Below is an edited transcript of my latest video.
TL;DR:
Link here.
TL;DW: N/A. It wouldn't be a worthwhile discussion if it was based on a few snappy sentences. Sorry!
Today’s thing is on WoW’s cash shop, or more specifically, all the cosmetic stuff you can purchase in the World of Warcraft with cash money. Over the years WoW has built up a catalogue of mounts, pets and funny hats. The community has mixed feelings on these items which sum up to you either don’t like them, or you like/don’t care about them.
So I’m going to bring up the viewpoints, some counter arguments and top it off with a crazy idea from yours truly. Let’s do it.
First let’s make it clear that this piece is only covering cosmetic purchases. Maybe at some point I’ll cover paid services like transfers and boosts and the token, but I won’t do it all at once. Trust me. I tried writing it, and it wound up way too long and complicated.
The current cash shop includes the following: 12 pets, 10 mounts, 3 hats, and the Warlords of Draenor bundle of extra stuff. By the way the in game shop doesn’t have as much stuff as the shop on the website. The bundle is missing as well as the helms and Moonkin Hatchling.
Anyway that’s an extremely small number of purchasables relative to what’s obtainable in game, with hundreds of mounts and pets, and probably over a thousand different helmets. The crowd that’s against these kinds of cash shop items include but aren’t limited to the following arguments:
Microtransactions shouldn’t be on top of a subscription service.
High quality content shouldn’t be behind a premium.
On top of the already existing paid character services this is greedy.
It’s only a matter of time until WoW is pay to win.
And there’s so much more. Microtransactions, or additional content, DLC, or however you call it, has been debated for years, long before WoW and will continue to be ragged on for years to come.
From the other side come these arguments, which aren’t exactly supportive but are more like counterpoints, including:
As long as there’s no pay to win features, it’s not a big deal.
It’s Blizzard’s game and they can do what they want.
If you’re against the idea, don’t buy it.
This’s the way of the industry now; live with it.
And more than any other argument, this point truly does describe the reality of game development these days. Studios big and small use additional content as their primary business model, to prolong the life of their game, supplement growth for their studio or just keep the lights on.
In the case of WoW, premium content has been shown to be extremely lucrative. Its first big dive into it was the Celestial Steed, this goofy looking flying sparkle horse. At $25 dollars many players felt the price point was way outside the realm of sanity.
But news folk in the gaming world noticed how hot sales were looking during the first few hours of its availability and projected that, Blizzard made millions off this mount. Considering the development that goes into a mount and its return, you’d think that Blizzard would pull this sort of stunt all the time. It’s speculative, but it’s likely that even now, Blizzard has resisted the temptation to overdevelop premium content for the sake of revenue. After all, going too far in that direction makes a pretty bad impression on gamers who vilify the notion of premium content, and these gamers are really really loud. It’s another obvious fact to point out when debunking the myth of Activision’s direct influence on Blizzard’s business model.
We’ve also got to consider the fact that WoW is a pretty old game and there’s a big difference between what WoW’s development of this premium content is and on the other side, on-disc DLC. That’s where skins or other playable content are already created for the launch of a game and exist on the game data, or disc, but is still locked behind a cash purchase. For WoW to not sell paid content until six years after its launch is a fair acknowledgement.
It’s also interesting to look at the paradigm Blizzard has tried and failed to fulfill - shorter gaps between expansions. The widely believed theory from fans and critics is that when Blizzard launches an expansion box, much money is to be made. Release expansions faster and that much more money is to be made.
I don’t believe in this theory at all. I also don’t know what Blizzard’s actual, point-a-gun-to-their-head reasoning is but I feel strongly that the goal is not necessarily to generate more money. There’re much more lucrative opportunities to generate revenue than the old adage of “doing more with less.” It’s a big and risky investment to bank on expansion sales every year or two when there are more predictable and less risky approaches to growth.
I have an idea - a bad one, because if it was good Blizzard would have done it already. But what if Blizzard really doubled down on the cash shop to generate the extra revenue? We’re going to scratch the surface regarding WoW as a business. Let’s see if we can help Blizzard fatten its pockets but more importantly, make it pay off for the players. I’m going to keep it basic so it’s easy to understand, and this is probably the limit of my intelligence anyway.
To help, I’m going to rely on this website,
http://www.worldofwargraphs.com. This is a pretty neat site that can pull up all sorts of useful data. I have no idea if it’s still actively updated, but from the looks of it, it’s still automatically pulling pretty up to date data from WoW’s API, so this works for me.
We’re going to look at the stats regarding player owned mounts and pets to see if there’s data that supports my idea. For the sake of time we’ll just stick to the mount data.
As of this writing, here’s what we’ve got:
*Last Database Update : 05 Jul 2016 - Level 100 players
Celestial Steed 19.7%
Armored Bloodwing 13.8%
Enchanted Fey Dragon 16.3%
Grinning Reaver 10.8%
Heart of the Aspects 18.5%
Iron Skyreaver 11.2%
Mystic Runesaber 9.1%
Swift Windsteed 8.4%
Warforged Nightmare 10.5%
Winged Guardian 19.2%
Average ownership 13.75%
Since this uses armory data, we can at least assume that these numbers reflect active users within a certain number of months with a least one level 100 character. Roughly we’re looking at a ten to twenty percent attach rate, and unfortunately there’s no way for us to know how many players purchased one or more of each mount. That’s not super important anyway.
