Does this not depend on what SimEx is actually projecting for GLS of MMO games? I have always thought GLS projection for MMO was for subscriber base as it is the most important metric of success for MMO games.
Maybe KultofCows can define what we are actually projecting MMO GLS of. Is it for subscriber base or copies of software sold to consumers?
This is clearly a different business model from what we see in the United States. I doubt these "game activations" are accounted as traditional unit sales. It sounds like people simply pay for time while playing (almost like renting).
This does have implications on how GLS stocks work in the future as companies adopt alternative revenue models for distributing games in Asia.
@apujanata, Oops. Big miscalculation from me. It should be US$ 100 million revenue, not US$ 10 Million revenue for 2005.
It probably means that china player didn't have to pay any initial cost (zero game sales revenue), and only have to pay monthly fee (just like ragnarok online).
That probably means zero "sales" in the ordinary/standard term of sales for China operation.
The only remaining question is : Do everyone agree that China sales are not sales ? If everyone agree, the price will drop a lot. If not everyone agree, it can go either way, depending who is stronger, buyer or short seller.
@deftangel, Errata : Article is dated November 03, 2005, not Jan 21, 2009.
Well, from the article : “We are obligated to pay royalties equal to 22% of the face value of WoW prepaid cards and online points sold by us by making recoupable advances against royalty payments in an aggregate amount of approximately US$51.3 million over a four−year period commencing from the commercial launch. We paid VUG an initial non−refundable license fee of US$3.0 million in 2004 and the first year minimum royalty guarantee of US$13.0 million in 2005."
13 Million US$ is royalty, guaranteed. Since royalty is 22% of cards, that mean at least 58.5 Million US$ revenue for The9. There are 5.5 Million WoW China players in 2008, which means probably 2 - 3 Million China players in 2005 (year of China launch). Let's use 2 Million x $10 (monthly fee, just an estimate from me, not researched properly) x 5 months (launch is June 7, and it reached 1.5 Million players in < 1 month) = US$ 10 Million revenue. I believe that means that : possiblities A. remaining 48.5 Million US$ come from game sales. or possibilities B. China player pay a higher monthly fee, to compensate for zero or minimum cost game sales.
What constitutes a "sale" of World of WarCraft and/or any of it's expansion packs? From GamaSutra, we have this definitiion of what Blizzard terms as a "subscriber" of which there are 11.5m as of the end of 2008.
Specifically, Blizzard's use of 'subscribers' includes "individuals who have paid a subscription fee or have an active prepaid card to play World of Warcraft, as well as those who have purchased the game and are within their free month of access. Internet Game Room players who have accessed the game over the last thirty days are also counted as subscribers."
Certainly in the west, users have to "buy" an account to start playing WoW and have to pay a one time fee to "upgrade" their accounts to use the expansions. This we can comfortably translate into "sales" for our GLS predictions. However, this only makes up half of the current WoW subscriber base.
In China, Blizzard partner with The9 to deliver a localised version of WoW via business models that make sense for the Asian market (where MMO's are huge). From the link above, here's how it works;-
Concerning payment for online games (Page 37) “To use our fee−based online games, a customer must register an account in our Pass9 system. Once registered, the customer may log into our network, select and activate the desired games and the game districts where the customer wishes to play, and then charge his account with a prepaid card or prepaid online points sold by Internet cafés or given by us through our promotional events that enable the customer to play for a specified period of time.
Each customer needs to maintain only one Pass9 account, which provides information regarding the customer’s available prepaid game playing time for each selected game district and payment history"
Here the situation is somewhat different. The player purchases a card from The9, "activates" the required game and then purchases game playing time to play them. I guess the key word would be what is meant by 'activates'. If the player isn't required to pay anything to activate a game then how does that frame a "sale" of either WoW or the Expansion Pack?
I'm posting this looking to provoke some more debate on our current GLS predictions for the WoW: Lich King Expansion. Out of the current 11.5m WoW subscribers, at least half originate from Asia where the business model and what constitutes an actual "sale" is not quite so clear cut. Please see the comments for the relevant info from the link.
Sorry, I completely missed these replies back on the 12th :) I certainly agree that for Blizzard's business model subs are the important metric and the lack of traditional unit sales information for WoW or any of it's derivatives is not neccesairly on it's own an indication of them making/missing certain milestones.
I am however, still minded to believe that if they managed to get 10m "purchases" of The Burning Crusade that's pretty big news and we'd have heard of it.
Certainly in the West, it's become clear to me that a "purchase" of some sort is required to play full time and the expansions seem to work on a similar basis. However, it's less clear how that works in Asia. I found one article that might shed some light on it which I'll post as it's a big topic in of itself when considering the price of this stock.
