$5.

8 Billion in annual revenue – (US market)

High-cost, high-risk titles – averaging over $10 million

Similar to Hollywood movies – Either a blockbuster or a flop

Lots of market cannibalism– MMORPGs in particular

MASSIVE = Constitutes players from all over the world in numbers ranging
from thousands to millions logged in simultaneously at any given point of time.

MULTIPLAYER= Players own characters who interact with other characters

in a virtual world. MMORPGs bring together thousands of different players that
assume digital personalities or roles

ONLINE= Essentially requires an internet/broadband connection to enable

‘live’ presence.

ROLEPLAYING GAME= Refers to that genre of gaming which requires

users to have named characters or avatars which are then engaged in some
specific activity in order to ‘level up’.
 Avatar
 Levels
 RPG game play
 Mission
 Chatting
 Society & community
 Friends
 NPCs / monsters
 Experience points
 Extended game contents
 Online customer services (GM)
 Player creates an avatar. He usually has to choose between various ‘races’

 A character name is selected which best reflects the players creativity

 Avatars usually start of with basic clothing/gear/armor but upgrades to

better, superior and rare items which can be worn as a symbol of status or
power of the wearer

 Complex MMORPGs permit a micro level customization of every aspect of

the avatar from hair, eye, skin color to the body shape and features.
 The virtual environment of MMORPGs are huge, with countries, capitals, states,
monuments, building and objects intermingled with stunning graphic greenery, jungles,
forests and other eco-systems.
 This environment has its own set of laws, rules and in almost all cases its own
currency.
 Any violation could actually lead a character to prison, representing loss in terms of
time/virtual money!
 Players ‘level up’ their characters by engaging themselves in activities like
attacking opponents, conquering colonies, waging wars or engaging in
diplomacy.

 The more hours you play, the stronger you become as players engage in
activities like mining, smithing, trading in precious metals, antiques and in-
game currency in order to get richer and stronger.
 Most games have unique currencies, something that enables an avatar to buy
virtual items inside the game

 These virtual currencies are often exchangeable with real currency — rupees and
dollars

 Level Up Network India business head Ashish Khoria explains how it works. “Every
time a player kills a demon or another game character, it drops an item. These items are
traded in the virtual market with virtual currency

 A demand exists for high level characters ( level 100+). In India, many characters
have been known to be sold for Rs. 15000-20000 a piece.
Players usually join ‘clans’ or ‘guilds’ or groups of characters who are incented to
work together to strategize and attack an enemy through “raids”

As more and more people interact, the level of social interaction become enormously
huge

Select gamers emerge as leaders capable of quickly organizing, motivating, and

directing groups of players toward a common goal

A level of discipline and a code of conduct is maintained

by the Guild Leader who exhibits real life leadership and
strategy skills
The most obvious appeal derives from the elements of achievement in these
environments

They cater to players who enjoy accumulating wealth, rare items and
tangible power

The other main appeal derives from the ability to chat, make friends and
affiliate with larger social groups such as guilds

Many players also find appeal in becoming immersed in a fantasy world and
becoming part of a story that is being told

Certain players enjoy competing with other players or even annoying and
manipulating them through devious means

 Some players are fascinated with the mechanics and geography of the
world. For them, the satisfaction comes from unravelling the game
Gamer speak –

I call myself an addict, because I share the same symptoms as someone who's
addicted to smoking, or alcohol, or some other substance. I think about EQ
[EverQuest] while I'm not playing, I get stressed when I have to go 24 hrs
without logging on for a fix, and I wasn't able to quit when I tried. If that's not
an addiction, I don't know what is. [m, 22]
Time
– Games require too much investment in order to have fun

 Difficulty
– Game is just too hard to play

 Subject Matter
– Game subject matters do not represent a cross-section of human
interests

 Social Factors
– Video games have a social stigma that other entertainment media does
not
It is easy to dismiss video games as pointless activities that only teenagers
indulge in.

The truth is that the average age of MMORPG players is around 26. In fact,
only 25% of MMORPG players are teenagers.
About 50% of MMORPG players work full-time.
About 36% of players are married, and 22% have children.

So the MMORPG demographic is fairly diverse, including high-school students,

college students, early professionals, middle-aged home-makers, as well as
retirees. In other words, MMORPGs do not only appeal to a youth subculture.

60% of players report having played an MMORPG for at least 10 hours

continuously.
Client-server architecture

Servers

Network bandwidth – Average bandwidth requirement per client is 7kbps

Network data packet – On an average 15 packets/sec

Network security

Graphics

Database
Standalone servers Distributed systems
A close look at a popular MMORPG over a long period of time

Key observations

Workload stability – Analyzing game workloads

Player acquisition and churn

Measuring disinterest
Periodic – Strong daily peaks with weaker weekend peaks
Predictable over short-term – Workloads fluctuations small from week to week
Mechanics for increasing population

New game content and updates

Promotions and marketing

Price reduction
Acquiring new players is hard

Lets keep the ones we have instead!

