Tabula Rasa: Financial Disaster

[GameBanshee News]

CVG has a painful report (based on a piece from the Korean Times) up about the rather sizeable loss NCSoft made on Richard Garriott's Tabula Rasa and how it's caused a restructuring of NCSoft Austin.

Apparently Tabula Rasa made around £2.7 million (or five billion won) in revenue last year, and NCSoft then projected that it'd make around £8 million (15 billion won) this year. That's nowhere near enough cash though. It's estimated the game's cost NCSoft over £54 [100 USD - GB] million to date.

"Half a year ago I communicated with investors and analysts we had very high expectations for Tabula Rasa", Lee continued. "After six months, I just put down 15 billion won as an annual revenue target and that's very disappointing. But I should admit that the actual result of Tabula Rasa has been disappointing.

"If you talk about our development cost we spent in the past several years, probably we are not making any money from this Tabula Rasa project. That should be the reality."

It's not confirmed how many staff at NCSoft Austin will get the boot, but the Austin studio will retain a workforce large enough to continue to support Tabula Rasa and will continue to develop other projects as well.

Richard Garriott will still be working on the MMO too, in between training to become a space tourist.

NCSoft has replied calling the article "inflammatory" and "sloppy and sensational" while admitting they are restructuring NCSoft Austin after Tabula Rasa's lackluster performance.

“The Korea Times English edition story is full of inaccuracies,” he said. “No one at NCsoft said the product is a financial disaster. That came from the writer and is his opinion.

“The TR development did not cost $100 million. I don’t know where that came from. The price tag for the product was much less…a fraction of that cost. Tabula Rasa was not restarted more than twice. It had one overhaul and that came after 2-3 years of development.

[Xandax]

It was quite visible with the low population on the servers - or rather - few servers.
I think TR ran some 3 or 4 servers where 1 was "EU" and the rest was US. The one EU was rather populated to begin with, but .... alas .... the game didn't have the staying power for many of the players I've met and I quit myself a couple of months into the game.

[Brother None]

Eh.

According to puuk, who worked on it, it did all right.

The problem might not be the low population, but rather the large investment costs. 100 million isn't completely insane for an MMO, but it's still quite a lot, and doesn't really allow for much failure. Which is why this game is a failure.

Absolutely numbers don't always indicate failure or success. MMOG chart put Tabula Rasa at 125k users which isn't bad for a startup MMO. But then again, E.T sold 1.5 million copies, and Shenmue 1.2 million, also not bad. All financial failures, tho' :P

[Xandax]

125K users is not "bad" no - however, it is not impressive either.
Consider an old game such as Dark Age of Camelot which still holds quite a number of subscribers (mmogchart lists that around 50K), and that game is 7 years old or so.

And when it comes to the investment, then "low" population is most certainly an issue, because low population means low subscription number, meaning low revenue. Those things are tied directly, so you can claim that the investment was too large, however, it was too large because they thought they would have more subscribers, so indeed the problem is "low population", because it is an indicator of the game not striking its market.
Especially when "users" could just as well mean trial accounts as well.

Plus it is a cycle. Few subscribers means more people will leave it to see if it survives, or because the game isn't "alive". That in turn can mean more people leaving, less revenue, less incitament to fix issues and further develop the game, in turn getting more people to leave. The Clan I played with have almost all left the game now.
On top of this a couple of million sold copies and only 125K users.... That alone is a strong indicator that there are problems. Also the initial value of the game sold is minor in terms of the revenue brought by subscribers. And also when the game delivers one month of playtime with the copy.

I think it is certainly possible for a MMO to survive with 125K "users", some niche MMO's would love that amount, however it must be hold up against development cost and return of investment and expectations of the companies involved.
I think TR have seriously missed its mark, which is too bad because the sub-genre within MMOGs it target really lack quality games right now. However the game quickly became a bore, despite its good ideas.

[BuckGB]

I hate to see people lose their jobs and respectable companies like NCsoft lose a lot of money, but, really, I think there have to be "financial disasters" like this to keep every single development house from pursuing MMORPGs. Single player and non-massively multiplayer RPGs are a viable option too, yet it seems as though many of the really talented RPG developers are going the MMO route.

If Richard Garriott really wants to pursue another MMORPG, he should get his hands on the Ultima license again. Or even better - develop a new single player Ultima. I'd buy either on day one, as I'm sure many, many other people would. Whether or not EA would be willing to let him work with the license, though, is another story altogether.

