f13.net

Richard Garriott, the Executive Producer for Tabula Rasa at NCSoft, contacted GuildWarsGuru.com's Billiard tonight in order to clarify a small matter for Guild Wars players:

    A note to Guild Wars players from Richard Garriott

    Recently, I was surprised to see a quote attributed to me describing the Guild Wars episodic sales model as a "failed experiment." Obviously, that is not true. Guild Wars is NCsoft - North America's flagship product in terms of both number of customers and total profit and thus by any measure is a resounding success. I personally am a big fan of the game and an admirer of the ArenaNet team that has taken many risks in creating an innovative product and a successful new business model for MMOs. In fact, the Guild Wars business model has been so successful that we are pursuing more products with this same model.

It doesn't actually say it made money... "Successful" is such a fuzzy term.

Did you miss the part in there where it said "total profit"?  I'm leary of the GuildWars business model for a couple of reasons (it requires the kind of access to the retail channel that an independant can't hope to get, and it's always only one failed expansion away from going into the red), but what's interesting here is that Lord British had to do damage control on this one personally.

--Dave

I apparently know nothing.  I thought that Lineage 2 or CoH/CoV was their flagship product. I would have never guessed GW.

In 2006 we cant really say that CoX was so much of a flag ship GW generated about twice CoX income.
GW as flagship for europe is not an non sens imo.

As far ar GW is concerned they are not that far from being "profitable" but  imo delays and dev strats in 2005 crippled them.

I take it you are neither involved in marketing or financial decisions then?  "Total profit" is fuzzy enough to mean whatever they want it to mean.. basically to us it means it is a useless statement.

I don't claim to have any valid figures regarding NCSoft or any of their games but as a consumer with a somewhat functioning brain I chose to draw my own conclusions. GW was certainly successful game but for it to superceed CoX in "total" profit I would have to assume an accounting error of some kind.

edit: I love the fud about access to retail channels etc. we need more of that shit to create drama.

He said North America so that's correct. For the US and Europe combined Lineage II has 105K subscribers, CoX has around 154K, and GW has 3 million+ accounts activated. In terms of sales revenue GW did about double that of CoX in 2006.

NCsoft puts out detailed information about its games on a quarterly basis. You can find the latest one here:

http://www.ncsoft.com/fileupdown/upload/EN_NCIREarningRelease/064Qearnigs(ENG).zip

Unfortunately it's not quite detailed enough to verify Garriott's claim that GW is NCsoft Interactive's (NCsoft's NA division) most profitable game. Cryptic Studios, the developer of CoX, is not owned by NCsoft, unlike ArenaNet which is 100% owned. So the money CoX makes is split between Cryptic and NCsoft and NCsoft doesn't specify what that split is in their quarterly report. GW did have roughly double the sales of CoX in 2006 so it would make sense that it was NCsoft Interactive's most profitable game. On the other hand both NC Interactive and ArenaNet reported net losses for 2006 and they don't break out profit/loss by game so by "total profit" he could really be saying "lost less money than Auto Assault".

Edit: typos

Trippy, I see your point. Yes it is very hard to draw any conclusions on how exactly NCSoft makes their money, especially if you are only interested in the north american/European market section. But I still believe there is a big difference between a succesful monthly subscription based game like CoX and a game that gets it's revenue solely from box sales like GW. Yes I know this doesnt add much except that it is my belief that CoX plays much more of a cornerstone role in NCSofts finances than GW ever will. Or does. It's just my opinion.

That said, long live CoX! (except it's grind).

So does this mean all the money Guild Wars is supposed to be losing is just accounting funny business so that NCSoft can claim a loss and lower their taxes?

Yes it could be. We don't know how they split up the money GW makes between NCsoft Interactive, ArenaNet and the parent NCsoft.

"it could be" but When do you assess an eventuality you have to evaluate its plausibility, would it make sens to search loss claim on nearly all there international branches at the moment ? Don't you think that the main concern for NC atm is to show that the can control there expense and restore there profit margin (margin that was divided by more than 2 in 3 years).


edit: I mean I understand that you can pretty much change the way benefice or loss are share between dev and distrib (Anet / NCi & NCuk) but I this that this would make sens if you actually had some branches making good money and you wanted to dilute that a bit, wouldn't it? The cost of A.net has been consistent over the last 3 years.
I agree that It "could be" but I'm so far convinced that it is not the case.

