Tuesday, May 25, 2004

Massively Multiplayer Online Gaming Market

This chart shows the subscriber levels for the various games over the last few years.

The results are interesting, because you get a great view of how this market works. No one wants to go online and walk around by themselves. Thus, if a MMOG wants to survive, it looks like it needs about 100,000 subscribers by the end of the first year. All of the games that didn't quite get there puttered out, including big names like The Sims Online. I don't see a single example of slow growth - you have to burst through the ceiling right away or settle for a token subscribership and an empty playfield.

Note that this gaming market is much different than the normal "install it, beat it, move on" approach to games. With MMOG's the product is intended to last many years, and all of the profits come from subscription fees. Games like Anarchy Online are even willing to provide you a copy of their product for free.

The development costs are enormous. In the first few years, games were often virtually unplayable at launch, and people would lose interest before the company could funnel the subscriber fees into adding bandwidth. Consequently, in order to have a fighting chance, game makers realized they needed to bite the bullet and prepare for a huge subscriber-base up-front, even if it never comes. This is why the recent entries have all been "big name" licenses - Star Wars, Final Fantasy, and (soon) Warcraft. Without some goodwill coming in to the market, the barriers to entry are just too high.

But boy, if you can get off to a good start, there is a ton of money to be made in this industry. Everquest, which I thought was a lame duck, actually has more subscribers now (about 420,000) than it did in January 2001 (about 400,000). All of those players continue to pay over $10 a month for a game that is largely running itself at this point - the players are experienced, the world polished, the server costs paid off long ago.

Meanwhile, Final Fantasy XI looks like the MMOG industry's next behemoth with 500,000 subscribers and counting. Apparently a game called Ragnarok is also quite popular in many Asian countries.

Needless to say the behavior of this market is quite fascinating. As the most successful games get bigger and bigger, it will be interesting to see if the public starts to take notice. After all, 5,000,000 18-34 males playing Final Fantasy every night (as is the nature of these games) would have quite an impact on other media markets. Or perhaps no game will be able to hold more than 500,000 individuals' interest at one time. We'll see.

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