[Kheros]

And half the PC games coming out appear to be MMOs....over-saturation of the market means that there is less of a subscriber base for each MMO, meaning less revenue, leading to more economical failures.

MMOs are going through the same growing pains as single-player games did back in the 80s-90s, and they STILL haven't learned it quite yet because that area seems to go backwards now (over-saturation of games and crappy performance....leaving quality titles few and far between.)

[Xandax]

Originally Posted by BuckGB

I hate to see people lose their jobs and respectable companies like NCsoft lose a lot of money, but, really, I think there have to be "financial disasters" like this to keep every single development house from pursuing MMORPGs. Single player and non-massively multiplayer RPGs are a viable option too, yet it seems as though many of the really talented RPG developers are going the MMO route.

If Richard Garriott really wants to pursue another MMORPG, he should get his hands on the Ultima license again. Or even better - develop a new single player Ultima. I'd buy either on day one, as I'm sure many, many other people would. Whether or not EA would be willing to let him work with the license, though, is another story altogether.

Except TR had some great ideas, and fun concepts, the implementation was lacking, content was lacking - it almost seemed liked half a game.

Originally Posted by Kheros

And half the PC games coming out appear to be MMOs....over-saturation of the market means that there is less of a subscriber base for each MMO, meaning less revenue, leading to more economical failures.

MMOs are going through the same growing pains as single-player games did back in the 80s-90s, and they STILL haven't learned it quite yet because that area seems to go backwards now (over-saturation of games and crappy performance....leaving quality titles few and far between.)

appear being the operative word.
The MMO market is growing, and as more people move towards the genre, more awareness and more hype surrounding the genre will naturally also exists.
However, the market is far from over saturated, very far from it.
There are a few "people-pullers" on the market, that everybody hears about.

The subscriber base for the MMO market have not been larger at any time in history, which is quite visible in the subscription numbers WoW have pulled in. Other games just have problems breaking into this subscription base, because WoW did so many thing correct (I know many people dislike the game, but it hit it big with content), and it is a very competitive market.

I would argue that MMO companies have learned it - all too well indeed, because many ideas looks to be carbon copies of recipies which are known sellers. And that is logical, because the time and money it takes to develop a MMO makes it a large risk.
Also the mindset of playing a MMO is vastly different then playing single player or normal multiplayer games. The loyalty is immensely higher because you dedicate time, effort and money into building your character online, in a "social" setting.
Thus to give up that time, effort and money and shift to another MMO - it has to be something which captivates you.
There it is easier to drop a single player game, because that is just you and yourself and a savegame is easy to load in. But in a MMO, if you drop it for 6 months, everybody around you have advanced 6 months and you have not.

Thus I do not agree with your points.

[Kheros]

The subscriber base for the MMO market have not been larger at any time in history, which is quite visible in the subscription numbers WoW have pulled in. Other games just have problems breaking into this subscription base, because WoW did so many thing correct (I know many people dislike the game, but it hit it big with content), and it is a very competitive market.

Yes but the subscriber base of WoW is not a regular MMO subscriber base. Of those numbers there aren't many who will go to another MMO and if they do, most likely already have. Yes WoW did alot of things right, but there was no projection on the 8+ million subscribers it has today and no other MMO can match that, not even close. That would be an instant failure for an MMO to try and match WoW. Thus the subscriber base has grown, but not by leaps and bounds and every other MMO still has the same (slightly larger) piece of the pie to market to. WoW is simply an aberration concerning subscribers

However, all that does not mean there won't come an MMO to pull the rug out from under WoW, but I don't think its here before 2010

Maybe a Wii-MMO....maybe.

[Xandax]

Originally Posted by Kheros

Yes but the subscriber base of WoW is not a regular MMO subscriber base. Of those numbers there aren't many who will go to another MMO and if they do, most likely already have.

That is some strong speculation, which I've not seen backed up by anything.
Prior to WoW MMOs where "niche" and rather "geekish" to play, because why pay to play something you already bought, and "escape from reality" and all that.
With amongst other things WoW helped MMOs become much more mainstream, and it is now generally accepted to play MMOs within the gamer communities. Thus it is something of a stretch to claim that the majority will never touch another MMO again.
In my times in other past-MMOs, beta and retail alike, I've met many WoW players, and for many of them WoW was their first MMO.
Now this subjective experience is not factual by far, but it does contradict the claim - at least when the claim is not backed up with anything.
The market have been expanded, and while no single MMO will get 10million subscribers (for a long time), it does mean that companies developing MMOs can now calculate with other numbers then could back in the "old" days. It has been proven that there are many players out there willing to play MMOs (especially now).

