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Seven Ways To Make Money From MMOs

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Gaia OnlineI just came across an amazingly handy list of ways that online worlds make money, as compiled by Canadian game developer Adrian Crook. His guide is limited to MMOs which are free to play, so it doesn’t include subscriptions, the standard since 1984, when CompuServe began charging $12 an hour to play Island of Kesmai.

While World of Warcraft dominates the subscription model, there’s been a quiet-but-steady movement away from it; now developers employ everything from Subscription Tier (play some for free, subscribe to play more), to Merchandise/Expansion Packs (buy the related toy/game at retail, play online free), to third party advertising (play for free… after these words from our sponsors.)

On a hunch, I compared the Crook list to GigaOM’s Top Ten MMOs, added WoW, and tallied up the users in each model. What follows are the seven most popular revenue models for online worlds, in terms of total number of users in each. The results, as they say, may surprise you…

Advertising Deals: 14.5 Million
(Habbo Hotel, 7.5 million; RuneScape, 5 million; Gaia Online, 2 million)

Virtual Item/Currency Sales: 10.2 Million
(Habbo Hotel, 7.5 million; Gaia Online, 2 million; Second Life, 500K; Puzzle Pirates, 200k)

Subscription: 10 Million
(World of Warcraft, 9 million; Lineage I/II, 1 million)

Subscription Tier: 9.2 Million
(RuneScape, 5 million; Club Penguin, 4 million; Puzzle Pirates, 200k)

Merchandise: 4 Million

Expansion Packs: 2 Million
(Guild Wars)

Virtual Land Sale/Use Fees: .5 Million
(Second Life)

As you’ll notice, several MMOs use more than one, and there’s a bit of fudging, for simplicity’s sake. (For example, World of Warcraft does make money through initial retails sales, though its dominant revenue source is still monthly subscriptions.) And as always, I welcome corrections. But the above is, I think, more or less a fair read of the MMO market in the upper tier.

Seen this way, one point jumps out: just 10 million MMO players are paying mandatory subscriptions, while about 27 million players are paying some other way– or not at all. Looking deeper, another point: most of the non-subscription MMOs are aimed at teens and kids, which is why the subscription model is probably on its way out. If you want know which revenue model will rule in the next five years, look at the MMOs that 13-17 year olds are playing now, and assume they’ll expect to pay for future worlds in a similar way, when they get their own credit card.

Image credit: Gaia Online.

10 Responses to “Seven Ways To Make Money From MMOs”

  1. Subscription MMO’s need to re-invent how they distribute their Wealth. World of Warcraft for example (in my opinion) should alow their members to legally earn an income from playing the game. Not only would their subscription base grow, it would solidify Blizzard’s longevity. Blizzard would never die (but that’s just my opinion).

  2. Hey, I like to play games but I wouldn’t want to pay by the hour! Games can be addictive and it wouldn’t be long and I’d be in the poorhouse with nothing but the clothes on my back:0(
    Now, if it were Me making the Money? THEN I’d be HAPPY! :0))

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  4. True– that’s why I say WoW’s “dominant revenue source is still monthly subscriptions”. Their 4.5 mill Chinese players subscribe by the hour at 4 cents an hour!

    “do you not think that traditional social network ‘business models’ might intrude on this space?”

    Yeah, that’s a good point, Neil, I agree– I can already see Facebook becoming more and more MMO-ish. (One reason I wrote about that Zombies game a couple weeks ago.) Good chance it’ll soon get into Cyworld territory, i.e. a social network with strong MMO features.

  5. WoW is far from having 9M monthly subscribers, since many of their players are in Asia where the game is sold on a per-hour basis. Chinese players for instance probably get Blizzard 10-15% the ARPU of westerners.

  6. I think subscription model is still valuable.
    When I was a child no way i could pay for gaming… (I was a huge gamer though).
    But some years later I’m ready to pay.

  7. Wagner – do you not think that traditional social network ‘business models’ might intrude on this space? If the 13 – 17 yr olds are growing up on social networks alongside MMOs, could a new breed of more fully featured, videogame centric, free-to-use social networks make it difficult for this generation to justify paying for an MMO experience (considering the parents’ credit cards will no longer fit into the equation)?