1.5% drop in subscriptions as a result (and there certainly would be considering the outrage that was promised in the past and we have seen this past week), this benefit to CCP would be fully negated.
How on Earth is CCP going to recoup the tens of millions of dollars that they have spent on Carbon, walking in stations, World of Darkness?
Nothing is adding up. What one earth is going on with CCP.
Good post, but you have to question / modify a few other assumptions to see micro-transactions even begin to make sense.
ReplyDeleteFor example, the spend per user ($0.25) could be much higher - certainly with $60 monocles they clearly are picturing a higher spend / u / mo.
Or, increase the number of users. Many games powered primarily through micro-transactions are free to play, and therefore bank on a MUCH larger number of players, of which only a small subset are willing to pay. These are mostly light-weight social games though. I will admit I know little about LOTR or other more MMO style games with MT.
EVE is, ehem, not exactly a 'social game' like farmville or mob wars - to put it mildly. So any assumption based on broader gaming behavior, like the EA data point, is a stretch at best. I would guess that EVE players spend more, on a per (human) player basis, than almost any other game out there, due to the prevalence of multiple accounts.
Your overall point though is a good one, particularly re: $99 licensing fee. That is just stupidity - on CCPs part for charging it and on the players part for thinking that specific fee was a material revenue driver for CCP. I think it was just a case of a lawyer thinking 'why not $99?', instead of a calculated decision.
straits
ReplyDeleteIf you wouldn't mind, what is the origin of this financial document, while I know this is all public record, I seem only to be able to find their records from 2008.
ReplyDeletePICU: The explanation I got was that they are public record but you need to pay a fee to get them, someone was kind enough to post them after paying and digitizing them. Here's the link to what I used in the link above. http://dl.eve-files.com/media/corp/Herschel/CCP_Financial_Statements_2010.pdf
ReplyDeleteThe $99 application licensing thing is not giong to be $99, at least according to this: http://www.eveonline.com/devblog.asp?a=blog&bid=931
ReplyDeleteAnd that link also makes it clear (to me, anyway) that the $99 fee wasn't intended to be a revenue generator, but a token fee for setting up a licensing contract so CCP would have some measure of IP control, while still allowing app creators to make money off of their work.
And that blog post was five days older than this one.