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Yoshida’s explanation, given through a translator, is a lengthy but interesting one, describing the mindset within a major corporation such as Square Enix as well as discussing his thoughts on titles like World of Warcraft and The Old Republic:
There are many different types of MMOs. There are two big types or groups that we see. You have one group with games like your Rift or your Star Wars, which are very large-scale MMOs with established IP. Then you have your smaller MMOs, which are maybe new IPs that don’t need as big a user base to be successful. So we can start off with the big group, the large-scale MMO group, with your Rift, your Star Wars, your Guild Wars, your Age of Conan and The Lord of the Rings. These games all started out on a subscription model, or were planning for a subscription model when they were in development. Then, partway through, they switched to free-to-play.
Then again, you have games like Rift and Star Wars. Even though people have been saying that yes, there is this change in the market, everything’s moving to free-to-play, they still – up until recently – were developing a system that would be subscription-based. Even though everyone is saying the industry is going free-to-play, they still were developing these huge games with subscriptions in mind. Again, we’re not saying that one is better than the other, that free-to-play is better than subscription or subscription is better than free-to-play. But for a large game on that scale, what’s most important – more important than making a lot of money – is making a stable income, a stable amount of money over a long period of time. And so to develop a large-scale MMO like this, you need to spend a lot of time with a lot of resources and a lot of staff to make this game.
To do that, you need a lot of money, and to get a lot of money to do that, you usually need investors to invest in your game. Because you’ve spent a lot of money on getting this game ready and borrowed a lot of money from these investors, when you release the game, the investors expect to see returns. If your game gets a lot of users and a lot of subscriptions right away, your investors will be happy and you can pay them. But what happens if you don’t hit that number right away? You have a bunch of staff members waiting to get paid. You have a bunch of investors waiting to get paid. You have a bunch of contents that needs to get made because you have to have updates, but you can’t do it because you don’t have enough money, because you didn’t hit that number you were aiming for. And so what do you have to do? One option to get instant money is free-to-play, or selling these items. To get that money so you can pay off your staff, pay off your investors, and start making new content, switching to free-to-play, selling items, and using that money is one way to do it.
So why didn’t Rift or EA with Star Wars do this from the beginning? Why didn’t they start with free-to-play? There’s a reason behind that. With free-to-play, because you’re selling these items, you’ll have months where you sell a bunch of stuff and you make a lot of money in that one month. But it’s all about what happens during that month. Next month, the person who maybe bought $100 worth of items in the last month could purchase nothing at all. You don’t know what you’re going to be getting, and because you don’t know what you’re going to be getting, you can’t plan ahead. You don’t know how much money is coming in. If you can’t plan ahead, then you can’t keep staff, because you don’t know if you’ll have enough money to pay the staff next month.
With a subscription base, if you get maybe 400,000 members, you know that you’re going to have the money from that monthly subscription for the next month. You also know that you’re going to have 400,000 this month, and it’s not going to go down to 200,000 users next month. That type of jump really doesn’t happen with a subscription model. So you know that you’re going to have a steady income. Because you have a steady income, you can plan ahead further. You can make sure you have staff members to create that new content. By creating new content, you’re making the players happy. If they know this game is going to keep creating new content, they’ll continue to pay their monthly subscription fees. So rather than going for the huge $100-million-a-month hit that you might get with the free-to-play model, having that steady income allows us to provide a better product to the players.
Now, you have Blizzard and you have Square Enix. We’re the only two companies in the industry, basically, that are making MMOs with our own money. That gives us an advantage, because where other companies have to get money from investors and have to pay that back, we don’t have a lot of time to build slowly and be able to pay that back. Investors want their returns right away. With Square Enix and Blizzard, because we’re putting our own money into it, we don’t have those investors to worry about, and that means we can release something and maybe take a little bit of a hit at the beginning, but as long as we’re increasing the amount of people we have, then we’ll get that money and make the players happy. We’ll get into that cycle I talked about before, where we’re creating good content and have that steady income to keep the cycle going.
With version 1.0, even though we call it a failure, we still had a user base. During the time that we were developing this game, 2.0, we were able to increase the amount of subscribers threefold as well. Again, it takes time. It takes showing the users that we’re really into this and giving them that new content. But we’re able to see a rise there. That’s what we’re looking for in this. Again, we’re not saying—The market didn’t change. It’s that there are two different types of models. Choosing the model that’s right for your product and being successful with that is what’s important. We believe that the bigger the game, the larger the scale of the MMO, it’s going to be better for the game if it’s on a subscription model.
That’s why you see a lot of companies that chose the subscription model, that wanted to do what we were doing, but were forced to free-to-play. They didn’t go to free-to-play by choice, because if that was the case, they would have gone free-to-play at the beginning. They’d develop it for free-to-play, not full subscription, instead of being forced to go free-to-play. We hear a lot of people saying, “Star Wars is free-to-play now, it’s great!” But then you ask them if they’re playing free-to-play Star Wars and they say, “No, not really playing it.” Everyone talks about how great it is that it went free-to-play, but then you ask around and really, there aren’t that many people who are playing it since it’s gone free-to-play. If you spend all that money on a game ,release it, and it’s filled with bugs and you don’t have enough time to do your updates, people will leave. Players need that new content. Not being able to provide it is fatal. If they were able to produce as much content as players wanted, then people would have stayed there. We don’t really believe it’s a problem with the business model. It’s how that’s handled.