The Numbers Game

There’s been an interesting backchannel discussion between several TN folks about the numbers of people in various online worlds. Or at least, the numbers publicly claimed and what they might mean.

Many of us track these census numbers almost like we track the stock market, especially for “traditional” MMOs. This has made SirBruce’s mmogchart.com very popular in a certain segment of the population (even though the data is currently out of date); it’s common to see graphs from his site appear in business plans and market analysis reports. 

There’s a general sense among many MMO/virtual world observers that the size of the market has been woefully underestimated -- almost all of us were surprised by how quickly World of Warcraft leapt to over a million subscribers for example, and I don’t believe anyone would have predicted a year ago that the game would have over five million subscribers by now. 

At the same time, there remains a sense of disbelief in some quarters (notably old-school game companies and many VC-types) that the market for MMOs/VWs is as big as its made out to be. 

So the question is, how many people really play these games, and what do the various numbers mean? 

In our discussion, Betsy Book highlighted the populations of several ‘social worlds’ to demonstrate their popularity, perhaps underestimated by the core gaming (“there are games besides WoW?”) crowd.  These included:

• Habbo Hotel - 40 million members
• Coke Studios - 4 million registered users, according to their docs
• Mokitown - over 584,000  according to its homepage
• Playdo - over 405,000  according to its homepage
• Dubit, over 377,000 members according to its homepage
• Second Life - 100,000 and growing

Almost any MMOG would be ecstatic to have populations like those cited by Habbo Hotel or Coke Studios. But are those realistic numbers? Do they really mean anything?

How many of HH’s 40M members are old defunct accounts (I know at least a few are old ones of mine). Similarly I doubt that CokeStudios really has 4M active users – they say those are “registered users” and that’s a very different thing. As Daniel James said recently here on TN, “Puzzle Pirates has had over 1.3M 'users' if you count registered accounts” but actually has “substantially less than that, however, at ~23k subscribers/equivalents.”

In response to the question about the difference between registered users and actual users, Betsy said, “I think registered number of users does measure at least casual interest, while concurrent users measures ongoing/active interest. … If even 5% of registered habbos are active users, that's 2 million. Not bad. The Habbo picture is further complicated by the fact that there are 16 versions, based in different countries.  At this very moment there are 12,518 kids in the UK hotel and 6,287 kids in the US Habbo Hotel.”

IMO, citing “registered users” goes back to the “getting eyeballs” theory of the dotcom bubble of the 1990s – the trick for a business is to somehow turn that casual interest or those eyeballs into revenue. As countless companies found out, that’s much easier said than done. For a free VW, registered users may measure casual or novelty interest; whether this can be turned into long-term somehow paying users is a much different question.

Along these lines, there’s no reason to think that HH has 5% active users over 0.05% (not to hang this on Betsy; her suggested 5% was an arbitrary number).  But using the concurrent population numbers Betsy cited for HH as a snapshot, between the US and UK there were about 20K online – at a 10-20% concurrency that makes for an overall active population of between 100-200K – or about 0.25-0.5% of the “total” population they claim. It’s more likely that HH has an active population of about 150K or so between the US and UK, so double it for the rest of the world and say it’s somewhere around 300K.  Not bad, but this is a drop in the bucket compared to the 40M claimed. 

In a similar vein we discussed Second Life’s 100K+ members, a figure which I and others have questioned here on TN.  Cory Ondrejka said that SL’s “concurrency numbers are rapidly approaching 4500, about 17,000 residents were in SL in the last 24 hours, and 50,000 in the last 30 days… If you go back even 90 days you get about 90% of the accounts having logged in.”

From the POV of a typical MMOG, these figures seem not to match up.  If you have 100K active members, you’d expect to see 15-20K or so online at any given time.  But SL reports far lower concurrent numbers than that – in the range of 4%, albeit supported by a long tail of unique logins over time. How far back you choose to go and call someone a “user” is difficult to assess; in a typical MMOG if someone logs in only once every 2-3 months that’s okay, so long as they’re paying their subscription.  In a world like SL however, they may not be paying anything – but this may be offset by those who are effectively paying much more than the typical MMOG subscription. 

Toward the end of our discussion, Jessica Mulligan sagely observed, “’registered users’ is an illusion.  A far more relevant figure for a commercial online game is ARPU/Month, or Average Revenue Per User/Month.” 

