I'm rushing onwriting a crappyresearch paper on MMOs. This was an interesting find enjoy.
Censored by SWTOR forums, Why MMO's fail, my take on Bioware/EA (long read)
Greetings,
Before I begin, I have made a few drunken rants and have many of times, put on my MMO / gamer hat and addressed these forums in a manner that make a ten year old seem like a mature member of civilized society ...
However, I am an Investment Banker specializing in this (Gaming) market segment as well as an attorney admitted to the NJ/NY BAR. (I specialize in IP) and Teach at Fordham Law in the evenings. (Con and IP.) - This is not a boast, it is my job and I dedicate 60-70 Hours a week researching, interpreting, teaching, hedging against and attempting to accurately predict segment shifts of companies that launch titles (such as SWTOR,) of which investments exceed a certain threshold ... in this case over 120m USD on product development, 40m USD marketing, promoting and licensing and at a huge opportunity cost to a company that has thus far failed in the lucrative MMO market (both f2p and subscription based models.)
When one pursues as lofty a goal as wanting to obtain a JD/MBA, they most usually draw from the motivation and determination brought forth from past achievements and merit obtained during previous life events. Mine was 6 years in the United States Army; between the two worlds, I was fortunate enough to be immersed in many different cultures and influenced by many spheres and groups of people I otherwise would not have ever met and conversed with during my time at any one place exclusively.
This being said, the unifying factor has always been gaming, console, MMO, portable.. You name it! Consequently, this is both my Legal and Financial area of expertise ... and has been for awhile now.
I won't make this post too detailed, and I will limit comparisons to other titles, save where needed. Most people understand what metrics are, but have no clue how to accurately read forecasts, revenue projections and initial opportunity costs analyses and the like ... and I know a few wannabe ibankers and people that didn't make it to the second round of interviews at Goldman or (insert bank / PE firm here,) will pour on the hate ... to you I say "bring it on."
I am good at my job, I know what I am talking about and have been spot on with my analysis; having never inaccurately predicted a trend or a reason for a success or demise of a title (as well as communicating the implications it had on a company stock or overall value,) to clients and like investors.
NOTE: DISCLAIMER: This post is in no way giving or soliciting legal or financial advice. My option is that of my own, and you are free to take from this post what you wish, but I am not liable or responsible for any investment or recourse as a result of this post, nor will I be held liable for any gains or losses in position a reader may experience. These are my own opinions and are meant / intended to communicate what I think, based on my experiences and research into this subject.
Which bring me to my point …
Why do MMO's fail?
Simple answer.... Well, for too many reasons to list.
Basic Answer: The following five reasons -
1) Rushed development and release.
2) Developer and Engineer talent pools are substandard.
3) Management team not implementing ideas and “cloning” what works from other titles.
4) Cost overruns.
5) Subscription models pooling from a finite set of MMO gamers.
What do these five things mean?
1) Rushed development and release.
EA has shareholders, and these shareholders were nervous with the idea of the company (EA) launching yet another title (NOTE: so many have failed within the EA architecture.) Many MMO's outside of the EA brand have failed as well ... (Pay to play / subscription models.)
However, WOW brings in 90-110 million a month in revenue, with subscriptions, micro transactions (name changes, server xfers, pets ect,) and EA wanted a piece of the pie, to a tune of 400-650k subscriptions and 2-3 million box sales (including downloads.)
Any risk adverse investor would look at the opportunity and be compelled to at least shoot for the chance of obtaining WOW like numbers, having the marketing and development cost (CAPIQ sets at 105.5 million plus marketing) being paid for upfront by box sales. (Free to play models do not have this upfront cost, and other plans IE:GW2, have the upfront cost but no subscription organic to accessing and playing the game.)
So, we are left with a scenario that any risk assessment officer would communicate as “opportunity cost only.” Meaning that no matter what, as long as development costs remain between (x) and (z) and marketing costs 
are adhered to, that at the very minimum, the 2 million (projected) 2.2 million (actual / current) would roughly equal 70 million USD (after licensing fees, shipping of physical units ((offset by collectors edition and digital downloads)) where just 30-40 million USD would remain to be recouped.
Note: (Approximately, Capital IQ gives a general overview, but specific numbers are not known at this time.)