Guild Wars, in one form or another, has had shelf space in the retail stores around here since launch.

So it certainly has a regular income.

I suspect Guild Wars is also much cheaper to support and develop than most MMOGs. How many genuinely new systems have ever been added to GW? The game needs a few artists for new zones and designers for new combat abilties, but very little programming talent.

They aren't running about adding crafting, or housing, or entirely new advancement systems every 12 months.

I can certainly imagine more games with business models based on...

1) Develop functionality once and then add content almost entirely in the art and design layers.
2) Keep the box on the retail shelves 11 months of the year.

Content creation is what is really expensive. Having one or two programmers create a new system is cheap in comparison as long as there isn't a dependency on lots of art assets and other such game content which gets back to the point that it's the content that's the budget killer.

off topic:
It's a bit scary that NC is delocalising the content creation teams to china, do you think that is will be a general trend in the years to come for other major players?

Yes it will. Many are already there and the rest will be following in time.

Let us not forget that GW is essentially the same business model as Diablo, or even Battle.Net in general.  The only difference is that you can't play GW offline (can you?)

Blizzard seemed to like that model just fine for many years.

The key difference was, for whatever reason, Diablo didn't keep it's shelf space.

I suspect retail shelf space is the real reason expansions exist for any MMOG.

This is also a big part of why MMOG publishers are more willing to give away the base game with expansions, selling CoV, or recent GW expansions as a stand alone box makes it easier to hold on to shelf space.

That's cause Diable II came out which is still on store shelves.

...and once Diablo 3 is released, Arena.net had better have GW2 nearly ready to go otherwise their playerbase will shrink quite drastically.

Hmm, I wonder how many ex-Blizzard North people wish they'd stuck with Blizz nowadays?

Also, the Diablo Battlechest takes enough space for 3!

Didn't Garriott get robbed or something this week?

Edit: They took all his liquor. (http://www.engadget.com/2007/03/18/inebriated-crooks-leave-behind-digital-snapshots-of-themselves/)

I mugged Lord British and looted his crown.  He kept yelling for "gaurds" instead of "guards" so the cop walking by didn't do anything.  What a newb.

Idk about getting robbed but the same Richard did say "Business approaches should vary depending on the game, but a subscription model is still well suited for vast, long-lasting games that require significant resources to produce and maintain." to the palmbeachpost on an article posted this weekend

I'm more interested in this original quote. It strikes me that he said something he shouldn't have and then the suits told his ass to run some damage control. The retards at gwonline are already screaming bloody murder over GW2 possibly being a sub model. I like GW in small spurts but if GW2 goes sub I think there's going to be nerd rage of a level seldom seen. Guild Wars has morphed from "that balanced PvP-centric" game to "that free" game. That's why people play it now.

As far at the first quote is concerned I was told that we will be able to fully gets its meaning after and announcement coming out this week...

So I'm now relatively convinced that GW2 will not be using a sub model (although several investor have been crying for some change in the model almost ever since GW was released).

Hmmm lets see:
You have a country producing about 4-6x our number of comp sci, digital media graduates per year than the US, significantly more skilled, and oftentimes with a better work ethic. The rate of pay (including benifits, wages, taxes, healthcare) is about 1/15th of the US.

This large pool is the creame of the employable crop, supply outstrips demand, in 5-10 years China will be innovating new SW programs as well as offshore development teams.

Add to this that assets are not required to be localized, no in fact at GDC I saw like 4-5 asset aggregation services on the expo floor. So you have:
1) Faster
2) Easier
3) Cheaper
4) Aggregated Services
5) Not bound by geography

Its not a matter of IF but WHEN, China is currently ramping up, what they have a problem with now (according to a friend who is a PM in Shanghai) is thier CS/Digital Media students thinking "creatively outside the box", they are graduating students with skills equal or superior to US grads. But it takes them 2-3 years of additional OJT  to "apply the thoerems in creative ways" as it were. This is not different than the US, but apply 1-5 listed above and you can see the value of spending 1m on 10 US hires or 1m on 75 Hires in China.

If your worried about job displacement I'd recommend Project Management Certifacation and 2-3 courses in Mandarin at your local College.