I think this nails it: between the US and Asia, people have tried to figure out how to compare subscription revenue with game-room revenue for traditional MMOs, and have more or less settled on concurrent users as a way to make apples-to-apples comparisons.  But as worlds like SL show, different usage models (different gameplay) create different concurrency patterns.  No doubt SL has many freeriders among their 100K, just as Neopets, Habbo Hotel, Runescape, and other free-to-play worlds do.  But the question is, what is the average revenue per user per month?  From a business POV this is the key metric, and also the sticking point.  And as Cory noted, this is something that no one will publicly talk about. 

Many of us believe that MMOGs are just beginning their real growth - that along with game worlds, there is a growing and broadening market for more social (non-men-in-tights) VWs. But I know from experience that this notion is a hard sell with investors. Apparent successes like SL help, but the shadow of WoW is long and the ghosts of TSO and There.com (both of which also touted big population figures – for a while), as well as non-monetized worlds like Coke Studios, haunt any such discussions.

How can we accurately assess a world’s population size?  This is important for both reasons of social research and commercial viability.  It is important that as MMOs continue to grow as a cultural phenomenon that we neither downplay their impact nor over-inflate their growth.

Comments

[AT]

1.

As an online game analyst for an investment bank that focuses on the Asia Pacific region, I'd like to note that there is further confusion in these metrics for Asian online game companies that offer both monthly unlimited play (like we use in the US) and hourly options. Thankfully, most companies in China use only hourly subscriptions, therefore allowing us to compare revenue yield on an hourly basis, that is, ARPUH (average revenue per user hour) based on AVERAGE concurrent users. We also run into 'PR problems' when these companies choose to market their PCUs, or peak concurrent users, which could, in worst case scenarios, be just one hot weekend over an entire quarter, and is highly misleading. We're still working on it out here.... and this is coming from a veteran of online and video game space.

[Michael Chui]

2.

What's a user, anyways? Do they stop being users if they stop playing? If they leave a mark on the world (like dumping a monument on a piece of land they bought in SL), should they be considered users if they stop logging in, in the spirit of Greek immortality?

A user is someone who uses the system. But what about people who used the system and don't anymore? If I used a hammer a long time ago, am I still a hammer user? What if I used it to build a treehouse kids still play in?

A different way to look at impact -- and you might have seen this coming -- is impact on the hosting company, i.e. subscription costs. Can we measure popularity based strictly on revenue streams, since that's WHY we even care to measure? But more importantly in terms of impact, we can look at server load. I.e. concurrency.

Because the total number of users doesn't actually matter. People will come or they won't; large numbers will only tip the scale a little bit, and might even tip it back further ("Geez, that's too many people, I don't want to have to deal with so many").

So I'd say that we should, in general, just ignore the number of users, or registered users, or subscriptions, or whatever and concentrate on the number of concurrent users, subscribing (paying) users, and users who have made significant changes to the world (in the Diku descendants, that's pretty easy: the number should be somewhere between 0 and 50, leaning heavily towards 0).

[Raph]

3.

The metric I've found most useful for population size is weekly uniques. You can also then compare this to your paying (or "can log in", which we call "entitled") userbase to arrive at a uniques percentage. Different games will have a different uniques percentage, but higher is better.

Concurrent users is useless. The old metric of "multiply peak concurrent by 4-5" has proven not to hold true for many different game styles. Among the casual Korean games, I am told they regularly multiply by 10. SWG, pre CU and NGE, you had to multiply by 8; Planetside was similar. Different game playstyles lead to different play session lengths, which then affects concurrency.

[Daniel James]

4.

Mike, the quote from me is that we have ~1.3M registered players, 100k active in the last couple of weeks, and ~23k paying> customers. I think that's an important distinction (you imply we have 23k active or 'actual' players).

Back to the subject; I don't know a good answer. I think looking at all three of these numbers -- total exposed audience, active players, and paying customers -- gives you a great idea of how a game is doing. I believe that peak concurrency is also pretty useful, with the caveats posted above. PCU or rather, 'average' PCU, is very useful when combined with the active player numbers. Interestingly we are at ~4,500 PCU, too. PCU is nice because it can often be discovered and doesn't have to come from the operator's PR.

[Mike Sellers]

5.

