Elder Scrolls Online Monetization

Elder Scrolls Online Monetization
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It’s that time again; another new MMO is set to release. Elder scrolls online monetization is the new question in our mind! Every time one of these enormously budgeted behemoths comes out from under the covers there are two large groups asking very different (yet related) questions: Does it suck?” and “How will it make money?”. Obviously we are here to discuss the second question. Elder Scrolls Online is particularly interesting to me not for the game itself, but because of how bold its monetization structure is. Why don’t we start by running down the list of facts?

Premium cost $60
Upgrading to the special edition $20
You must pay a monthly subscription  $15/month
There is a micro-transaction storefront  +??
Minimum First Year Cost 240

History lesson! The year is 2008, there is only one MMO and it is taking the world by storm. It will soon enter its third expansion. No other MMO could stand a chance. Many try; none make any impact on World of Warcraft’s subscriber base. Fast forward. Blizzard introduces “sparkle pony” available on the battle.net shop for a one-time fee of $25. We now have the first instance of a game using all three monetization wdstrategies for the same title.

World of Warcraft did it, why can’t ESO? Now that we have all the exposition taken care of, we can start to talk about the interesting decision taken by ESO. The answer to the question is “we’ll see”. World of Warcraft initiated their micro transaction storefront at one of the highest points in its subscriber history. It also positioned its MTX model when there was no significant competition from other games in the genre.  They took it slowly and brought out cosmetic items only (a rule I believe they still follow). The importance of this has been highlighted in other articles on the website. This has been highlighted as a great long term policy for MTX.

ESO has done a couple things “wrong”. The option to buy the special edition of the game is a false option if you plan to do specific roles at max-level (tanking). The special edition comes with an exclusive race option that has a much more desirable bonus for certain specializations. The bonus is so large that serious raiders must have the special edition in order for groups to consider including them.

A $60 price tag congruent with a subscription model is very rare these days. The days of World of Warcrafts dominance are over, and many free to play games have moved into the spotlight. This has obviously had a downward impact on the perceived price you can charge for a game.

Finally ESO has implemented plans for a MTX shop from day one, without first maturing and developing their player base. The shop’s existence would not concern me so much if it were taking a conservative approach to the virtual goods available. Remember reading about Dungeon Keeper’s Microtransactions? It seems that earning enough in-game currency to purchase a mount is a difficult accomplishment and is seen as a great asset once unlocked. Don’t worry though, you can choose to simply buy the mount via mtx.

How does a big budget game with such hype make such obvious mistakes? They haven’t. Every decision by ESO has been a deliberate strategic maneuver. ESO is betting that the strong brand and glowing fan adoration from previous Elder Scrolls games will provide an above average number of whales. I hesitate to use terms such as ARPU or ARPPU because their meaning changes once we layer multiple pay structures on top of each other.

Another way to break this down is to reverse engineer time to profitability. We need to estimate some variables.

Now how many people do we expect to play this game? World of Warcraft still holds the crown for most played mmo and its subscriptions are down to around 7 million. I estimate that an optimistic subscriber base at launch would be around 1 million people.

1,000,000 X $60 = 60,000,000 initial revenue (NOTE: I am purposefully excluding special edition upgrades for now)

Game budget of $300,000,000 minus $60,000,000 initial revenue = $240,000,000 deficit

$15/month per player X 1,000,000 players = $15,000,000 per month

$240,000,000/$15,000,000 = 16 months

Every single player who purchases the game at launch must play for 16 months before the game has broken even. No wonder ESO has pushed to squeeze every bit of monetization out of their players as possible. Breaking the numbers down makes it easy to see that even a $60 box + $15 subscription means this game will be hard pressed to make money. Even if we adjust our already optimistic player base upward by 50% we are dealing with 9.3 months to profit. These are completely unrealistic expectations. Good luck ESO, your bold monetization strategy looked almost crazy until we realized it was actually just desperate.

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