To make a profit, EA’s “HIT” or “Mark” number of 450k subscriptions after initial sales is widely used and generally accepted as of this post, (some put it at 500k,) but this is month one only, which will likely be higher (initially) and fall off in the first 90 days. Either way, initial development and marketing costs will be addressed, as well as most of the server and customer service (or lack thereof lol) costs be recouped.
This is from a risk perspective of "worst case scenario" and at the opportunity cost - (what could have been accomplished with 100 million dollars and 3 plus years of development time.) The “bet” appeals to the investor and the project gets green lighted because it is hedged against a scenario that all but dismisses the possibility of taking a loss.
NOTE: Do not for one second disregard opportunity cost; these things tend to set companies back in market share and often require further title development to regain consumer confidence and brand loyalty should such a project fail on this grand a scale.
This being said, MMO titles are usually rushed to release after inadequate beta testing and inadequate “bug stomping” by short sighted management under pressure from shareholders (or out of ignorance and/or greed.) As long as the game is playable, they (the investors and “C” level executives,) bank on initial projected sales, and assume month 1 and 2 subscriptions in advance.
SWTOR was a preorder game, launching it time for the holidays to maximize profit and sales. (Which was a very good strategy) Had they held it back, preorders could have been canceled and those holiday sales EA enjoyed might have been lost. So, now we are where we are, with a mediocre launch, (not the best but far from the worst we have seen in our lifetimes,) and playing a game with numerous bugs and “barebones” content ... because much of the cost and time was spent voice acting and implementing a fully voiced MMO ... that consequentially, many people spacebar thru .... So not too sure what to say here ... the cost doesn’t justify the means, in my very humble opinion. However, this was a first for the MMO genre on this scale, there are those that enjoyed it, so kudos for the attempt.
Reflection:
If this were my project, I would have voiced over a) main planet quests and b) class quests ONLY! Dailies and the like would not have voice over’s and would have been more traditional scripted engagements, that of which we are all used to seeing and generally accept in moderns MMO's. This would have saved money, and allowed the developers to focus on other areas, and would have allowed funds and resources to be allocated to other areas of development, resulting in a better initial launch and first impression (which is crucial,) and more content / features available for play today.
2) Developer and Engineer talent pools are substandard.
Well, lets face it, if you are a great developer, engineer just out of school (like a gifted athlete or brilliant scientist or finance guru,) you are recruited / poached form a select pool by the best in the industry and command the highest salary for your chosen profession. This is why some athletes have 50 / 100/ 200 million contracts and some make the league minimum, why the disparity in ibanking is 250k a year to 100 plus million over the same period.... the same applies to talented developers and engineers...
This is to say, “Why work for EA, when you could work for Blizzard, facebook, Zygna or 38stidios.” (To name a few)
Work atmosphere and corporate climate / company culture are also key motivators when being recruited. Outside of this, benefits and the like are all stipulated in compensation packages, of which, respectively, are areas that EA becomes notoriously frugal when compared to competitors. (Google EA work climate for horror stories, but I cannot verify the truth to the story or the claims)
I will say in EA’s defense and to its benefit that they are creating jobs and employ some 8,000 people; in this economy, having a job at all is a good thing I suppose ... but this is getting from the point ... of which the best and brightest people probably do not work at Bioware / EA. I could be wrong, and I am not saying the people they do have are “lame ducks,” I am sure they have some talented folks … I am simply saying that I do not think they attract or retain the best the industry has to offer, and I say this based on the releases and failures I have witnessed for the past few years. (They have had successes and many of these are console and RTS / shooters / single players,) MMOs on par have been disastrous, and these are the pool of developers and engineers I question coupled with project and team leads all the way up to the executives and decision maker’s responsible for a product going to market.
I know of, (not personally) but of most Execs (C suite) officers at EA, (I know where they worked before coming to EA ((sun microsystems, partners at Deloite ect,)) track records and successes ((and failures)) as executives,) and ... well, I am not too impressed with the talent pool in the upper tiers of the companies management either. Not having the foresight and flexibility to float subscription models to successful micro transaction models of failing titles and not switching paying to f2p models on many other titles that overtime failed is a huge failure. An even bigger failure was not capitalizing on casual gaming and social segment gaming (allowing companies like zygna to achieve a higher market capitalization, for example,) is a complete and utter failure.