I dumped WoW because I couldn't keep the sort of hours my friends were, and have gone back to GW because:

1. Its Free
2. I can play solo when I want to
3. I can feel like I'm progressing playing casually

That said, I dislike the linear plotline and being channel fucked through the game. Its like MMO dungeon siege, and you have limited freedom.

That said, maybe they can make GW2 and actually have more ranked forms of PVP and not make PVE so predictable. They have sold a few million copies of the game, so that's success in my book.

I was surprised to learn here that ArenaNet hadn't been outsourcing to China all this time. To Trippy's point, content creation can be the most expensive part of a game. However, if the game system is already done, and the rules for creating new content for that system established, then that's the perfect recipe to outsourcing to a land with much lower wages. I had thought that was the only way they were still afloat: Western revenue with Southeast Asian expenses.

That's actually the wrong way to do it since the quality will drop precipitously. Better to get the China people involved from the start. If you've seen the quality of content in Chinese online games you know that overall it's much lower than Korean or the top US standards. That's not because the artists are crap but because they work in an environment that focuses on getting content made as quickly and as cheaply as possible, stifling whatever creativity these people may have. It's basically a sweatshop environment for cranking out game content. If you have a team of them, removed from the sweatshop environment, working on content from the beginning you can train them up to produce content at the quality you need.

One small correction: Shanghai and Beijing are the centers for game development in China, neither of which are considered "Southeast Asia".

Arena.net has their own art team run by this guy (http://features.cgsociety.org/story_custom.php?story_id=3919).

I would imagine that if you were to out source your content creation team you probably the conceptual desing home made and subwork texturing 3dmodeling animation etc

What was wrong with your original reply?

I didn't want to be mistaken for an NCsoft spokesperson.

Wow thats really good work.

Also note I wasnt promoting outsoursing, just presenting the business case scenario for the reasons WHY someone would outsource.

I've also heard nightmare stories in everything from Engineering to Creative Content (not necessarily in games) to Database/Programming  where outsourced teams cost MORE money, because of either bad/sloppy/incorrect work, or having to go through and correct the work that was done, or what was delivered was not what was specified, or they just didnt bother delivering at all.

So this goes to understanding that outsourced work can save money, if its good, solid, reliable teams, or cost you money a lot more money where even one of those criteria are missing.

Huh?

A good point, and at least to me, GW has shown more creativity than the normal bang-out-new-models/textures variety. It still stands that the actual creation of content over there is going to be cheaper based on salary and cost of living though. But as mentioned, the relationship needs to be carefully managed, on both sides. The worst thing to do is to make assumptions about what's going on the other side of the world.

But we already assume that all red names are official spokespeople for their companies :-D

Lum speaks for all MMOGs, everywhere, past and future.

The way Anet uturned  has a taste of Failure for the GW game concept. A.net tried to make something original, but after all there is nothing like a good old receipt for MMO: several race, hundred of character level , power leveling, raids etc... No subscription to pimp on there GW user base .. with the so far released info GW2 would had been with a sub, I would really had nothing original compare to any other MMO.

Pretty sad that they dropped the original GW Concept, I guess It was a pragmatical choice.

Guild Wars 2 Overview (http://www.guildwarsguru.com/forum/showthread.php?p=2648062#post2648062)

At least they are planning to do the PVP right the second time around, and just allow people who only want to PVP to jump right in. Isaiah and I were chatting over MSN last night about how that would help draw the PVP crowd back to the game, and maybe give a little redemption for what they pulled on us in GW1.

be careful with Gaile shortcuts.
According to the resume that was given to the press. ATM
the main PVP mode will be the "Mist Battle" this is teh end game where players from different "realm" can fight (instance of hundred(s) of played) doing zone control battle.
This PvP mode as gaile stated will be PVE, low level char will be able to access the zone to powerlevel as buff bot / side kick / bitches or what ever you chose to call it.

There will be an other PvP mode knowned as GvG (don't necessarily see GW1 GVG although it share the name) this mode will be give your char temporary UAX. So far A.net doe not speak about ladder , does not speak about competition. But do mention that depending how well you perform in GvG , your REALM will get fame and wealth..

Given the current info  I really don't see anything of GW in this World of Guild Quest 2...

Sounds more like Dark Age of Guilds, imo.

I like how they claim that gw1 was getting overbloated with the new chapters (which I agree, it was) yet they are going for a no monthly fee method again.  How will they pull that off without going back to bloat?