Originally Posted by Kheros

Yes WoW did alot of things right, but there was no projection on the 8+ million subscribers it has today and no other MMO can match that, not even close.

Of course the projections where no where near 8 to 10 million subscribers, I think the mention was about 1 million. However it goes to prove there is a huge subscription base out there for MMOs, and that the market no longer is niche and limited to "people without lives".

[Kheros]

Since WoW launched, what other MMO has broken 1 mil subscribers?

None afaik.

Thus I wouldn't call the market bigger for MMOs since there has been no indication of MMOs after WoW that has done more (subscriber-wise) than before WoW. That's why I call WoW an aberration

[Brother None]

You are correct. Runescape grew to 1 million after the launch of WoW, but the other two 1-millioners (Lineage I and II) have only shrunk.

In fact, Xandax, if you look at MMOGcharts, the market looks horrible. When WoW launched Lineage I/II, FF XI and Runescape combined for 4.6 million subscribers. Now they're down to 3.5 million. All other MMOs are sub-500k.

Think there are significantly more sub-500k MMOs now than before? Think again.

Hell, Dofus, EVE Online and Second Life are the only MMOs other than WoW with a positive long-term trend. That's 4 MMOs out of more than 2 dozen. Doesn't look like a healthy market, to me.

[Xandax]

Originally Posted by Kheros

Since WoW launched, what other MMO has broken 1 mil subscribers?

None afaik.

Thus I wouldn't call the market bigger for MMOs since there has been no indication of MMOs after WoW that has done more (subscriber-wise) than before WoW. That's why I call WoW an aberration

Because no other game can compete does not mean the market has grown smaller. More subscribers equals more players equal more market. It is simple math and economics.
Time will tell however, if one day WoW goes belly up and the "genre" shrinks back to how it was "pre-WoW" to never grow again.... then perhaps. But until another quality game is released, which can bring something different then WoW - my argument stands based on what we can measure.
Tabula Rasa didn't bring it. It lacked in many areas, and only had a few innovative features. Vanguard failed miserable. LOTOR:Online (and I'm gonna be flamed for this) looks and feels way to much like WoW in my opinion that I'd ever consider switching to that.
What other major MMO releases have there been after WoW with a subscription model and a general appeal?

Originally Posted by Brother None

Hell, Dofus, EVE Online and Second Life are the only MMOs other than WoW with a positive long-term trend. That's 4 MMOs out of more than 2 dozen. Doesn't look like a healthy market, to me.

Well, that is the cause of how the market indeed is.
Currently WoW is "dominant", and because of the genre of the MMO with it's persistency and the social aspects, people aren't as "fickle" as they are with single player games.
This means that if you play a MMO, you're in my own experience a much more "loyal" customer. This I base on the years of playing the genre in a number of games - both retail and testing - along side with what I observe in others, where there are many effects to encourage this.
Many people seem to be sticking with a MMO simply because of lack of choices. Those who play EVE Online have little other choice then to play EVE Online, as there is little on the market like it. This means that even if people are unhappy with the state of the game, it is difficult to give it up, because there is not much else to play out there.
That also goes for the fantasy genre. Many people play WoW because there is no real reason to change to another game. Many of the other (earlier) fantasy MMOs present either half the choices that WoW did, or a worse implementation. Many MMOs released after, presents similar gameplay as WoW, so why change? (Yes, this is generalized, as there always are differences, but those differences, often are drowned out by the similarities).

Other aspects are the persistent and online/social aspects.
Because you form social ties with the people you play with, then it is easier to stick with one game, even if tired of it - or unhappy with it - if you have ties with other human beings. Many I've seen have used the MMOs for little more then a glorified graphical chat engine (Second Life - IMO - is an excellent example of this). This means that you're likely to stick around the community longer then if it was just another single player game.

Also the persistent factor means that if you do not play/attend the game, you'll fall behind those that do. This is also a factor, because it can affect you in the manner that you'll as a gamer question why you should try out another MMO, instead of improving the character(s) you've already spend years on.

This to me strongly indicate reasons why WoW still holds supreme when it comes to subscription numbers.

