WoW Reaping Quiet Bonanza

World of Warcraft

Reporters tend to be obsessed with novelty -- what's new, hot, fresh, innovative, surprising, catastrophic, etc. This preoccupation is understandable: I mean, our business is called "news." But there's equal importance in things that don't change -- equilibrium instead of trend, static versus dynamic, solid out of ephemeral.

On that note, I recently found myself thinking about World of Warcraft, the pioneering massively multiplayer online role-playing game, or MMPORG for short. In the months following its launch in November 2004 the Tolkien-ish fantasy realm attracted millions of subscribers, in a burst of growth which came to symbolize the explosive potential of media and entertainment properties in the Web 2.0 era, or 2.4 or whatever it was. This included plenty of debate about WoW's potential as an advertising channel.

Then, some other stuff happened, including the rise of MySpace and Facebook, the collapse of the U.S. housing market and the global financial system, the election of Barack Obama, and who could forget balloon boy? WoW slipped from the headlines: frankly I haven't heard much about it in the last couple years. So it seemed like an appropriate time to check back in with WoW: what's been going on with the orcs, anyway? Well, it turns out WoW has more or less plateaued ... as one of the biggest businesses on the Web.

True enough, WoW grew quickly at first, from one million subscribers in February 2005, to five million subscribers by December 2005, then eight million by January 2007, and 12 million by January 2009. And that was the peak: since then WoW seems to be holding steady at roughly 11-12 million subscribers around the world -- a small fraction compared to Facebook, which currently has a global audience upwards of 475 million. At a time when any social network with less than double-digit growth in users is deemed a failure, one might conclude that WoW had run its course. But oh, one would be wrong.

Because WoW's user base is highly engaged, completing some 16.6 million quests and bidding in 3.5 million online auctions every day. And WoW subscribers actually pay to play, ponying up a monthly fee of $14.95, month after month, year after year, to fight those orcs or elves or what have you. According to the company, 4.5 million subscribers in Europe and North America alone produced $800 million in revenue in 2009. Meanwhile, server costs come to about $140,000 per day, or just over $50 million a year, and I can't imagine other expenses come to much more than another $50 million... so that leaves $700 million of gravy.

Now, it's true that a new generation of free MMPORGs may put pressure on Blizzard to make WoW free, but various senior personnel (including lead designer Tim Chilton, quoted in PC Gamer) seem pretty skeptical about that possibility. After all, WoW enjoys the same advantage of bigger social networks like Facebook: It has the momentum of an established community, whose members are presumably comfortable with the environment they have helped create. If a sustained economic downturn didn't drive them to cancel their subscriptions, there's probably not much that could make them do so. Like Rupert Murdoch after buying the WSJ, Blizzard will likely come to its senses and keep charging subscription fees. But if WoW does go "freemium," those old debates about in-game advertising will have new relevance.

World of Warcraft

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