Economics of Scale in The Forgotten “WoW Killer”

No game has made Blizzard Entertainment the juggernaut that it is today more than World of Warcraft. At its peak in 2010, the game had 12 million subscribers and to date has brought in over 10 billion dollars for the company. Although, those subscriber numbers have dropped off over the years. According to a recent exploit that allowed users to calculate total subscribers, the game’s total now sits at only 1.7 million. While certainly low by WoW standards, it remains one of the largest subscription based games.

Instead of a swift death brought on by a better MMO as many predicted, the game has instead just slowly faded from the limelight. It’s a testament to the game’s “stickyness”, the ability to leverage network effects and player investment to keep users engaged. Players are reluctant to leave because they develop friends in duels, communities in guilds, and accumulate items in quests.

The game created one thing that developers and especially Wall Street loves—predictable, recurring revenue. The subscription based business model in WoW created steady funding for development of later titles like a Starcraft sequel and Hearthstone.

Dog Days

Since then, many other popular developers have shifted toward competitive PvP games like Overwatch and PUBG or, simple niche titles like Minecraft and ARK having shorter development cycles for faster, easier hits of profit

After the Activision-Blizzard merger, the now even bigger giant has taken this path more than ever. The mantra seems to be: more games, lower budgets, more carnival tricks to squeeze out profits. However, this strategy requires developers to continue to pull off blockbusters and puts extreme pressure on each subsequent release. Fans have become weary of loot boxes and constant payment for new expansions with little added content.

Another problem is the sheer amount of redundancy we’ve seen in games. Just like the movie industry remaking existing IP over and over with sequels, prequels and reboots, video game developers have taken the same strategy to multiply profits. For basically every IP you can imagine, a MOBA game seems to be necessary in an increasingly saturated market.

The PUBG-Fortnite lawsuit is a symptom of this lack of innovation at play. Gamers quickly get bored and move on to the next most popular iterations. The “stickyness” factor is very low for these blockbusters that quickly burn out. They’re too easy to copy.

Turning Tide

Not only is the tide turning in terms of profit, it has started to damage many brand’s long-term image. Players have started to lose respect of their once favorite game designers due to their blatant money-grabbing tactics. For example, EA received a huge amount of backlash throughout 2017 due to extreme amounts of in-game purchases in the Star Wars: Battlefront franchise. So far in fact, that the EA CEO Andrew Willson has been practically called out for being just short of Satan incarnate. Hated for popularizing the “loot-box” trend—gambling for in-game items. A tactic which has spread across the AAA title industry. The outcry from players has turned out to be fairly prophetic for the stock.

Gamers are tapped out. Publishers and Developers started listening to investors more and to players less. Lately, the likes of Blizzard, EA, and Ubisoft have all started to catch on. Though there seems to be an endless cycle of people creating great portfolios of ip and then plundering those assets and reputation for short-term gain. There has to be a better long-term solution.

New Era

Game developers such as Blizzard(if not their competitors) will have to go back and take a page out of the WoW playbook. They will have to create lasting content that doesn’t rely on short-term money making schemes and games that are easy to copy. This new era of gaming will be not unlike the platform described in Ready Player One.

Whether they’re aware of it or not, game makers are now in a race to accumulate the largest network effect in the internet of games. Some developers have started to catch on, as many slides like these have made the rounds at conferences and shareholder meetings.

With the carnival schemes losing their cocaine like highs, developers will have to go back to the long term subscription model, and build a neutral system that puts all players and creators on an even footing. They will have to leverage the following for maximum network effect:

Open Economy

Titles that will succeed are those that relinquish control of the in-game economy. Players can take full ownership of past achievements, items, and rewards, they might even be able to withdraw them from the game as a tokenized asset. This will add maximum network effect. The digital world on these platforms will simply be an extension of property rights in the real world. Botting might a problem with this system, but games like Black Desert have addressed this by simply adding it as a new game mechanic. Called a “worker”, players have equal access to passive, in-game farming. Or, something similar to WoW’s Warden software to boot botters can also be implemented and works pretty well. In addition, verification measures can be put in place where it’s really needed. For example, bio-metrics and cryptographic keys.

Massively Multiplayer

Part of the reason why massively multiplayer games haven’t grown much in terms of player size is the high infrastructure cost involved. Also, 3rd party networking solutions required add cost on top of the hardware needed. SpatialOS brings a new solution that allows developers to realize cost savings. One way it saves resources is by breaking up maps into parts and allocating data transfer to adjacent segments first while leaving redundant data to be set aside.

Player Driven

Of course, keeping all these players happy is tough, casual gamers and hard core gamers tend to be at each others throats in terms of what content and style of gaming they want. Developers are forced to choose sides or make disappointing compromises. One way to mitigate this is to allow players to participate somehow in the development of the game. Player driven games are the future.

Interoperable

As the difference to the user experience between systems becomes more and more irrelevant, interoperability is key. Even in instances where limited hardware is being used, such as mobile phones. On these less powerful devices, or where playing main game content is cumbersome, mini games can be incorporated that translate into the full game. For example, someone playing on mobile could play a commander role or air support to compliment team mates on the ground in battle, all on a more simple and mobile friendly UI. Similar cross platform games such as DUST 514 , were an early stab at this sort of specialization by platform. The massive blockbuster game of the future will also have to be integrated with V/R and A/R as adoption increases.

Here, interoperable should mean open source as well because it seems inevitable that development/game engine/infrastructure companies inevitably get taken over by some corporate plunderer or an
indifferent NPC, seeking to gain some kind of legal enforcement at every opportunity. At least, titles should be as open source as they feasibly can be, and we’re making great progress.

Persistent

The Xbox gamer score and PlayStation trophies along with their associated avatars are earnest attempts at increased persistence. This allows players to keep their progress both in each individual game and on a persistent 2nd layer. This layer in the future would be a pervasive universe where titles might only show up as mini-games inside them. Just head over to the arcade to play, some of which might be included in your subscription.

You can expect other developers to take this path of continuing to connect their titles in new and innovative ways. This way you might have something to show for your insane amounts of game play other than getting on a hall of shame for number of total hours played.

Spontaneus Content

The biggest problem of any quest driven mmo is that content takes much longer to develop than it does to consume. Developers can’t keep up. There are two ways this can be resolved that also creates depth and unpredictability to games that mirrors real life.

  • Procedural generation
    • In computing, procedural generation is a method of creating data algorithmically as opposed to manually. In computer graphics, it is also called random generation and is commonly used to create textures and 3D models. In video games, it is used to automatically create large amounts of content in a game.
    • “Butterfly Effect”
  • Emergent generation
    • Emergent gameplay refers to complex situations in video games, board games, or table top role-playing games that emerge from the interaction of relatively simple game mechanics.
    • A.I. or algorithmic generation

SpatialOS and similar solutions also introduce non-deterministic elements to the game play because of how the scaling works. The “butterfly effect” will be a real thing that creates a living breathing world for even single player games.

In No Man’s Sky all environments are procedurally generated, so the environment isn’t set in stone until you actually discover it. This can be taken a step further: Imagine picking up a weapon drop in a game after killing an enemy, but the item is completely procedurally generated. A.I. puts together the name, its color, its shape, its enchantments. The power and allure can be scaled with its chance of dropping.


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