Apologies Daniel; I didn't mean to eliminate that distinction. Those three numbers - registered palyers, active players, and paying customers - are very interesting, especially given the ratios between them.

The only issue with APCU, as Cory and Raph point out, is that the ratio between this and paying customers (to say nothing of the ARPU that Jessica pointed to) varies widely between games. I think we're going to see this variance increase as we see different kinds of games develop.

(I see too we're developing a whole new form of acronym soup!)

[Warren Grant]

6.

I am told the industry uses the term "Churn" to denote the ratio of players leaving a game versus the new players entering the game (measured in paid subscriptions I would assume). I am sure this number is closely guarded by each company, but surely that would be a vital metric of the direction a game is taking at any point and almost as relevant as the current population of players (by whatever means you choose to measure it)? I saw no mention of this ratio listed above...

[Darniaq]

7.

As silly as it may sound, there's also a question of how the gamers themselves see comparisons. It matters to some where other people are, if only to validate their own decisions. While the average company probably doesn't need to worry this, gamers will affect where others go with the numbers they bandy about.

To me personally, I only need to know if there's enough density of players given the size of the game world and the overall population therein. That density is mostly about peak concurrency in local conditions.

Not sure this adds anything to this discussion :)

[Mike "Salvator" Sherman]

8.

If I were a VC company, I would look at a graph of ALL of the North American games, and look at the median. I would immediately eliminate the lowest and the highest,especially since WoW would be a huge break in the current trends.

If a company came to me looking at my money, I would laugh at them if they presented me with WoW type numbers. I would be more willing to hear more reasonable goals, such as a half million boxes at launch, with a growth to maybe a million boxes sold in a year.

5 million in a year is an achievement, but no game in the NA market will reach that again for a long, long time.

Looking at paying subs at once, I would target the 500,000 region as well. 50% retention over the first year would be a huge achievement, putting WoW aside.

[AT]

9.

When I used to cover telecom companies, the metrics were straight forward, and actually incorporated a lot of the suggestions posted above by Mike, Jessica, and Warren. For the perspective or benefit of Wall Street investors, companies and analysts always provided ARPU, total subscribers, total new additions, and churn (% of people terminating service).

When NCsoft began to publish their numbers as the first public pureplay online game company in Korea, I had a difficult time applying these traditional telco metrics because of the nature of the way revenue was generated from internet cafes, as well as usage plans and styles (monthly subs vs hourly charges, and shared seats at internet cafes). It would have been comparing apples to oranges.

NCsoft supplied PCUs as a proxy, in addition to total registered accounts (useless), number of IP addresses, and unique accounts. All the other game companies in Korea and China (shanda, netease, webzen, etc) have since adopted this method and supply ACU (average concurrent), PCU, ARPUH, and active accounts (those active in the last 3 months).

From a Wall Street perspective, I note that these are proxies at best, and because we are mainly looking at ways to measure and anticipate profitability to do our job of assessing a future stock price, this is the best we can do. It is highly frustrating that most of these companies have chosen NOT to provide more usefull numbers, but we can understand why. Churn would help a lot too, but as indicated by Warren above, has it's reasons for being kept secret.

Lastly, PCUs in Asia, particularly China, are no longer relied upon by VCs, as they are not as robust. Game companies here regularly host events on weekends, offering special morphs, events, items (u guys all know the kind), which skew the concurrent user statistic in determining profitability. This is especially apparent when the ACU for game is 600,000 from one quarter to another, yet the PCU increases from 900,000 to 1.1 million in the same period, but revenue stays the same.

I guess at the end of the day, as Michael Chiu seems interested in, is what your goal is in finding these numbers.

Great post Mike.

[Richard Bartle]

10.

Historically, there have been 5 means by which virtual worlds announce how wonderfully popular they are:

1) Count the number of registered players (ie. number of subscriptions). All commercial worlds have to do this to get money. Free worlds that do it may keep registrations around indefinately, thereby inflating their figures, or may not require players to register because that's a barrier to entry.

2) Count the number of characters. Discredited as an approach now, because it falsely assumed that the average number of characters owned by a player was constant across all virtual worlds.

3) Count the number of distinct accounts/characters who access the game per day/week/month/year. This isn't a bad measure, as it turns out, but you do need all the figures, not just "on New Year's Eve, we got ...".

