MMO subscriptions grow by 28% in 2008
The Screen Digest media analyst and research group has released a new report on Massively Multiplayer Online Games (MMOs) that shows positive growth for the market.
The report is entitled “Subscription MMOGs: Life beyond World of Warcraft” and found that the subscription-based MMO games market grew by 22% in 2008, reaching levels of $1.4 billion dollars in North America and Europe. They expect it to top $2 billion by 2013.
Screen Digest states that they expect the MMOG market to grow at a pretty good pace for at least the next five years. This is driven by consumer acceptance of predictable subscription payments (i.e.= you don’t mind paying for a subscription to an MMO) and the “innovative use of premium subscription-based models). Of course there are a few other reasons as well, such as “continued introduction of more mainstream game services, broadband internet adoption and the overall development of the European market.”
As is to be expected, World of Warcraft continues to dominate the MMOG market with 58% of the Western consumer spending on subscriptions market in WoW’s grasp.
However there was growth too in non-WoW areas. Growth in consumer spending for non-WoW titles was at a robust 27% from just 12% in 2007 which “confirms continued adoption of the business model across other games and services”
Piers Harding-Rolls, Senior Analyst and Head of Games at Screen Digest said: “Industry commentators have for some time been using the example of the Asian online games market to proclaim the death of subscription business models in the West, praising the accessibility and flexibility of free-to-access games that generate revenue by encouraging players to make micro-transactions as part of the gaming experience. Screen Digest has always advocated a mixed model approach for the markets in North America and Europe. Subscriptions remain an important and lucrative way of monetizing MMOGs in the West across all game settings and consumer groups, and the results in 2008 support this view.’
While games such as Age of Conan, Warhammer Online and The Lord of the Rings Online helped grow high-end traditional subscription sales, much of the growth in 2008 for MMOGs game from free games that employ what’s called “premium subscription models.”
What does that mean exactly? Premium subscription models are when a game starts out free, but allows you to “upgrade” to a subscription service in order to “improve” your game and access content that’s inaccessible to free users. Premium subscriptions are a new development in the MMO arena and tend to only apply to freely distributed, downloadable or online accessible MMO’s like Conquer Online, RuneScape, Maple Story or Club Penguin (the PC version not Club Penguin DS).
To quote the report: “In a highly competitive marketplace this is a powerful way of hooking players in to the games experience and preparing them for a premium up-sell opportunity at a later date. Two of 2008’s biggest subscription titles were Club Penguin operated by Disney and RuneScape operated by UK company Jagex, both of which offer premium subscriptions to their players.
Harding-Rolls concludes “As a share of the total ex-WoW 2008 market, consumer spending on premium subscriptions grew by 11% year-on-year, from 35% to 46%. This swing towards premium subscriptions has helped reinvigorate a diverse market that was threatening to be overwhelmed by the dominant success of World of Warcraft. Overall, the outlook for subscription-based MMOGs remains positive over the next five years. By 2013, we expect the subscription market to top $2bn in consumer spending and for it to maintain its role as a key business model for monetization alongside micro-transactions.
However, accessing the MMOG market remains a high-risk endeavor considering the amount of up-front investment that is needed to build, launch and manage a service. Heavy competition and the complicated nature of MMOG service delivery means that commercial failure for many new subscription titles is an unfortunate reality.“
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