Maybe its RMT and they aren't brave enough to admit it yet.
But regardless, everything they are saying doesn't add up.

I'm sure they are considering trying to implement a cash shop, that seems like the best system out there for mmo's these days.

Actually I guess the meat is in the wording.  In the PC Gamer article they mention a lot about the campaign model leaving, however they also make it known that the next guild wars expansion is an expansion and not a campaign.  They have defined campaign as a stand alone product that integrates with the others (pretty much).  So the reasoning for the no level cap could mean that their revenue is going to come from selling expansions a lot, but you will be required to have previous expansions (unlike the current gw1 model).

Of course, how will the increase in levels affect PvP and how will they encourage pure pvpers to buy expansions, especially with giving them UAX.

GW was suppose to get extension like gwen from the start.(no tutorial only lvl20 .. I had Jeff on tape explaining that)
I'm betting that the free furnace was an avatar of what was supposed to be such extension. But they had to drop that because NC ask them to redesign the game durring summer 2005
redesign to make it more suitable to Korean Taste ( GW was failing in Korea) => chapter 2 factions...
Nothing was forcing them to keep this model after they could have went back to extension and only once a year new classes..
Hell they did went back to extension : GWEN .

IMO the "2 chapter a years was to difficult to keep so we had to to gw2" is horse shit

as far as the model is concerned. I think that they look a there GW sale figure and they thought our key sale point is no monthly fee, we will make some thing a bit orginal we will benefit of teh GW user base and if we make a MMORPG loads of MMORPG will understand our game this time and will buy it => It seems that they are not that far from beeing profitable , a moderate increase in player base would do it.

I guess that once they can properly assess there sale target for GW2  they will set there mind up on how they will make $.

Will GW2 replace GW1? That seems to be the implication, but if they're doing well enough with GW1, I can't see why they'd launch a completely different game at the risk of cannabalization. Unless they're projecting ahead and realizing the GW1 model is soon to be unsupportable, or not enough people are buying expansions?

Otherwise, the GW2 writeup indicates a fairly traditional diku. Monthly fee, ingame adverts, or microtrans could be fine. But that's less important than having to come up with a strategy that will pull people into yet-another-derivative and out of the time sinks already having captured them.

I was curious about this one.  2 million boxes sold in 06, for revenue of $14 million and a loss of $6 million?  Is it me or does something not add up?  I realize retailers get a chunk, but that's averaging $7 a box.  Is that just measuring developer royalties, or is that a function of currency exchange, or what?  The financial statement DID say the results were unaudited.

Developers only get a tiny fraction of retail sales.  It's one reason digital distribution is a great option IF there is enough publicity for people to know it exists.  Then it becomes an exercise in figuring out if your title will net more with a high-volume a retail precense or a lower volume through direct means.

All the guys who worked on making that 2 million boxes sold game weren't all sent packing. They have to be paid for their work on the new games. Those expenses get booked as the revenue from the game they finished 3-9 months ago flows in.

I don't doubt the costs.  It is the revenue that looks funky.  I would think if you sold 2 or 3 million of ANYTHING you'd be rolling in the money, not sitting on 7 figures of red ink.  Hence Garriot's comments.

It's even weirder with the fact that as of August 06, in time for Nightfall, there WAS a digitial distribution system.  And the prices for that are the same as retail.  So where's the money going?  I want some GW licenses for $1, too, damnit.

50 employees at $35k a year is 1.75 million.  Then you have licensing, promotion, hardware, software, office space and utilities, fully stocked fridges, conferences, business trips, waste, profit distribution, accounting tricks...

It can easily add up.

The digital distribution system might known by current players, but I had no idea about it until after I bought a box.  This is my bad since I had many people I could have asked, but why seek it out when the actual CDs can be found at a discount and having the CDs is usually easier when I get a new PC.

That is one of the downsides.

The best is probably some middle ground where retail presence provides advertising, lets people know the game exists, and picques their interest then they hopefully go home and purchase it online.  It could be sold a more cheaply online to encourage the practice, dressed up as saving on physical materials, yet each sale would still yield more profit than a retail box.

Sell 3-6 hours of gameplay in the stores on a demo disk for $9.99. Then, if the player likes the game, he/she can by the rest digitally for $39.99. The risk of that model is clear though: the first 3-6 hours better grab them.