Then one might question why older MMOs do not get a surge, well - generally it is because why change to something "old" when WoW delivers all you need?
And if it doesn't deliver any longer, then "few" would go to a say 5-7+ year old game (some of course do, but mainstreams look different).

I see this market as much more healthy then ever before. The MMO market is very different then a single player market, because of the aforementioned things. That is quite visible with the fact that more people play MMOs then ever before, bringing much more money into the genre (much into WoW of course).
However the reason for this is that WoW did many things right, and it is now up to the competitors to try and be innovative.
If they aren't innovative or they fail with their innovations, people will just as well stick with what they are already playing.

Something Tabula Rasa is feeling right now. Something Vanguard learned the hard way as well. In the past, it was almost enough to put up a persistent world and dot it with mobs or something - not anymore.

That is also why I look forward to seeing what WAR and Conan can bring, because the try to bring at least some new things to the table.
WAR looks very much like WoW, however Mythic is bringing with it valuable lessons learned with DAoC, and Funcom is trying something very new with Conan both with the "maturity" aspect (which I think will cause it to attract all the "kiddies") and the fusion of more single player aspects into the persistent world.
If they do not "bring it" so to speak - people will just as well stay with WoW, until they grow tired of it altogether.


I see no indications what so ever that the MMO market is somehow "bad" or "declining".

[Brother None]

Originally Posted by Xandax

Because no other game can compete does not mean the market has grown smaller. More subscribers equals more players equal more market. It is simple math and economics.

I'm afraid that's a pure if-and bit of logic. If subscribers leave WoW *then* the market is bigger. It's not right now, because the people subscribing to WoW are unavailable to the market in exactly the way you describe (consumer loyalty).

In fact, I think you're mixing up market and consumer potential. The MMO market has grown, but because 2/3rd of the market is held by WoW, the consumer potential has not grown as significantly, if at all.

That's reality now. The moment WoW crumbles we're faced with a different market than we were before. But that's speculation, not reality.

[Xandax]

Originally Posted by Brother None

I'm afraid that's a pure if-and bit of logic. If subscribers leave WoW *then* the market is bigger. It's not right now, because the people subscribing to WoW are unavailable to the market in exactly the way you describe (consumer loyalty).

In fact, I think you're mixing up market and consumer potential. The MMO market has grown, but because 2/3rd of the market is held by WoW, the consumer potential has not grown as significantly, if at all.

That's reality now. The moment WoW crumbles we're faced with a different market than we were before. But that's speculation, not reality.

That would be like suggesting that loyal Coca-cola drinkers aren't a part of the global Cola market, simply because they're are less inclined to shift to another brand, then less loyal drinkers.
That doesn't hold in any economical sense nor logical sense.

There are more people paying to a MMO right now, then ever before. That fact alone shows that there are a larger market right now, because that directly shows there are people willing to pay to play MMOs.
The fact that the customers are loyal has no bearing on that aspect.

[Brother None]

Originally Posted by Xandax

That would be like suggesting that loyal Coca-cola drinkers aren't a part of the global Cola market, simply because they're are less inclined to shift to another brand, then less loyal drinkers.
That doesn't hold in any economical sense nor logical sense.

I think you misunderstood. To a fabricator of Generic Cola, the brand-loyal Coca Cola customers are still a part of Cola market (I never said otherwise), but they're not a part of the consumer potential he's trying to reach. He can't sell his Cola to those Coca fans, they're not a penetrable market.

That's what I meant when I said "you're mixing up market and consumer potential", and you're still doing it. The question for a marketer is not just "are there more people playing MMOs now than ever?" - which is partially just a question about general popularity of the product - it's more "how many people can I get to play my MMO?"

Now - so far - almost all other MMOs are losing people as WoW grows. Maybe the consumer potential is there, but nobody has been able to tap into it. That means that right now, while the market has been expanded for MMOs thanks to WoW, the direct consumer potential for new MMOs has not yet proved to be bigger. In that sense, "there are more people paying to play MMOs now than ever" is - for a marketer - nothing more than a simple recognition of a fact that for the purposes of selling his own products might as well be completely abstract. It has yet to mean anything for new MMOs.

And that's the real question. Not "do lots of people play WoW", but "has WoW increased consumer potential on the MMO market for other MMOs". You say yes, the numbers say no.

You're thinking in too absolute terms. To paraphrase Morbo; "economics do not work that way!"