Blizzard’s Three Scary Words

First, a quick note to the tanks in recent WoW heroics that I’ve been healing: When a healer shouts out “mana!”, that should not be interpreted as “run even FASTER into the next group of mobs!!! WHEEE!”  Because I am going to not heal your butt, but will just laugh when you end up as worm food.

So.  Last week there was all sorts of hubbabaloo over Activision Blizzard’s recent quarterly statement, in which (among other things) they mentioned a statistic that’s gotten everyone talking: only 30% of all WoW trial accounts make it past level 10.

Seriously — who cares?  Is this interesting in any way, shape or form?  Why all the discussion surrounding this statistic when they didn’t tell you any of the possible factors behind it?   Blizzard’s not hurting for WoW players, so I don’t think they can view this as a crisis.  And how would this number compare to other MMO trials?  Now, that might be interesting.

What caught my attention instead was a lovely three-word phrase that kept popping up in Activision Blizzard’s presentation.  See if you can’t figure out what it is:

Ah yes: “Value Added Services”.  That’s sinister marketing speak for “we got ’em pinned against the ropes — now nickle ‘n dime them to death!”   Or, in other words, microtransactions and paid premium content.

Okay, yeah, we’re not going to stir up any new controversy with this.  You either are okay with microtransactions at this point or still find them annoying and crass, but they’re not going away, so the general community feel is that we might as well stop complaining about it, because it’s here to stay.  Sort of like how every tax increase by the government gets us complaining at first, but if long enough time goes by, we just accept it, forget it and soldier on.

I just found it a bit… creepy that “Value Added Services” was featured so prominently in this presentation.  I mean, it’s underlined and everything!  Blizzard’s downright proud of the fact that there’s been widespread acceptance of gross overcharging of basic services such as moving to different servers, as well as the pricey $10 pets (the charity excuse is long gone — but the price remains the same).  Obviously there’s demand for these things, and people willing to pay, but I take this presentation to mean that what we’ve seen in the past is only the beginning of a big, big push for more microtransactions — er, “value added services” — on top of subscription fees and the rest.

After all, we “solidly adopted” it, so now we’re stuck with it, eh?

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21 thoughts on “Blizzard’s Three Scary Words

  1. Fuzzy February 15, 2010 / 10:41 am

    I thought the three-word phrase was “StarCraft (II) beta testing” 😛

    But I’m the kind of guy that plods through single-player campaigns in RTS games, so that piece of news doesn’t matter as much for me. Diablo III, on the other hand…

    As for “value added services”, I guess it’s Blizzard’s way of compensating for the goodness that is the Dungeon Finder.

  2. Asmiroth February 15, 2010 / 10:47 am

    Part the one:

    30% make it to level 10 can be due to the insane restrictions on trial accounts. If it takes a casual person I dunno, a weekend to hit 10 and their friends are 80 – who they can’t talk/trade/group/look with – that doesn’t push people to keep going. A system of trial vouching would be great here. A level 80 can “vouch” for a trial account, giving them un-restricted access to the game (for the most part). If the trial account breaks any rules, the “vouching” account gets a week penalty. 3 strikes and the 80 gets perma-banned. In my head it works out well.

    Part the deux:

    Judging Blizzard against micros is a hard thing. Their usage numbers allow them to charge crazy amounts for inane services and even with a 1% acceptance rate, you’re still looking at 100K people paying. Cryptic would be happy if they had 100K people just playing (I went there). Volume/profit margins are different when you control such a huge piece of the pie. Maybe comparing them to Free Realms (8mill!) would provide better numbers.

    Part the three:

    The words I find MOST interesting are the sub numbers. WoW has been at 11.5 since before Lich King came out, indicating a plateau of numbers. Statistically speaking, this bodes very well for any up and comer that wants to take the time and money to refine what Blizzard has done as it would appear Blizzard is finished with it’s up-swing. WoW is in an interesting spot, linked closely to item #1, where they have too much of a gap between end game and new players. “forcing” players to play through 80 levels of content to reach their friends is turning new adopters away. That’s why I think that item #2 for Cataclysm is going to be paid leveling/mentoring.

  3. Tesh February 15, 2010 / 11:19 am

    Sometimes it’s better to boil the frog than try to chase it with a skewer.

    I don’t consider much that they do to be “value added”, but then, I’ve applied that to the rationale behind subscriptions themselves. (I don’t consider the “value added” service of multiplayer to be worth $15/month.)

    The DRM philosophy is also relevant, though I’ve softened a *little* on that thanks to Steam’s insane sales. I still *detest* needing to check in to play games that I’ve paid for, but since they were so cheap, I’ll roll with it. (So, the “value added” there is the *lower* price, at the cost of needing to check in via the internet and login.)

