Analysis of MMORPG Billing Structures

Gene Hoffman, of billing and fraud management powerhouse Vindicia (used by several big-name MMORPG companies), has some commentary and analysis on MMORPG billing structures over at Gamasutra. (Thanks Kotaku for the tip).

It’s a very interesting read as to how the publishers decide to set their pricing structures, and what considerations guide them when choosing between competing offers.

So while the overall game experience plays a major role in player retention, specific payment issues also come into play, says Hoffman: “Our experience has shown that focused attention on minimizing payment failures can lead to a six percentage point increase in retention.”

Assuming 300,000 subscribers who each pay $15 per month for an average 16 months, simply taking additional measures to ensure customers can pay easily — and that they do — can drive an additional $4 million in revenue, according to Hoffman.

Hoffman also addresses multiple accounts.

Hoffman notes that subscriptions have a downside: When it looks like there’s a fixed monthly price until eternity, even a game’s most dedicated fans can eventually balk. Many publishers entice retention with discounts for longer commitments, but Hoffman also suggests that creating a demand for multiple subscriptions per user can prolong the average customer’s lifetime value.

This last sentence is a key point. Many games, especially older ones with dedicated followings, can benefit greatly from simply allowing multiple subscriptions per user, and creating incentives to do so. For instance, an older MUD that I still play, Dragonrealms, I have three separate accounts, in order for me to be able to heal and resurrect my main characters. I have an incentive to do so (though, certainly one that most modern MMORPGs can replicate due to technical reasons of running multiple game clients). With games like EVE that support a certain level of automation for utility accounts (harvesters and miners, etc.) , there is an incentive to have a second account running on a second computer. I don’t have any problem with paying a second monthly subscription fee for these benefits. Hopefully, more publishers will see the light and begin providing these incentives.

Popularity: 11% [?]

7/25 Short Cuts

Every now and then we’ll get swamped with news that doesn’t quite merit its own post, and we can combine it into a group posting. We call these “Short Cuts”. Without further ado:

• Microsoft to take a larger cut on better performing XBLA sales as a “marketing fee”.
• EVE Online announces unofficial ISK and Time Card seller has been scamming players. Make sure you buy from CCP’s official retailers for time cards.
• Speaking of RMT, Live Gamer, a legitimate RMT company that is authorized by some MMO’s to conduct official transactions, hires a Finnish  “Virtual Economist” to support their operations. Live Gamer aims to legitimize the RMT trade through stability and regulation.
• Team Ninja head Tomonobu Itagaki increases his demand in his unpaid wages lawsuit against Tecmo to approximately $1.6 million, and has provided evidence that apparently damages claims by Tecmo chief Yoshimi Yasuda that certain bonuses were never promised to Itagaki. Joystick has a picture of the rad-looking Itagaki clad in black leather and dark sunglasses.
• Gamasutra has a post on telecommuting for industry employees that touches on some of the legal aspects involved. (i.e. if you offer it, make it available to ALL employees, document everything, practice proper emailing/communication techniques to avoid temper flare-ups that can lead to employment suits, etc.)

Popularity: unranked [?]

EVE Online leadership compatible with businesses

Forbes.com has a very neat article on leadership qualities in the MMO EVE Online, and how they are compatible with business leadership in the real world. The irony, of course, is that “guilds” in EVE are called “corporations”, and “groups” are called “gangs”, giving it a very similar structure to how corporate America runs itself. For those of you unfamiliar with EVE, it is a very PvP heavy game that rewards large fleet battles where players are encouraged to fly support ships, and not just the biggest baddest bruisers they can fly. Corporations can register a headquarters on a certain station, and collect tax revenues, and often have outsourced mining and industrial operations, as well as hiring security forces to escort their logistical operations. It’s a very management heavy game — the saying goes that EVE is best played with a spreadsheet rather than a powerful graphics card — but it shows just how accurately games can simulate a market economy and business systems.

From the article:

Sometimes, reality mimics fiction–or at least videogames. CCP, the publisher of EVE, formed a nine-member Council of Stellar Management, to which the players elected Conover. The council functions much like a board of directors for the game. CCP even hired an economist full time to study the behaviors of EVE.

Conover admitted that while the game’s business environment, set in outer space, behaves like one in the real world, there are some major differences. “EVE” and most games like it encourage risk-taking, but “you can take risks in a videogame that in business [would make] the shareholders revolt,” he said.

Interestingly, some of the comments to the Forbes piece are critical of Conover, CEO of the corporation “Goonsquad”.  The criticism exemplifies the public image problem that many real world corporations have. I guess even the comments prove Forbes’ point.

Popularity: unranked [?]