Break-even Analysis à la SWTOR

I’m reading one of my many amazing and interesting horrific business books and I’m trudging through a section about break-even analysis when I casually alt tab and start browsing the web.  The first article I see is one about SWTOR being substantially profitable at 500k subs.  It’s fate.  I have to write something about it now.  *throws book aside*

John Riccitiello says their goal isn’t to challenge WoW while going on about not wanting to be happy being some lowly second — at which point I tune him out and focus on the important part which is not challenging WoW.  That is a good goal.  It’s a goal many claim to have but  almost no one actually adheres to in their design.  Every one of these theme-park clones does nothing but try and appeal to the same market.  You don’t make a game like WoW because you decided to make a game that just happened to be like WoW. It’s intentional.  You make a game like WoW because you know millions of people like that particular game and you want to perhaps interest them in what you’ve done.   BAD GOAL.

A good goal for Bioware/EA, and any other game out there, is to make the game that you want to make without any interest in what WoW has done or is doing.  Ignore them.  Do some break-even analysis and realize the numbers you’ll need to break even and turn a profit.  At that point, evaluate where you’re at and see if the type of game that you want to make is niche or mainstream.  Chances are it’s going to be somewhere in the middle.  At that point, do what EA does and realize you’re going to be fine at 500k (probably be fine at 300k, in my opinion) but would be like Uncle Scrooge swimming in his vault if you hit 1mill.  Make a game that would be fine around 250k — most every great MMO in the past did.  That’s my “if this were a perfect world” ideology.

Anyone on this planet knows that SWTOR will sell well and do fine on subscriptions.  It’s Star Wars and Bioware.  If WAR is still alive with even 50k subscribers for this long then SWTOR will do 500k sustained for at least a few months.  The key lies with the timing.  Their recent announcement that SWTOR would not be out in Spring is, in my opinion, a result of intentionally delaying the game.  Bioware’s biggest competition will not be WoW but rather the dozen other games closely packed well below the mean.  Delaying until after Rift releases, DCUO is chilled for a few months, and Cataclysm is but a memory means that they get to swoop in and clean house.  It’s smart.  It’s what I would do.

  • The big thing is having enough content to keep subs. With how little they have doled out and how much they say story is the next step, I worry there isn’t going to be enough to keep people with it. Playing though the same story over and over does tend to get very boring.

    However every time I hear ToR is delayed I am very happy I don’t care if it takes another year as long as it is a full finished and polished game.

  • This is one of the best things EA/Bioware could have said, especially with the amount of money they have been “rumored” to have sunk into it. TOR will sell 1 million boxes in the first month, I don’t think that is going to be an issue. Holding onto those subs is going to be their fight.

  • This is what confuses me about RIFT – I am worried they are not targeting the right market. Trying to appeal to the WOW fans that are sick of WOW seems like a risky business…I think they can still pull things around but they need to make a few key decisions.

    I forgot that SWTOR was supposed to be out in spring…I kind of didnt expect it until the end of the year anyway. I think they dont need to be too afraid of the smaller competition…it may be worth it to avoid RIFT and DCUO…what about GW2…could it run into the same problem with them…?

  • You dont think companies that invest 200-200 mil into projects do all kind of BA & look at every possible angle to make a profit? Gotta love armchair CEO’s.

  • Rift: appealing to WoW-fans who are sick of WoW with a game that’s very much a clone of WoW just does not work beyond the opening month: the game just won’t be as good as WoW so even those that try it will flood back to WoW right away.
    No matter how good the game is at launch, WoW has now had 6 years of extra development giving them a headstart that’s hard to beat.
    So MMOs need to DIFFER significantly from WoW to attract and retain an audience.

    SWOTOR has all the potential and timing it right is just another arrow in its quiver.

    Let’s hope it comes close to that potential 🙂

  • @Hatch: And yet look at all the failures over the last few years. They may “do all kind of BA & look at every possible angle to make a profit” but they are not doing a very good job of it.

  • Don’t get me wrong, I’m an advocate for great gameplay over profit, DAoC is my best MMO experience to date, but thats perhaps with rose tinted glasses. But the two are linked, with no profit, theres no game.

    I digress, how many 200+ Million dollar MMO’s in the last few years haven’t been profitable?

    I know there’s been low budget failure’s & success’s. Perhaps they were making they game they wanted & had enough funding they didn’t have to justify to investors their RoI analysis.

  • @Hatch: As MMOR, Keen, and Epiny have very generally (read: vaguely) said, I’m sure that they do. But to be honest, you can look at the entire gaming universe from every possible angle, but if you’re doing it in a ship made of shit, it will still look brown. What I am so crassly trying to say is that they may be looking for every possible way to make a buck, but their core product is of a poor quality. And frankly, they may actually be maximizing their profits, but when you’re fighting for the remainder of the market, which is a minor portion once WoW’s taken its bite, a majority of the remainder is still a minority. It’s just bad business.