    It really is funny how Blizzard doesn’t get called to the carpet on this, while Cryptic gets blasted for being incompetent moneygrubbers. To be sure, Blizzard has better spin masters, but the metric should be what is done, not what is said. It’s been interesting to see WoW shift over the last couple of years.

  4. Ravious February 15, 2010 / 11:19 am

    Good catch. Cataclysm is going to be a game changer, no doubt about that.

  5. CunningB February 15, 2010 / 11:24 am

    VAS makes me shudder every time its mentioned, one possible service has already been mentioned (access to the AH and mail out of game) which although will give people an edge in the AH markets doesn’t seem massively game breaking but it’s kind of paving the way *sigh*

    That and I’ve been spoiled by EvE Online where you get this sort of crap for free -.-

  6. canazza February 15, 2010 / 11:28 am

    I’m not against Microtransactions. The line however gets drawn when you can buy Gear for real money (and when I say gear, I mean progression gear, I honestly couldn’t care if they charged people $5 for an heirloom item for example), basically stuff that people in game worked hard for, including mounts, titles etc.

    You can dole out pets, tabards and pixie sticks on your transactions all you want, but I’m not buying. It just labels you a sucker to have it out in public.

    The only thing I’d consider buying is a race change for my Paladin. Tauren with a massive hammer = Win!

  7. Alarmist February 15, 2010 / 11:32 am

    Creepy marketing lingo is creepy.

  8. Tesh February 15, 2010 / 11:37 am

    Oh, and yes, the “players past level 10” metric tells me all of *squat diddly* about retention, trial-sub conversion or anything else useful for understanding the business model. As I noted at Spinks’ place, it’s interesting for game design reasons (Hunters don’t even get a pet until level 10… huh?), but for business reasons, it’s completely useless.

  9. Dblade February 15, 2010 / 1:42 pm

    Most of the trial turnover is from RMTs. They use them to harvest and just make a new one when the time runs out. It’s impossible to make restrictions to stop them short of crippling trial accounts to play. I wouldn’t worry.

    On microtransactions, its because players wont pay 19.99 a month instead of 14.99. MMO sub fees have stayed more or less static for ten years. That’s why added services are so big, as they help them make money.

  10. Bryan February 15, 2010 / 3:34 pm

    The words “premium-based” were used when Blizzard announced the WoW Auction House going mobile. Makes me think that this is apart of a bigger marketing initiative that will impact all of Blizzard’s games. Expect to learn more about these “value added services” when Starcraft II and Battle.net are released to the public…if not sooner. Lame.

  11. Brian 'Psychochild' Green February 15, 2010 / 5:53 pm

    And how would this number compare to other MMO trials?

    As Sandra at Elder Game says, 30% conversion is pretty good. Most game would kill for that rate. It was amazing in M59 if someone actually did anything besides log on, stand around, then log off. We probably had less than 70% of people even leave the room newbies start in.

    Ah yes: “Value Added Services”.

    As I’ve said many times before, I’m a fan of microtransactions as a business model. But, I think mixing subscriptions with microtransactions is distasteful, particularly if the game didn’t start with them. People were opposed to them in the past, but it seems some companies are damning the torpedoes and forging forward anyway. Where to draw the line between stuff that is really an additional service (like server transfers) and stuff that will become necessary to “really play” the game. Given how anal people have been in WoW about only playing with “good” people and having to link an achievement before getting invited into a PUG (before the dungeon finder), I can definitely see people requiring that people have some premium service that affects gameplay.

    I believe this is the point where I express joy at not playing WoW anymore. 🙂

  12. Ryan February 15, 2010 / 7:35 pm

    Those are some somewhat scary words. Blizzard gets away with *a lot.* I hope people start calling them out on that kind of crap, because if Blizzard starts taking flack for it and has to scale back (or at least stabilize) their microtransaction behaivors, other companies would be forced to follow suit. Games that charge $15/month should not have tons of micro-transactions.

    As for those who say, “well, they’ve stayed at $15/month for a long time now,” I’ll respond with this: there are several different ways to make money. Make costumers pay more, reduce costs in terms of making products or… and here’s the big winner… increase the amount of costumers you have. If anything, over use of microtransactions on top of a game that charges $15/month will reduce the playerbase… it’s one of the two or three reasons why I haven’t purchased STO when I was really, really excited about that game. So the nickle-and-diming that Cryptic’s been doing has probably cost them at least $100 from my pockets this year, in terms of buying the game and paying for at least a few months (and potentially hundreds of hundreds of dollars — god knows how much I put down on a game like EQ, which I played for about 5 years and bought all the expansions in those 5 years.. as well as some expansions from when I wasn’t playing).