A fact of MMORPG life
MMORPGs notorious for low acquisition rates
Most MMORPG player acquisition rate drops over time
Potential reasons
New players at a disadvantage
Hard-core player population “tapped” out
Examining play history to detect waning interest

Minutes played per week

Session length statistics
Inter-session time statistics
Minutes played per week throughout play history - Players play less over time
Session time distribution - Session length of “final” session shorter than normal
Intersession time distribution - “Final” intersession time significantly longer than
normal
 Tons of Content
10,000 quests.
20 people working
2080 work hours in a year.
About 1 quest every 4 hours.

10,000 items.
10 people, 2080 hours/year.
About 1 item every 2 hours.

50 “unique” areas.

10 people, 2080 hours/year.
416 hours/area. (just over 10 days).

With that we have a 40 person content team and it’s tight!

Cost of 40 person content team/year: approx. $400,000/mo * 12 =

$4,800,000/year.

Where’s the testing, balancing, bug fixing, etc?

Content Development: $5milion - $15million (40 people 1-3
years)

Billing System: $500,000

Customer Service: $300,000/mo + ramp up costs.
Technical Support: $150,000/mo + ramp up costs.

If you ramp up too early, your monthly burn will really hurt.
If you guess the number of day one players incorrectly, you will
bleed money fast.
#1 ranked World of Warcraft released at a cost of $90 million

Vanguard released at a cost of $ 35 million

EverQuest2 released at a cost of $25 million

Another way of putting it ?

ITS LIKE PRODUCING A MOVIE!

World of Warcraft - Separate client required which comes at a price in addition to
Monthly subscription fees

Runescape – Internet browser based client which is available free of cost.

‘Members’ refer to those who pay a monthly subscription fee only
Blizzard entertainment's World of Warcraft, the world's most lucrative
online game, debuted in late 2004 and has consistently been the best-selling
PC game in the U.S.

They have profitable business model in which North American and

European gamers pay $15 a month to play the "World of Warcraft" computer
game, while Asian players access the system by buying prepaid cards.

Subscribers include “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

The power of the game lies not in the boxed retail sales…but in the
recurring revenue stream from the monthly subscription fees players pay
ongoing
In 2007 it generated revenues of $1.1 billion with operating margins of more
than 40%, creating some $520 million of operating profit

The average revenue per unit (ARPU) is estimated to be in the low teens.
The fee in North America is $14.99 per month to play the MMO, but lower
Asian and Chinese fees and variations elsewhere in the world obviously
affect totals. China gamers have to pay $.04/hour

As a result Wow is reported to have North American revenue of about $200

million in third quarter of 2007, whereas $ 30 million in China.
A net based mmorpgs which clearly divides its users into members and non
member based on the payment of monthly subscription fees

Members can access more worlds, unlock greater quests and gain access to
items which are of more value in-game

The game has more than 5 million active players

Over 850,000 of RuneScape's users pay $5 a month for access to extra playing
levels and better customer support

That suggests more than $50 million in annual subscription revenue for Jagex
How many players will there be next week?
Provision servers to support them

What can I do to increase this number?

Impact of game updates and promotions

What can I do to make sure players don’t quit?

Detecting disinterested players
MMORPG- THE NEXT BIG THING

There were 15 million MMORPG users in 2006 and their population is

doubling every two years

Forget whether in real or virtual world

Most daily activities and socialization will revolve so much around
MMORPG’s that it would almost become leading a double life.
BIG BUDGET MMORPGs

After the success of World of War craft, many executives dreamt of

making as much money as WoW did. But to produce a blockbuster
MMORPG, one needs a much larger development budget

There has to much more content and heavy investments in hardware like
the servers on which the game is running

Much of the failed games of 2007 can be explained by simple

underfunding

 Sooner or later it will be realized that heavy investments are needed and
we will see big budget MMORPGs

 The future is of big budget MMORPG’s which will expand the existing
market.
All will play in the same virtual world.

•As community gaming becomes the nation's pastime, convenience will demand that
some day each person's online identity be able to move from one realm to the next
There would gradually be a convergence of virtual worlds

You'll meet someone who plays an MMORPG for a living

The player earns gold in World of Warcraft, gold with which he can buy these in-
game objects . In the future, it can be imagined somebody working full time to gather
in-game gold and then exchanging it for real dollars.

In the future , stealing objects in the virtual world could be punishable in the
real world

Governments maybe be formed in the future as the necessity of having some

regulator would be immense