[MUD-Dev2] [Design] Dinosaurs evolve to chickens, MMOs evolve to massively single-player games

[Mike Sellers]

Jeffrey Kesselman wrote: 
> On Wed, Jul 1, 2009 at 11:30 PM, Mike Sellers 
> <mike at onlinealchemy.com>wrote:
> 
> > Mike Rozak wrote:
> > > But my point is that MMOs have a new USP to add: Players not only 
> > > don't have to buy the game from a store, they DON'T have to download 
> > > the entire game before they start playing. And, all game updates (to
> > > content and code) are automagically installed.)And, to top it off, 
> > > players DON'T even have to pay for the game.
> >
> > All of those are operative in browser-based games, some of which are 
> > MMOs or their descendants (mammals, not chickens).  These games are 
> > phenomenally successful --
> 
> Uh... how do you define "phenomenally successful"?

I define this very carefully, actually. Look at monthly average unique (MAU)
user figures combined with very broad-based monetization numbers.  For
example, just taking Facebook (a significant sub-section of browser-based
games but not its entirely by any means), games monetize at about 30c per
user per month (ARPU - average revenue per month), according to Facebook's
figures.  That's not per *paying* user, but per MAU.  Now, most of the
14,000+ games on FB are not monetizing at all.  Of those who are doing this
even somewhat professionally, the average ARPU is about 50-70c per month.
Of the more MMO-like games, the average ARPU is between $1.20 and $1.50 per
month.  These are independently verified figures coming from across many
browser-based games with a time baseline of over a year.  Oh, and the
numbers are definitely trending upward, meaning that as more people join the
pool of those playing these games, the average amount being paid in per user
is going up.

Note that in all these cases, the average revenue per paying user (ARPPU) is
in the $10-30 range (with some outliers on the high end).  What varies more
is the conversion rates -- turning the 90% or so of free players into paying
players.  

The other figures to look at are the MAU per game.  On Facebook, the top
games have over 20M MAU -- that's right, about double what WoW has, in a few
cases more (and just a few months ago, the top numbers were about 10-11M, so
this too is growing very fast).  The top 10 games have over 12M MAU.  The
top 100 have over 500,000 MAU.  The top 200 have over 160,000 -- and at this
level we're really not talking about any games you'd consider "popular."

What this means in terms of commercial success is that the top games are
*conservatively* pulling in something like $10M-20M per month, and even
not-very-successful games are monetizing at a rate of about $100,000 per
month.  

So yeah, any way you look at it these games are phenomenally, staggeringly
successful.  They take anywhere from $10K to $1M to produce, and earn that
back in a matter of weeks or months.  Nor is this the old hit-driven
environment of the past where only the top few really make money (as is
still the case on the iPhone, I might add).  

> Most of these games are NOT giving out actual earnings 
> figures.  And we learned back in the days of the web-book 
> that user account count ona  free service is totally 
> meaningless. It means they visited you once, and ptu in their 
> email, and thats about it.  (And in some cases, not even 
> email is required to initially register.)

Well as you can see above, I'm certainly not depending on "registrations"
(agreed, a pretty much useless number in terms of commercial success), and
thanks to the amount of independent information available online, we don't
need to rely on marketing-spun figures for number of active users or
monetization rates.  

> There is a LOT of smoke and mirrors in this space.  
> Prediction: When it blows away there will be very few 
> companies left that are even positive cash-flow.

That's demonstrably not the case even now.  Do some research into the
companies behind the browser-based games and their investment and growth
curves. Some do have significant investment, but most have very strong
organic (i.e. product-based revenue) growth.  

Mike Sellers