MTV Busts a Move

Virtual World News offers this tidbit: MTV has named Christina Glorioso to be VP of sales and marketing partnerships for program enterprises. This is a newly created position whose duties include "maximizing opportunities for the various projects developed under the program enterprises group, including virtual worlds, 'Rock Band' and other videogames" (via Billboard). In other words, part of her duties will be to promote the MTV brand in virtual worlds, presumably by purchasing ad space and sponsoring virtual events. It wouldn't surprise me if she were also to sell ad space in the gamut of virtual worlds run by MTV Networks.

This is an interesting development, as it is another piece of evidence that shows that corporate America takes the profit potential of virtual worlds seriously. Granted, the user base for virtual worlds is pretty similar to the target audience for MTV. Still, someone is thinking that enough eyeballs pass through virtual worlds to warrant a new VP position.

It will be interesting to see which, if any, other corporations follow MTV's path. There are certainly a number of Fortune 1000 firms that would seem to benefit from more aggressive marketing in virtual worlds.

L00t Chase

Black market sales of virtual world items have been the bane of many MMORPGs, particularly World of Warcraft. A report on a session at the Game Developers Conference 2008 posted at MTV Multiplayer by Tracey John offers some fresh perspectives on the practice. The session, entitled “Learning to Love Virtual Item Sales,” featured Andy Schneider of Live Gamer and Steve Goldstein of Ping0. John reports the following from the session:

for games that don’t offer real-money transactions, like “World of Warcraft” for example, websites like IGE and ItemBay have transformed illicit virtual item sales into a billion-dollar business— over $1.8 billion according to analysts’ estimates given in the session— and game publishers aren’t getting a cent.

The key point here is that there exists a huge profit opportunity, one which is currently being exploited by the black market. And as much as game companies may be committed to staying true to their opposition to the commercialization of games (well, beyond the fact that they charge $15/mo to play), the fact remains that game companies want to maximize profit. Leaving money on the table for sites like IGE to take does not make economic sense.

In addition to hurting revenues, black market trading increases support costs. According to John’s post, Schneider noted that before Sony’s Station Exchange, 40% of customer service was due to “virtual item sales resolution.” Since Station Exchange went live, such costs have fallen 30%.

It is true that many gamers are vehemently opposed dollar-for-gold or similar exchanges. Yet some sound reasons in favor of such sales have been put forward, such as to help a newcomer catch up to his high-level friends or to aid a time-constrained player reach new content. One solution to this dilemma is for game operators to designate some worlds as open to real-world exchanges. Operators already do this for PvP and PvE already, so this would simply allow some players to opt to play in an environment where they could participate in a sanctioned auction site, such as Sony’s Station Exchange/Live Gamer operation.

I expect that economics will trump other considerations. Even the hardcore purists might come to embrace an arrangement like one described above – the players who currently (or want to) engage in black-market trading would tend to migrate to Station Exchange-type worlds, leaving the purists in a, well, more purist world.

(Note: Sony recently announced that Live Gamer would take over the role now played by Station Exchange.)

Update: For another account of this Worlds in Motion session, see this post on Virtual Worlds News.

WoW Growth

Blizzard recently trumpeted hitting the 10 million subscriber mark for World of Warcraft, a milestone which helped push Blizzard's revenue for 2007 to a record high $1.2 billion.
However, WoW does not release detailed subscriber information (like Linden Lab does for Second Life). Instead, Blizzard periodically puts out press releases announcing a new milestone in the WoW subscriber base. Fortunately, it is possible to take these irregular press releases and compile a rough timeline of the growth in WoW subscribers (thanks to the Wayback Machine). The graph above (click on it for a larger version) displays such information from WoW’s inception in November 2004 to January 2008. I’m also including a table of data that includes some sparse geographic detail.

	Global	North		Asia
	Total	America	Europe	Total	China
11/23/04	0.0
1/10/05	0.6
3/17/05	1.5	0.8	0.5
6/14/05	2.0
7/20/05	3.5				1.5
8/29/05	4.0	1.0
10/28/05	4.5
12/19/05	5.0
1/19/06	5.5		1.0
2/28/06	6.0
11/9/06	7.5
1/11/07	8.0	2.0	1.5		3.5
3/7/07	8.5
7/24/07	9.0
12/2/07	9.3
1/22/08	10.0	2.5	2.0	5.5

The data suggest a slowing rate of player acquisition. Although WoW doesn’t give exact year-over-year changes, it has released subscriber figures in January of 2005 to 2008. This allows us to roughly estimate how WoW grew over a three year period. In 2005, the number of WoW accounts went from 600,000 to 5.5 million. That’s a change of more than 800% or 4.9 million players, averaging about 410,000 additions per month. In 2006, growth slowed by almost one-half, to 2.5 million (210,000 per month). Finally, in 2007 the number of WoW subscribers grew by just 2 million, dropping to 170,000 new players per month.

				Average
	Total	Annual Change		Gain per
	Subscribers	Million	Percent	Month
1/10/05	0.6
1/19/06	5.5	4.9	817%	410,000
1/11/07	8.0	2.5	45%	210,000
1/22/08	10.0	2.0	25%	170,000

Of course, adding even 2 million users in a single year still puts WoW in a category all its own. Many MMORPGs struggle to reach 100,000 or 200,000 total users. Nor are there any other games that appear to be in position to pose any sort of seriour threat to WoW. Indeed, the data I’ve seen indicates that WoW stands alone atop the mountain, with no one else even close. Still, though, these numbers suggest that the sheen of invulverability surrounding WoW might perhaps be wearing off. Is WoW approaching its market saturation point? Do the string of new MMOs on the market collectively constitute a competitor for WoW that are peeling off potential customers?

Blizzard defines its subscriber count thusly:

World of Warcraft subscribers include individuals who have paid a subscription fee or have an active prepaid card to play World of Warcraft, as well as those who have purchased the game and are within their free month of access. Internet Game Room players who have accessed the game over the last thirty days are also counted as subscribers. The above definition excludes all players under free promotional subscriptions, expired or cancelled subscriptions, and expired prepaid cards. Subscribers in licensees' territories are defined along the same rules.