So let’s make some broad assumptions instead. We’ll use American dollars for our values. Let’s lowball it and say that only 10% of the active player base is ever willing to buy these mounts, down from the 13-14% average from the earlier table. Let’s low ball even more and say we have 3 million active players to work with. Let’s low ball even further and say every mount was purchased on sale, for $15 instead of the $25 or $30.
Based on that scale, we’re going to project that for every mount released, it will be purchased by 300,000 players and generate a maximum of 4.5M dollars in its total lifetime, so I low balled yet again. Considering all of that, that’s not bad at all.
A mount is, arguably, not difficult to make. All it takes is an idea. And concept art, approvals, sign-off, modeling, rigging, animating, sign-off, testing, compatibility, approvals, regression testing, sign-off, marketing, promoting, compliance, submission, sign-off, deployment and a blog post. Then followup. And maybe sign-off.
Give or take model versus a reskin, a new mount is pretty involved but compared to other segments of game development, this isn’t so bad.
Here’s what I’d like to see, or would like to have seen: a separate entity independent of the main art and animation team dedicated solely to generating revenue through the sales of cosmetic items. Its existence is dependent on the numbers it can produce. Ultimately it’s a production and sales department. Let’s pretend that its goals are to raise revenues by anywhere between 10M and 20M a year, and it will do this by launching a two mounts every quarter, or 8 mounts a year. Each mount produced doesn’t mean instant revenue because it has to sell, but based on our model we can say that each one made increases their projected revenue over the course of several years. Mounts don’t exactly go bad or expire, so aside from its dependence on subscriber numbers, the department’s growth can really only go in one direction. There’s also diminishing returns to consider, but the non-expiration of mounts sort of cancels this out.
Its eventual (?) success will mean the expansion on what the team can produce, which means a larger team. Pets and transmog skins can start appearing in the shop as well. A team of ten comprising of concept and 3D artists, animators, effects specialists and a manger dedicated to a small number of quality content pieces can probably produce a lot of profit, even if all ten of them earned over $100k/year after benefits.
But what about players? Yay Blizzard is printing money, but you can bet that the outcry from players would be massive, regardless of how Blizzard paints this idea. Critics would argue that instead of a separate art team, just make the current team bigger and produce more non-premium content - that’s an easy and valid argument to make. But from a business standpoint, budgeting for a bigger team without a known return is tricky. On the other hand, budgeting, approving or even scrapping a separate team using clear key performance indicators (KPI) is easier for Blizzard decision makers to understand. Meanwhile resources aren’t taken away from the existing team. You sort of have your cake and eat it too.
Customization and the opportunity to make your character feel unique is objectively a good thing. In a space where players feel like their classes are feeling dumbed down or homogenized or whatever hyperbolic catchphrase they use, having more cosmetic options helps a bit. It helps even when the conversation can devolve into an argument between Blizzard’s greed and “special snowflakes.”
Maybe Blizzard could introduce cosmetic tokens, similar to the WoW token. I’m not going to get into that subject because we’d move into territory outside the scope of this analysis. But that’d be a start.
Probably the biggest benefit to a department like this would be to negate the previous theory I mentioned about pumping out expansions faster. A revenue stream that is independent of expansion cycles means that Blizzard can take an even closer look at future expansions’ product life cycles. It’s been said that Legion will have a better paced and perhaps longer patch cycle than Warlords of Draenor, but premium content provides an opportunity to stretch out an expansion for even longer. It can help fund more patch content or help other areas of the WoW team expand to engineer new features and systems. The door opens for having meatier playable content with fewer sacrifices in story, scope and scale.
I know that ultimately this means that some players will end up spending more money, but the point is that when it comes to this sort of optional content, namely skins and pets and mounts, people just like to collect stuff. The passionate conversations about transmog and the website I showed you sort of underlines that point. Whether it’s a signed book, a plushie, fake Doomhammer or in game cosmetic thing, there’s a significant number of people who will throw down to collect stuff. In my opinion, fans of in game collectables are a target market that Blizzard does not take full advantage of, and maybe that’s a good thing. But it might be a missed opportunity, too.
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Originally Posted by rda
Not sure if you read that part, but does that help clarify?But what about players? Yay Blizzard is printing money, but you can bet that the outcry from players would be massive, regardless of how Blizzard paints this idea. Critics would argue that instead of a separate art team, just make the current team bigger and produce more non-premium content - that’s an easy and valid argument to make. But from a business standpoint, budgeting for a bigger team without a known return is tricky. On the other hand, budgeting, approving or even scrapping a separate team using clear key performance indicators (KPI) is easier for Blizzard decision makers to understand. Meanwhile resources aren’t taken away from the existing team. You sort of have your cake and eat it too.
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