When WoW broke 10m, Blizzard announced 5.5m of these players were in Asia so we're safely talking about 50% of the userbase.
The Lich King expansion is aimed at players level 68 or above. You can only get to level 68 by purchasing The Burning Crusade so in the main, this expansion is squarely aimed at those who purchased the first expansion.
If we agree not 100% of players will purchase expansions, we can also agree that not every player who purchased one expansion will buy two. The percentages could well be quite different but we're still talking about a subset of a subset of that 11.5m LTD and XXm GLS.
In my original post, I did mention that to get current GLS for Lich King assuming 75% of players upgrade that far the GLS for WoW in general would need to be over 15.5m. It's currently 11.5m. It's certainly going north of that number but another 4m? With StarCraft II & Diablo III on the horizon. We're already being very generous with that 75% given the subset argument above and as I also noted the vanilla game is still charting high so some of these new players contributing to the 11.5m are definitely just playing the vanilla game, at least right now.
On the other hand, current subscribers would not include those who purchased an expansion for a month and then stopped playing some time ago. There are bound to be some who get into Lich King for a while and then lapse again.
It's probably even difficult for Blizzard to guage how many copies of the game they've "sold" with relevance to our GLS prediction, particulary with the Asian business models.
To answer your other questions;-
I think it's $40 to upgrade your account in the West at least and I think the character limit is 10 per realm. Not sure if there is a hard limit on characters per account but my friends sure had multiple characters.
@KultofCows, Yep, that was the post I was looking for. Thanks for linking it here.
Deftangel, How much is the price to "upgrade" account to play the expansions ?
I more or less agree with your position, that 50% - 75% (not 100%) of Wow player will purchase the expansions, especially if it is true that the expansion are focused for the high level characters.
Just curious, in WoW, is one account = 1 character only, or 1 account = several character ? I haven't played WoW, so my question might sound stupid. I had played Ragnarok Online, and in that game, I can have several character for one account (up to 4, IIRC). The same thing is valid for FFXI, IIRC (my brother played it, not me, and I remember it also have several player for 1 account).
Regarding Wow itself, remember we are predicting GLS, not LTD. I remember seeing a post predicting WoW to cross 13 Million, either in 2009 or 2010. So, whatever percentage you are using to arrive at WotLK, you need to base it on GLS, not LTD. For example : 50% of 13 Million, not 50% of 11 Million.
Personally, me thinks MMO stocks are dangerous (high risk) and profitable (high margin). It is dangerous if your prediction is wrong, but it is profitable if your prediction is right. I remember seeing rikitikitik, one of NeoGAF's highest networth player, went down from 31 Million to 18 Million, because of incorrect prediction of Age of Conan MMO.
Ok I've done a little more digging. You do have to "upgrade" your account to play the expansions so in one sense, it could be argued that is a "sale" just like downloading a game. Fair enough.
However;
Reading the WoW forums, it seems to be that you need to have upgraded to the Burning Crusade to upgrade again to the Lich King. If that's true (delighted if a player can confirm) then the GLS for the Lich King can not possibly be more than for the Burning Crusade (which topped out around 10m I think).
Regardless of that even, I stand by my original comment of subscribers != sales. I came across a Forbes article which suggested Blizzard expected "half" of subscribers to upgrade to the expansion. That's under 6m as it stands. Certainly not every single account will upgrade. Some people have more than one to play with lower level friends. Even the latest PC charts have the vanilla game at #7 so some of these new subscribers are buying WoW just to play the core game, not the expansion packs.
It is ridiculous to assume that every WoW subscriber will upgrade their account. Currently we're predicting 1m more than there are total subscribers to the entire game. I've no idea of WoW's shelf life but let's be generous and suggest 75% of people will upgrade BOTH expansions ( that's high, IMO ). Blizzard would need to have over 15.5m subscribers for that to work out, again assuming 3/4 of all players decide to jump in.
The expansion packs are mainly aimed at those players with high level accounts. How many players have put the hours in to get up to the level to make it worthwhile? I certainly can't find any kind of PR that the first expansion sold 10m. I'd have thought we'd have heard something about that no?
75% of the current total subscribers is around 8.5m , that's a little more acceptable but the mindset on the exchange seems to be more or less every subscriber will buy the expansions and WoW will keep growing. I don't think there is any compelling evidence to support the former and WoW subs might be growing still but a lot more slowly than they were.
We've yet to see what StarCraft II sales are going to do to WoW subs, especially in Asia. That series is monumentally huge over there.
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Does this not depend on what SimEx is actually projecting for GLS of MMO games?
I have always thought GLS projection for MMO was for subscriber base as it is the most important metric of success for MMO games.
Maybe KultofCows can define what we are actually projecting MMO GLS of.
Is it for subscriber base or copies of software sold to consumers?