From a company that had to lay off 1500 people in 2009, and a botched acquisition of playfish (for nearly 300m USD) that same year ... I view as a dismal failure, and relate this to squandering the opportunity to leverage that buy into a mainstream and social segment that could have potentially doubled the companies market share. A talented management team with sharp market awareness that were in touch with its customer base would have taken the initiative and capitalized on a huge opportunity, that’s now lost at a loss to the shareholders and those vested in the interest of Electronic Arts. (in my humble opinion.) (Zygna is the company that just launched a very successful IPO and has titles like Mafia Wars, Farmville and the like on Facebook.)
Again, I am not saying the worst or bottom barrel folk’s work at EA, but the best and brightest (those responsible for many of the successes in the MOBA, MMO and RPG segments,) do work at other companies. (Blizzard, 38 Studios, Riot games, to name a few.)
3) Management team not implementing ideas and “cloning” what works from other titles.
This is fairly obvious to anyone playing for two or more weeks. Here is a pretty straight forward list of changes that need to be made, should have been addressed and worked thru before launch, and a list of things that should be in the game that aren’t, and may never well be.
* Ability Delay (auto attacks are one thing, but combat should be fluid.) plays too much like KOTOR for Xbox or PC that launched years ago.
* GTN (a user friendly, easily searchable database.) No limit on posts, better categorizations, especially with armor, promote a free market / floating economy.
* Customizable UI (to what degree is questionable, but static is never good for the gamer, options are usually better.) Metrics, (meters) and more detailed character customization and implementation of graphics for characters (Flip hoods, huge butts, small miniature walking people in class quests, not being able to hide companion head slots ect ...) All needed to be addresses for the benefit of the player before the game was released.
* A tiered gear system, and reworked availability / access to it: Tionese for example, minus maybe the BP, are essentially worthless because the champion PVP gear is better (and easier to access,) and the Columi gear can be acquired from HM FP's. So much for the tier 1 set!
* Faction Imbalance, server imbalance: Classes should be mirrors (by faction,) and steps should have been implemented, (and metrics monitored,) to ensure the ratio's were at the very least comparable on both sides with regards to population. These issues translate into many other problems, especially in PVP and world PVP. (Well lack of world PVP with Illum cap trading, yet another short sighted game flaw.)
* Player housing - Ships were interesting, but we can’t customize them, we can’t craft or buy furniture, or get trophies (xyz lords saber, world boss head w/e, like you could in LOTOR.) Many players enjoy these types of perks, while others may not care but wouldn’t be opposed to them either. Keep in mind, there are hardcore players, casuals and everything in-between, and little neat / fun / niche things like this appeal too the majority in my experience.
* Space Combat – Some are great, gets repetitive. Photon Torpedoes need a rework. Space exploration and instant travel (bypassing time sinks that are orbital stations,) should be worked into the game.
* Security – Too much … and the 18 hour Fleet pass (1000 credits from security vendor … is the 18 hour pass to promote obtaining a security key?) … really? Fix the CD on fleet pass!
* Repair costs: Are too high.
* Dual Specs - need to be implemented in this and in pretty much any MMO that uses a hybrid class or the healing / tank / dps model.
* Talents - Too many and too disorganized. No macro support, no bottom quickslot (3rd quickslot) just compounds the issue.
* Saber / Blaster color: Locking light side / dark side is ok, but you need to address and should have addressed neutral. Further, Red / Blue / Green / Yellow / Orange / Magenta / Purple and Cyan should be available to every class and every faction. Blue / Black core and the like is fine being faction locked, if it is even necessary at all; but locking primary colors is more an annoyance and takes away from Jedi wanting to immerse themselves as a Mace Windu protégé or simply wanting to wield or fire something purple / cyan (for example.)
* Crafts: rather than nerf biochem, make the reusable packs usable by everyone. Make special implants for biochems, and special stat imbued advantages inherent in any craft that only a person of the craft in question can utilize. The stat gain should be fairly balanced no matter what profession is chosen, or, make biochem a 4th skill set that every can learn if they so choose. Either way, nerfing this is both short sighted and a failure on the developer. Crafts in this game need to have more meaning and better gains / rewards initially and end game. Further, the reverses and misc craft types are too numerous, and need to be streamlined. (3 tiers of crystals / packs ect) not the multiple tiers that clutter crafting panels currently. The system of crafting is fine and interesting, but the implementation and impact is sorely lacking.