    I would agree with Keen in that you need to find a new market. Yes most MMO players have played WoW, and there’s most likely a minority who avoided it strictly because it’s WoW. You’re still aiming at MMO-players, and some adventurous Bioware fans, so you may be appealing to some of the same people, but it’s for drastically different reasons. People don’t play WoW because they like KOTOR, and people don’t play Dragon Age because they think Farmville is the shit. If you can take people who like WoW for X, Y, Z, and lock them in to your game for A, B, C, you’re way better off than trying to beat WoW at the X, Y, Z-game.

  • And wouldn’t it be funny if Guild Wars 2 released just two or three months after SWTOR to sop up those players who didn’t want to pay the subscription, yet long enough for the box purchase to lose its sting.

  • I think the change of tone of EA CEO is that they’ve realised that they don’t have enough content to challenge the competition.

    When a dev say a flashpoint can be ran in 90 mins does that mean 90 mins of gameplay or 90 mins with X mins of cinematics and dialogue?

  • We don’t really know how much SWTOR cost, I personally think that it must be 100mil at the very least. It could be double that..

    MMO market is a VERY high risk investment, no matter how good you are chances of success are slim so the returns have to be large to compensate the investors. 500k subs is a good target I think, but more realistic target would be 200-300k. I almost wonder if they are having second thoughts about the amount of money they sunk in the stuff like voice acting, cgi movies etc and wondering if it was not better to aim a bit lower at a lower cost.

  • @Lyram: That’s exactly what will happen unless EA holds off releasing longer than ArenaNet can. The deeper pockets may prevail on this one.

    @Valdur: I bet 30% dialogue.

    @smthin: I can only guess like anyone else at this point, but I would hope they found a sweet spot between excellent immersion-creating voice acting/cgi and content/gameplay quality. If not, it was a poor production choice.

  • But SWTOR is still slated for a Spring release after the close of EA’s fiscal 2011, which ends March 31st 2011. And “Spring” gives a window from April 1st – June 16th or something like that.

    I’m still confused by your previous blog post to the supposed ‘delay’.

  • “A good goal for Bioware/EA, and any other game out there, is to make the game that you want to make without any interest in what WoW has done or is doing”

    It’s a very good motto and one that I’d like to see more developers embrace. I think as soon as people stop trying to copy WoW and just come up with something awesome and completely unrelated then they may stand a chance at competing. Unfortunately publishers and investors don’t see it that way and want to minimise their risk by copying the market leader.

  • @Keene: Very good point. I would not be surprised if there was a rivalry there.

    Notice that the third and last pre-release GW novel hasn’t been announced. That’s what I’m keeping my eye out for to help time the game’s release. We may hear about it when Arenanet becomes aware of STWOR’s more firm timeline.

    Conversely, I wonder if EA is purposely hiding PvP information until shortly before release. The PvP audience (of which I’m a part) is vitriolic and can generate considerable negative perception. Maybe when we hear a large amount of PvP information, that’ll be a signal release isn’t far.

  • I’m not certain ANet cares as much as Bioware in terms of who launches first. Guildwars and Guildwars 2 are both games that are very friendly to sometimes-players; if a bunch of people buy GW2, play for a couple months, and then go off to play SWTOR for a while, it’s not really an issue for ANet’s business model – at least so long as they come back to do the Christmas quests, and come back later in spring to buy the mini-expansion, maybe buy a costume or what have you…

    Personally I’ve picked up and dropped Guildwars at least half a dozen times now, and each time I come back I’m usually buying a new expansion or chapter or mission pack. But there’s never that feeling of deciding to “quit it” in the same way that you’d cancel a WoW subscription. You just drift away when you get bored and come back when you’re missing it.

  • Two things:

    1) The reason EA is making SWOR into a MMO is precisely because WoW is so successful and pulling in over US$1 billion per year in revenue.

    2) The game EA wants to make is one that eclipses WoW. They learned for WAR that it was probably a bad idea to say so, but they’ve also just said that in order to be profitable, they have to be the second most successful Western MMO title from launch onwards. “Fine at 500k” is still a much higher player figure than pretty much every other sub-based Western MMO around today.

  • Browsing through some blogs I ran into a reference to ealouse post back few month. That reminded me that the number floated there was 300mil.. with some other eamythic people suggesting 200-250mil. Are they full of it? maybe.. but maybe not. They would need few million subscribers for a a few years to just break even with such costs. This thing might just be pure PR bs (likely)

  • Couple things – First, I think Bioware did make the game they wanted to make. If you watch the gameplay footage, the art style, the cinematics, the story = signature Bioware.

    The combat, at first glance, looks more like WOW – but the fast pace of combat (shorter, more frenetic battles with multi-mob pulls as a matter of course), greater player engagement (no auto-attack), and choreographed real-time combat animations (melee weapons actually collide and lightsabers block blaster fire) demonstrate that SWTOR isn’t just a WOW clone, but an evolution of the current status quo (ie, WOW).

    WOW became MMO King by shamelessly borrowing and improving upon past MMOs. Bioware needed to do the same, and from what I’ve seen, so far so good.

    Oh, also, I disagree that SWTOR will find much of a competitor in Rift or Guildwars, no matter when they release. FYI, Bioware’s target is still Spring 2011-no pushback has been announced and I would be surprised if there was one.