Welcome back to the Dungeon! Many apologies for the lengthy period of time between updates to this blog, but I've been working about 70 hours a week for the last 2 months, and finding time to do the important site work, like updating the site and handling some light moderation work has left little time to do the "fun" things that I really enjoy doing here at DCUO Source, i.e. posting on the forums, writing the Dungeon, and creating the Weekly News Update video. Now with apologies out of the way, let's talk about the newest MMO from SOE that has released on this side of the Atlantic, Free Realms.

Now, before we begin, you might be saying, "why the hell do we care about Free Realms?" The answer to that is simple...it's currently the second largest MMO in North America, with more than 3 million players. (Source: http://www.freerealms.com/article/detail.action?articleId=116). Not only is that an impressive number of registered users, the time in which it took to get to 3 million is equally impressive (the game was launched April 28th, 2009). For those of you that don't know, Free Realms is one of the growing number of "free to download/free to play" MMORPGs that are gaining in popularity world-wide. The catch? If you want to access all of the content, features, items, etc., you have to either pay a micro-transaction fee, or purchase a monthly subscription to the game. Games created specifically for children (Webkinz.com, Buildabearville.com, and ClubPenguin.com) rely on these models. Both Webkinz and Build A Bear are micro-transaction models, whereas Club Penguin is a subscription based game. (Who knew I'd EVER talk about Webkinz in a blog by the way). The significance of these prior pseudo-MMOs? These companies are making money hand over fist through these models, and the big boys have begun to take notice.

Enter Free Realms, which has a hybrid micro-transaction/subscription model. For $4.99 a month, Free Realms players gain access to 3 playable character slots as opposed to 1, have the ability to take on 5 unique jobs not available to free players, and have approximately 400 items/quests available to them that free players do not have access to. That's a huge amount of content that is available only to end users that pay the $4.99 monthly. In addition to the monthly subscription, Free Realms offers a number of items in-game that are made available only through the purchase of SOE's virtual currency "Station Cash." (Station Cash is akin to Microsoft's Points system on XBox Live, or "Lindens" in the wildly popular MMO Second Life). To top it all off, SOE also employs a unique type of micro-transaction in which you purchase either real world trading card packs based on Free Realms, or virtual trading card packs (similar to how one would purchase actual card decks/packs to play Magic the Gathering in person, or virtual packs to play Magic the Gathering Online) and included in both the real world trading card packs, and virtual trading card packs, is one card that grants an in-game reward. Through the use of the three revenue generating models indicated above, SOE has quite the potential for a lucrative revenue producer in Free Realms.

What if Free Realms weren't free to play? What if Free Realms had chosen to go with the tried and true model of MMO revenue production, and simply charged everyone who wished to play an initial "purchase" price, followed by a $15 monthly subscription fee for monthly pay? Does anyone believe that Free Realms would have hit 3 million subscribers at any point during the life of the product? Let's quickly take a look at Warhammer Online, which is the last major MMO released prior to Free Realms. EA-Mythic doesn't release statistics in regards to the number of users that currently subscribe to Warhammer, but at one point, there was discussion that the high point of actual subscriptions was close to 750,000. A number of Warhammer's servers have since been shut down, so we do know the number has decreased dramatically. In fact, it has been reported that as many as 450,000 have quit playing the game, and the number of subscribers as of January 1st, 2009 was actually right around 300,000. (Source: http://www.massively.com/2009/02/03/breaking-300k-warhammer-online-subscribers-as-of-december-31-2/). Let's take a moment to extrapolate the data. Assuming a uniform loss of subscribers per month since the game released (the game released September 18th, 2008), and knowing that Warhammer lost approximately 100,000 subscribers per month, we can roughly estimate the average number of subscribers from the date of release to today's date to be 375,000 or so. Each subscriber pays at the maximum a $14.99 monthly subscription rate (other gamers pay for many months in advance and received reduced monthly subscription rates) so we can extrapolate that data as well, and make a very rough estimate that each subscriber pays $13.00 monthly on the average. So, the average monthly revenue produced for Warhammer Online each month over the course of the game's life is $4,870,000.00 per month. What about Free Realms? We have no concrete data to venture a truly educated guess at, but let's just assume that only 1 out of 3 Free Realms players pays the monthly fee. Let's further assume that only 1 out of 5 gamers make $5 in Station Cash purchases monthly, and only 1 out of 10 players purchases $6 worth of trading cards per month. So, taking those numbers into account, Free Realms produces approximately $5,000,000 in revenue from subscriptions, $3,000,000 in micro-transactions, and $1,800,000 from the trading card game. Total monthly revenue? $9,800,000 monthly, or more than double that of Warhammer Online.

Suddenly, the significance of the micro-transactional model on the MMO industry becomes clear. Gamers that were turned off by large monthly subscription fees, and gamers that had been shut out from playing MMOs due to not having credit cards are suddenly now viable end users. Furthermore, the notoriously picky console gaming crowd, that until the current generation of consoles essentially shunned ideas like micro-transactions and add-on content, have grown accustomed to micro-transactions in the contemporary gaming era, paying huge amounts of money for new songs on Rock Band, and a substantial sum of cash for add-on content for games like Fable 2 and Fallout 3. That being said, console gamers have still not opened their wallets for MMOs with subscription based revenue streams, as games such as Final Fantasy XI never achieved the type of success with North American console gamers that had been hoped for.

So, what does this mean for future MMOs, and DCUO specifically? Based upon the number of trading card games based on current SOE MMOs, a trading card game based on DCUO is almost an absolute lock. I also believe that a hybrid subscription/micro-transactional model is a lock. What form the micro-transactions will take, and what will be included in the subscription is completely up in the air, but what we know is that MMORPGs must evolve, and Free Realms has proven just how profitable varying revenue streams can be. I anticipate that not only will SOE adopt the subscription/micro-transaction/trading card varied revenue stream model, but the new MMO in development by Blizzard, and the MMOs in development from Cryptic/Atari will adopt this same model. Games have changed dramatically over the last 2 decades. Yars Revenge was a great game for its time, but it would pale in comparison to Gears of War 2. Expecting the games to change, but not the gaming industry in general is simply not fair to the industry, and it's time that gamers realize that along with improvements in graphics and stories, come improvements in revenue streams as well.

This is Deathstryker, thanks for spending some time in the Dungeon!