* Swimming / Fishing / Flying mounts: Fishing and hunting ect would be cool. Swimming is kind of standard along with jumping. This is the future … not flying mounts is a bit strange.
* Class balance: factions mirrored, dual specs and better implementation of DPS and heal balance. No auto attacks DW'ing (sent for example.) is fine, but requiring a 2nd saber doesn’t really feel like much, having the 2nd saber mean something a bit more and do something a bit more would be better satisfying. Guardians, threat and ability to AOE tank ... should have been addressed, all dps and tank classes and heal classes should be able (on the whole) to accomplish the same feats by different means. Bringing different utilization and buff are fine (and preferred.) but from a content perspective, no one class should be heavily favored over another. Also, would it have hurt to make the single sabers a bit wider since they don’t get a 2nd or double? More detailed weapons? Or a shield / focus / generator graphic?
* Ranged / Melee balance: This charges into the buggy raid encounters and mechanics. Many of which adversely effect melee.. To a detrimental degree. I am disgusted and wont comment further, but this should have never made it thru beta (HM/NM SOA for example.)
* Graphics bugs: Too many to list.
* Token gear system: No buyback feature is a mistake / oversight and having all tier be token specific takes away from the fulfillment of acquiring loot from a defeated foe. Mixing the system for specific loot would be ok, but to the degree implemented in game currently is not preferable.
* /Roll: Where is it?
* Pazak: Why not?
* Swoop racing: Why not?
* Companions: Some classes have that useless one, too reliant on a healer in many cases (or strongly preferred,) to the point where 2 or more are never used (or rarely.) Gearing them is ok, but the slots should have been limited, and upgrades not something that can be taken from raids . FP’s that other PC’s could use. (Companions specific loot (outside maybe accessories,) would have been the way to go, such as the moddable weapons from the Belsavis daily.
* Queuing FP's or Raids (errors getting in, pre-reqs .. too confusing and buggy ATM, no excuse for it in 2011/2012)
* No LFG … seriously?
* No battle groups cross server pvp/pve?
* Sharding: Is fine, how Bioware did it was near broken and did not promote community.
* Mounts: 90-110? 90 initially was fine, 110 is lack lusters, 90 / 120 / 150 or the like would be more acceptable and justifiable for the cost.
* Art work on some sets: Debatable, but most I think would agree sent sets are very bad 
point is, with too many robes and sabers ect.. The feel of an epic look and identifiable feature (like whoa that person must have did x y z raid) is non-existent.
* Customer service: 24 hours for a ticket is pushing it, speaking to a live GM on major issues should be standard. 4 days waiting for an assistant droid to respond is just sloppy.
* Community: Lack of moderation as an excuse for no server specific forums is unacceptable. Not wanting to create a community on the forums is once again unacceptable. Server forums are pretty standard and should be with this game. Let select players moderate and police themselves to a degree, works fine for most other games.
I am going to stop the list here, but I could go on … My point is simple, that there are things the developers could have (and should have,) implemented in the game and tested in the game, that they unfortunately didn't. When you have this much potential and 100m plus sunk into a title, these listed features should have been no brainers ... and aren’t even in the game.
4: Cost overruns.
Cost overruns are common and may or may not be a factor for this title. If they are however, (and should subscriptions tank,) then changes and fixes in the game will probably take longer to be addressed. Additionally, many larger "nice to haves" may never see the light of day. Reputable companies manage the expectation from launch and thru the development process (patches, expansions or simple fixes.)
EA has failed (for the most part) in this regard (managing expectations.) Talking to your customer base, being honest and owning up to mistakes do wonders for breeding loyalty and inspiring patience; two factors any title needs when working thru MMO's of this magnitude.
5: Subscription models pooling from a finite set of MMO gamers.
