Blizzard's problem right now is that they are now part of a big corporation and all corporations are run by the investors that like more predictability than is usual in the gaming industry. The gaming industry is a hit or miss proposition as titles these days cost millions of dollars to develop but if the gaming public doesn't like it, the title won't sell. That's why you see games like Call of Duty, Crysis, Madden, and Diablo getting multiple sequels because it is always safer to produce a sequel of something than new material. Blizzard perhaps is the king of this if you consider that they haven't introduced a new world since they released Starcraft/Diablo in 1997/8. They hit a home run in 2004 when they developed Warcraft 3 into the World of Warcraft and that leads us to today.
Blizzard's philosophy with WoW has been made up of 2 simple ideas to keep the subscriptions going. The development cycle for WoW takes a long time so they plan to release a new expansion every 18 months.. In the interim they do major content patches to keep the player base happy. In practice their development cycle has run closer to 2 years as seen by the release dates:
11/04: World of Warcraft
01/07: WoW: Burning Crusade
12/08: WoW: Wrath of the Lich King
12/10: WoW: Cataclysm
This development policy has been extremely successful but considering that the game is entering its 7th year and has peaked with 12 million subscribers I think it is safe to say that it has definitely hit market saturation. (Note: the 12 million number is a bit misleading as about half that number uses a subscription model paying $15/month. The rest based mostly in Asia pay a per hour/transaction fees). As I said in the previous article most of Blizzard's income is from monthly subscriptions and not new game purchases but monthly subscriptions are now trending downward. I am sure this is something that Blizzard has seen coming for a long time and have been planning to make sure they stabilize that income. One solution is the new property they are developing codenamed Titan but that is 2-3 years away and isn't guaranteed to have WoW's success. They really need something to fix people to the monthly subscription and in my opinion the answer is Battle.Net.
Last year, Blizzard made a big push to include a revamped version of Battle.Net in Starcraft 2 and integrated it into WoW so that people playing either game could communicate. They also updated their forums and did a lot of other behind the scenes things to create a system that could plug seamlessly into any property they developed. Most players thought this was a cool feature but there's no way Blizzard did this just so WoW players could talk to their friends who happened to be playing Starcraft. My feeling is Blizzard has much bigger plans for Battle.Net.
Before I talk more about that I want to mention the other Battle.Net like services in the industry.
Blizzard's philosophy with WoW has been made up of 2 simple ideas to keep the subscriptions going. The development cycle for WoW takes a long time so they plan to release a new expansion every 18 months.. In the interim they do major content patches to keep the player base happy. In practice their development cycle has run closer to 2 years as seen by the release dates:
11/04: World of Warcraft
01/07: WoW: Burning Crusade
12/08: WoW: Wrath of the Lich King
12/10: WoW: Cataclysm
This development policy has been extremely successful but considering that the game is entering its 7th year and has peaked with 12 million subscribers I think it is safe to say that it has definitely hit market saturation. (Note: the 12 million number is a bit misleading as about half that number uses a subscription model paying $15/month. The rest based mostly in Asia pay a per hour/transaction fees). As I said in the previous article most of Blizzard's income is from monthly subscriptions and not new game purchases but monthly subscriptions are now trending downward. I am sure this is something that Blizzard has seen coming for a long time and have been planning to make sure they stabilize that income. One solution is the new property they are developing codenamed Titan but that is 2-3 years away and isn't guaranteed to have WoW's success. They really need something to fix people to the monthly subscription and in my opinion the answer is Battle.Net.
Last year, Blizzard made a big push to include a revamped version of Battle.Net in Starcraft 2 and integrated it into WoW so that people playing either game could communicate. They also updated their forums and did a lot of other behind the scenes things to create a system that could plug seamlessly into any property they developed. Most players thought this was a cool feature but there's no way Blizzard did this just so WoW players could talk to their friends who happened to be playing Starcraft. My feeling is Blizzard has much bigger plans for Battle.Net.
Before I talk more about that I want to mention the other Battle.Net like services in the industry.
- Steam Steam is basically an online hub that knows all the games you have purchased from them and even lets you run games from them. You don't need to have software because all you need is your Steam account to download/play anything in your catalog. Steam was originally developed for the Half Life/Valve and was controversial at first but over time many other developers have been utilized the Steam platform. Steam makes money for Valve two ways 1) Digital distribution is a lot cheaper than retail and 2) companies that use the Steam service have to pay Valve a %. These companies gladly will do this because its a lot cheaper to distribute games this way.
- App Store - Apple's platform for Ipad/Iphone programs. Programs are purchased through the App Store for a small fee and downloadable to your device.
- PSN/XBox Gold - Playstation and XBox both offer online services that cost a set amount that give users the ability to play each other in online games and also offers other downloadable services on their consoles.
By now you might have guessed my suspicions. Blizzard desperately needs to keep their existing subscribers but they've got an aging title that may be in store for a major decline. Keep in mind that because the subscription numbers are a majority of Blizzard's revenue that even a 10% decrease in subscribers will have devastating consequences for the company's profits due to having mostly fixed WoW costs. One way to cement people to their monthly subscription is to combine the Steam / PSN-Xbox concepts and allow people access to Diablo 3's online features only if they are paying for a Battle.Net subscription. A $15 Battle.Net subscription would cover not only WoW but allow access to any of the other Blizzard titles in the future. Without the Battle.Net subscription you would be limited to single player only. This would even work for Titan when it is released. All you'd need to do is buy the game, continue your existing Battle.Net connection and you are good to go.
This system has many other potential uses like releasing older Activision titles for free to keep people entertained who don't want to play Diablo/Warcraft/Starcraft, to being similar to the App Store only for Blizzard games, to being a distribution hub for other game designers like Steam. The executives at Blizzard have to be looking at something like this or they risk losing their subscriber base altogether. They know that attracting the entertainment dollar is getting harder every year and very few people are ultimately going to pay for both Titan and WoW. The solution is to link them and stabilize their income.
One added benefit is if they are successful then Titan could mesh seamlessly into WoW's development timetable. If you look at the past we should expect a new WoW expansion in December 2012 (random thought eek ... Isn't the world supposed to end then according to the Mayans?). If Titan can get on the same pattern they'd release nicely around December 2013 then every 2 years afterward which would have the benefit of smoothing income from new titles while also giving players continual content so they keep paying their monthly fees.
I know this sounds a bit crazy and the one flaw is that Starcraft/Diablo fans will quit Blizzard's games in droves if they feel they have to pay for something they used to get for free. The thing is I'd bet many of these players are already paying for WoW but gamers are notoriously fickle. I have to think that it is a risk worth taking if you are a company in Blizzard's position as their revenue stream is in danger if they don't do something soon.
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