This is my first column for DailyGame, and I’m very excited to periodically write for the site about a range of topics concerning home consoles, MMOs and the overall videogame industry. So let’s get to it and talk about the industry’s biggest combined superstar / cash cow: World of Warcraft.
Anyone who follows the MMO genre and PC gaming knows the second WoW retail expansion pack, Wrath of the Lich King, is expected to ship this holiday season. While people are excited about the expansion itself, its release begs the business-side question: What impact will it actually have, if any, on worldwide WoW subscriptions? The answer may surprise you.
Let’s look at what we know about WoW subscription numbers to date. It’s fairly well known that MMO lifecycles have three general phases of subscription growth: acquisition, plateau and decline, as shown below.
The acquisition phase starts with launch and is marked by a rapid rise in subscriptions. The plateau phase is that literal plateau portion of the top of the chart, where the number of new subscribers each month roughly equals those who stop playing. Eventually the game starts to consistently lose more subscribers than it adds each month, thus putting the game into the decline phase, as shown by the accelerated drop in subscriptions to the right of the plateau. That decline usually gives way to the flat area at the end, a steady state that can go on for years before an MMO finally gets shut down. Like The Simpsons on TV, a once-great MMO will stay alive as long as it remains sufficiently profitable.
If the chart above shows a typical cumulative active subscription curve for an MMO, what does WoW’s subscription curve look like? MMOG Chart has culled exactly this data from Blizzard press releases and various pieces of information about subscription estimates in North America, Europe and Asia.
According to the data from each of the three regions, subscriptions have been growing since WoW’s November 2004 launch, except for a slight dip in Europe in late 2005. Growth in Asia has far exceeded North America and Europe, which is not surprising considering China’s broadband penetration growth and Asia’s history of large MMOs before WoW, particularly Lineage. However, WoW’s initial growth finally slowed by mid-2006, at the time appearing as though WoW was headed for its plateau. But with news of The Buring Crusade expansion coming in January 2007, subscription numbers picked up again in the second half of 2006, a growth pattern that continued through 2007, though not as fast as before.
Aside from the assumed effect of The Burning Crusade in January 2007, each holiday period (2005, 2006 and 2007) so far has seen a boost in subscriptions as Blizzard has been very aggressive with advertising and PR around each holiday period in WoW’s life.
What we know from examining WoW and other massively multiplayer games is that once they leave the launch phase, the only thing that usually increases subscriptions — or at least slows the churn — is the release of new, meaningful content. This content is either in the form of patches, such as the WoW 2.4 patch this past March that included a fairly significant amount of free content, or retail expansion packs such as The Burning Crusade.
Based on the MMOG Chart data, it’s hard to argue that WoW has reached the plateau phase. After all, the game grew by roughly 2 million worldwide subscribers in 2007. We don’t yet have specific information about subscription numbers in 2008, but we do know a few things:
- WoW patch 2.3.0, released in late 2007, reduced the amount of time and effort it takes to level a character from 20 to 60, thereby putting a fairly significant dent in the “grind” needed for existing players to level-up additional characters, or for a new subscriber to reach the final stages of the game, where the most popular content is available.
- After the March 2008 release of the WoW 2.4 patch, Blizzard announced it would not release any other significant free content updates, because it would be focusing its resources on releasing Wrath of the Lich King by the end of 2008. This might support churn, at least temporarily, as subscribers who already have maxed-out Level 70 characters might feel less compelled to continue playing until the release of new content.
- Age of Conon, a competing fantasy-based MMO released by Funcom in May, is widely believed to have lured tens of thousands of players away from WoW, at least temporarily.
- Blizzard made WoW available in Russian in August 2008, opening the game up to a potentially large new audience with a rising gaming industry.
It’s clear that Blizzard is still aggressively trying to grow the WoW subscriber base. One good indication of exactly how much growth there has been in 2008 is available from Warcraft Realms, a site that tracks player activity each month since May 2005. Take a look at the chart below for the combined U.S./Europe player base:
Don’t look at the magnitude of the numbers, as it is a sample using a volunteer census method. Rather, look at the shape of the chart. Amazingly, it mirrors the same growth pattern from the game’s launch to December 2006. The January 2007 release of The Burning Crusade saw a huge increase in active players, but this growth almost completely receded by the following Fall, indicating that perhaps the expansion simply brought back many lapsed WoW subscribers. The next peak, in early 2008, coincides with the annual Blizzard holiday WoW marketing blitz as well the previously mentioned 2.3.0 patch.
After all the volatility in the Warcraft Realms chart since The Burning Crusade’s release, the total active players (again for EU + U.S.) has fallen to only slightly above where it was in December 2006, before The Burning Crusade launched. All this chart estimates is the number of active players; it does not necessarily reflect a drop in subscriptions. Given how the growth has not been steady since The Burning Crusade’s release, it does give credence to the idea that WoW has entered a plateau phase again. And without major content releases, WoW playing activity is now returning a “base” level, possibly an indicator that overall subscription levels would have hit the plateau well before now if not for such releases.
Based on the semi-scientific analysis of the above data, the current 10+ million subscriber base and how the market reacted to The Burning Crusade’s release, it is quite possible that Wrath of the Lich King will sell at least 1.5 million copies in the U.S. alone in the first days of release, and an additional two to three times that number in Europe, Asia and the rest of the world combined. As for what Wrath of the Lich King will do to subscription levels, it will certainly retain most existing subscribers, and it will likely lure back lapsed ones as well. It’s very likely we might see WoW pass 11 million worldwide subscribers by mid 2009. The question is, how many of them will truly be new, and how long will they stay?
What’s all but guaranteed is that a huge spike in the number of active players will follow the Wrath of the Lich King release, and subscriber numbers will rise as well. But given what we’ve seen so far in 2008, it is likely that active players might level-off again. If at the end of 2009 WoW’s total subscription numbers are less than 10 percent higher than they were when 2009 started, I will submit that WoW will have officially entered its plateau phase. But even if that transpires, and if after four to five years WoW has declined and leveled-off into a steady state of a mere three or four million worldwide subscribers, it will still be a cash cow.
— Jeremy Miller
Jeremy Miller is founder of Strategic Game Consulting, a specialized company focused on helping video game industry clients create higher selling products though industry leading NPD data analysis, game accessibility consulting and individual and team Executive Coaching services.