Metrics show us that 24.5-25 million MMO players exist in NA/EU (45-47m online gamers, but many fall into the f2p and social segments.) (Think facebook games, Kongregate / New grounds / Armor Games Flash titles.) Of the 25 million, World of Warcraft “owns” 8.5 million. Titles like Aion, LOTOR and the like combine for 6.5 million respectively. This leaves a pool of approximately 10 million, of which 9.5 Million are dedicated to f2P / casual titles and MOBA genres (League of Legends / DOTA ect.) and console RPGs with multiplayer (and DLC) functionality. Less than 500k swing from titles, break from gaming, stop playing or do thing (like die, go off to war, grow old.)
My point is that they (the 500k) are not at the time of sampling, involved in an active MMO, and may or may not return (obviously the dead will not return.) .. or will they? The battle here is pooling from a finite set of players (mostly WoW) to pay to play a title, in our scenario, SWTOR by EA/Bioware/LucasArts (TM / copyright yadda yadda.)
Most MMOs take on a f2p / micro transaction model, or upfront / micro transaction model, but very few attempt an upfront subscription model. This is mstly due to the fact that the pool is so finite, and dominated by WoW and niche segment titles (FF11, Aion, LOTOR ect,) and the fact this pool is ever changing (Diablo 3 will pull from SWTOR, WoW, AION ect) the next “big” thing will pull from x y z titles ... predictive analyses becomes difficult and the continuity of players subscriptions usually falter on any set timeline. Meaning, that the pay to play model is very difficult to maintain for new / modern title trying to compete for a finite number of customers in a segment already dominated by a major title.
Conversely, this is why the MOBA genre (Dominated by League of Legends) – (Riot Games) have experienced so much success and growth. MOBA inspired companies have figured out a genre / market that could simultaneously pull from various sources on a revenue model that relies on micro transaction (with LoL, this is purchasing RP to buy champions and skins to customize your appearance with your selected hero) which (save skins) could also be earned in game (along runes, things that make your character more powerful,) which can only be earned by playing (cannot be bought,) thus achieving not only balance in terms of staving off the (pay to win) stigma most other companies struggle with, but because the game is free to play, have enjoyed substantial growth and an influx of customers willing to pay money for things that only have a functional or aesthetic appeal. WoW does the same with vanity pets, name changes and server xfers ... people will pay for these things and do pay for these things. SWTOR should exploit this model to a degree and may untimely need to look into these revenue sources to boost the company bottom line in the near future.
Server xfers and name changes should be a premium service anyway, (with certain limitations of course,) as it befits the player and is a source of additional revenue.
This is all more complicated of course and multiple models / projects and analytics are done addressing these issues all of the time ... but one of the things to be very cautious of are the company’s index and revenue reports (especially those from July 2011 to Present thru April 2012.)
I will post again after April, but coupled with metrics from Capital IQ, I can pretty much accurately predict the overall population of the game, revenue shares and ascertain the future of the game given the data on hand after 1 April 2012. (Given the limited information available now, but credible to the same degree, I can make broader predications that have, in the past, turned out to be spot on and on the right side of accurate predication based on data compiled from Capital IQ and other business intelligence services I have access to performing the scope of duties my profession requires of me.)
Needless to say, in its current state, many people are unhappy (with certain game aspects,) while others are enjoying it, and still others that have enjoyed it for awhile are becoming bored and ready to move on. (This based on personal experience and many different people I have encountered and traded conversation with both in game and in real life.) I do not think the game is experiencing growth, and I think after 90 days subscriptions will fall, however, at what rate will depend on the changes they implement between now and that time.
In closing, I want to say that I am a person that wants this game to succeed. Not because I am an EA/Bioware fan (I’m not, though Dragon Age was fun,) but because I love Star Wars. I grew up with it; I like MMOs and I vested in this title both my time and money. I had, thus far, unmet expectations, but a reasonably good solo / first person experiences with the story and have experienced success and some degree of satisfaction with raiding and pvp. This is a game I had high hopes for, and a game that I see with so much unfulfilled potential in ... potential that may or may not ever be realize for the reasons I listed in my post, and for many other reasons myself or those reading this are still unaware of.
Thanks for reading, best of luck
Sinius
I am sending this to most game magz / blogs
I am fed up with the customer service and censorship / moderation of these forums (SWTOR forums)
Tried to engage the community in a constructive debate and that is what I get for my time. GG lol!
In this day and age, with the Internet, ignorance is a choice! And they're still choosing Ignorance! - Dr. Filthy Frank