  13. Ryan February 15, 2010 / 7:41 pm

    One addition to my previous reply: Suggesting companies should increase the cost to $20/month, or add MTs to offset the difference, because of inflation over the past few years ignores the fact that these games probably aren’t much more expensive to maintain now than, say, a few years ago. They may even cost less. Why? Wages across America have actually gone *down* in the past 10 years — and have stagnated since at least the 80s, relative to inflation. This is probably doubly so in the gaming market, where literally thousands and thousands of MMO employees have been laid off in the past two years. MMO gaming companies are certainly paying their employees less and probably have fewer of them to begin with, given the glut of them looking for jobs right now.

  14. ymrar February 16, 2010 / 1:07 am

    A milk cow is a milk cow. You want the most milk out of it before you slaughter it and sell the meat. I think we’re at a point where the milk is starting flow a bit less, so they need to do something to increase it.

    Remember that stockholders always want better results. So if their subscription numbers have stayed at 11,5, they need to get their sales numbers up in some other way.

    So no, I don’t think Blizzard is struggling with WoW by far. It’s just this crazy world where just good results are never enough for stockholders.

  15. klelith February 16, 2010 / 2:14 am

    There’s also the fact that Blizzard is going to have pay for custom maps in StarCraft II that they undoubtedly keep a cut of. We will definitely see more. We just have to wait and see how far they take it.

  16. spinks February 16, 2010 / 4:04 am

    I think I’m willing to wait and see a while longer. Because if they can come up with services that actually do add value, then I don’t have an issue with paying for them.

    I just don’t really know what that might be.

    Compare with cinema for example, a TON of companies are making 3D films this year because Avatar proved that people will happily pay more for tickets to see a 3D film. It is seen as adding genuine value to the experience.

  17. Genda February 16, 2010 / 10:44 am

    The thing about these services is that there is an upper limit to everything, and at some point they will reach a point of diminishing returns.

    Could it be that the real WoW killer isn’t some other game but Blizzard’s own microtransactions (or VAS as they call them) at some point. I can definitely see a place on the horizon where people throw their hands up and say; “Enough!”

  18. MM February 16, 2010 / 10:57 am

    I’m confused why people get so uptight about microtransactions. They offer perks that are not required to play and enjoy the game. I’ve played WoW, Champions, and Star Trek, and I’ve never once felt compelled to make use of their microtransactions.

    It almost seems like a case of – if you don’t want to pay for a perk, you don’t want anyone else to be able to pay for it. Most of the microtransaction stuff is simply fluff. Besides, even if someone had the ability to pay to gear, who cares? That doesn’t hurt my ability to run an instance, and it doens’t diminish my excitement when a good upgrade drops. If we were in a competetive game where another person’s success meant something negative for me, it would be a different matter.

    Microtransactions are a proven alternative revenue stream, so there’s no way you’ll get companies to abandon it. I expect all MMO games to eventually incorporate some form of microtransactions – especially in rough economic times where they are scrambling for every source of revenue.

  19. Tesh February 16, 2010 / 11:55 am

    MM, I don’t have any trouble with smart microtransactions. I think they are ill-advised on top of a subscription, though.

  20. PeterD February 16, 2010 / 3:33 pm

    For smaller companies with limited development budgets that are otherwise meeting the “free content updates” requirement of an MMO with a subscription fee, I don’t have much problem with them offering additional content that would never have existed were it not offered as a microtransaction. City of Heroes is a case in point — they have flatly stated that the costume packs you can buy wouldn’t exist if they weren’t selling them, since the guy that makes them gets his salary paid by those sales. No sales, no guy. No guy, no costumes.

    For a company like Blizzard, that’s raking in billions, this is a bit harder to swallow. They don’t have the resources to provide additional content beyond the abysmally slow trickle of free updates they do without charging for it? Really?

    Whenever I hear the term “Value Added Service” I immediately think of the VAT – Value Added Tax. It’s simply a way of adding a fee to EVERYTHING and making it sound like something helpful.

  21. Genda February 16, 2010 / 4:29 pm

    @PeterD In fairness to Blizzard, the reason they do this isn’t because they can’t afford to put the resources in place to provide these things at no additional charge. Like every other publicly held company they are held to the absurd expectation that there should be continued growth quarter after quarter where there had been in the past. As their player base clearly ins’t going to grow at that rate any longer they need to do something to keep the stock value up.

    The stock market doesn’t understand or account for blips in growth. As a matter of fact, the market punishes for long term growth by jumping off the bandwagon at the first sign of a correction.

    I’m not a fan, and all of this additional charge stuff is making them subject to the Law of Unintended Consequences, but I am just saying that I “get it” when they do stuff like this.

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