[MUD-Dev] Re: CoH and others (was Cancellations: ...)

[Mike Rozak]

There's been a some of debate about how long players will stick with
CoH, and about whether CoH would have been better as an offline game
with an optional online component. Last night I thought of a
different take on CoH:

Would an offline CoH (with optional online play) be more or less
profitable than than online-only CoH?

I put together some numbers. (NOTE: These are guestimates. If you
disagree, change them and see what happens to the final results.)

  Income generated by CoH per customer:

    - $15 from the retail box

    - Online CoH gets $15/month, BUT I'll assume $10 of that is
    spent on servers, bandwidth, and support. I'll also assume that
    players stick with CoH for 4 months, making 3 payments of
    (($15-$10) = $5) before they leave.  (I recall that a
    traditional MMORPG aims for 8-12 month of play, so this assumes
    that CoH's shallow gameplay can't hold customers.).

    - Conclusion: Online CoH brings in $30 per customer, offline
    brings in $15 per customer.

  How many customers?

    - I recall hearing that CoH had 200K users. Since it's still
    early in the product's lifespan, I'll double this, to guestimate
    400K customers over the product's lifespace.

    - Recently I heard that the software industry's official piracy
    rate is 38%.  I assume game piracy is higher. I read (online?)
    one developer's comment that his game from the late 90's had a
    confirmed 7:1 piracy rate. In order not to be too controversial,
    I'll assume a 50% piracy rate. This means that while online CoH
    may sell 400K copies to 400K users, OFFLINE CoH would have sold
    200K copies to 400K users.

    - The online nature has pros and cons: It's more expensive and
    connecting has its drawbacks. But, playing with other people is
    more fun, and online-games are still "trendy". (For an example
    of trendy: I suspect Myst got a boost in game sales because it
    was one of the first games to use a CD-Rom, AND it came out just
    as CD-ROM drives became ubiquitous. As a result, it used a new
    technology that computer users wanted to play with. If it had
    come out a year later its sales would have been smaller.) I'll
    assume that the pros and cons balance out. One could easily
    argue a 2x swing in either direction.

    - Conclusion: Online CoH sells 400K copies x $30 = $12M
    income. Offline CoH sells 200K copies x $15 = $3M income.

  How much are development costs?

    - I haven't heard numbers about CoH, nor have done any searching
    on the topic. Let the CoH development cost be $N.

    - Online games are more expensive to develop than offline. I'll
    assume offline CoH would cost 1/2 N.

    - Profitability = Income - Development costs....

Thus, if CoH cost $5M to produce, then offline CoH would cost
$2.5M... doing the math results in a profit of $7M for online CoH
and only $0.5M for offline CoH. The ROI is $7M/$5M = 140% for online
CoH, and $0.5M/$2.5M = 20% for offline CoH.

If online CoH costs $10M, profits are $2M. Offline CoH's cost is
then $5M, so LOSSES are $2M. ROI is 20% for online CoH, and -80% for
offline CoH.


With numbers like these (which are guestimates) management won't
really care if players only stick around for a few months. The
online version of CoH appears to be more profitable than a
hypothetical offline version.

By the way, if anyone has more accurate numbers than my guestimates,
or a more accurate model, I'd like to know so I can see how they
affect profitability.

Mike Rozak
http://www.mxac.com.au
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