4) Count the number of simultaneous players, either peak, prime time or average (mean, mode, median). Of these, the best measure is the peak because at least you know that there are this number of distinct accounts playing at once (rather than a handful of dedicated accounts playing the whole time). Again, though, peak varies depending on the time of year: you don't want the peak peak, you want the daily/weekly/monthly peak.

5) Count the number of player-hours. This is the best measure of how a virtual world is perceived by its players, but is a closely-guarded secret because of this. Also, in the climate of flat fee games, developers actively want to limit the time that people play; they could have more player-hours if they wanted, but that would cost them more money with no more income.

For commercial games, traditional measures such as ARPU are also important. It really depends on what you want the information for as to what you'll find most useful.

Richard

[Richard Bartle]

11.

Warren Grant>I am told the industry uses the term "Churn" to denote the ratio of players leaving a game versus the new players entering the game (measured in paid subscriptions I would assume).

Yes, it does, but it's not something people like to talk about. Heavens, if shareholders found out that there are people actually leaving the game, they'd be outraged!

There are basically two kinds of churn: sink and drift. Sink is where people start the game as a newbie, don't like it enough to want to continue, and so disappear in fairly short order. Drift is where long-term players become disenchanted or find other interests, and go away.

Sometimes, a company will tell you something positive about their retention, from which churn can be determined. For example, an August 2002 article started that EQ players stayed on average 8 months before quitting. My guess is that this refers to drift, rather than churn. What it says, though, is that on average one eighth of EQ's players quit every month during that period - a churn/drift of 12.5%. This is pretty high for a virtual world, but not for other kinds of online game (poker, play-by-email etc.).

At the time, this meant that EQ was losing about 54,000 players a month. They were also claiming a net increase of 2,300 players a month, which meant that they were actually gaining 56,300 players a month - just they were losing 54,000 of them.

All this is in my book, by the way...

Richard

[magicback (Frank)]

12.

Happy new year everyone.

Much has been contributed, so let me add this thought: while there are apples to oranges comparisons and apples to apples comparisons, perhaps we are at a stage of comparing one type of apple to another type while the apples are changing their types.

For example, in the area of analyzing Chinese online game companies the new financial game is to change business models from pay-to-play to free-to-play-plus (premiums). The changes in the marketplace obviously have affected traditional metrics like PCU, APCU and to some extent ARPUH and other handy metrics.

SirBruce's chart was useful at the time as the games were all similar in terms of target demographics, usage patterns, revenue models, etc. Now in the financial space, we're falling back to revenue, margins and profits trends to get metrics worth comparing too.

So what I like to have is an population index developed using just audited company financials numbers or some more robust numbers.

I like Daniel's methodology for population numbers. The only thing I would add is to get the number of new registered users over the past quarter and 12 months.

Maybe someone using a mix of techniques will developed an industry standard population index.

Frank

[MK]

13.

I was recently in China and spoke there with a principle of a prominent private equity firm about his thoughts on online gaming in that country. (I am in business school, play WoW and other games, and am interested in the industry, but am not an expert). He had invested in game companies in the region and I was particularly interested in his thoughts on WoW's adoption in China. He pointed out (though I never got his source) that WoW usage in China had recently plumetted now that the "beta" period had expired. He also cited examples of other games that had or had not been successful in China, emphasizing that some very good games had not been successful (Lineage) and some mediocre games had been very successful. His point, other than to disabuse me of my impression that WoW was taking over the world, was that in order for a game to be successful (and sustainable), the company operating the game must know how to attract and retain users, and how to charge them in a way that makes sense in that market: Having the coolest game is secondary. The discussion then turned to some novel pricing strategies, but the point, in relationship to this post, is that there are even more reasons than already mentioned why a game's user numbers may not reflect its actual popularity, vitality, and viability.

[Betsy Book]

14.

I think we all agree that on an individual company level it all depends on the business model. It's good to take registered users with a big grain of virtual salt, however keep in mind this *can* be a valuable number if the biz model involves co-marketing deals to a database of users who've opted in (or who have not opted out) to receive messaging. Weekly/monthly site/world visits are important for those who sell ad deals in which ad banner impressions are a big part of the revenue stream or, for those trying to attract sponsors for specific carefully timed promotional events. Active users and concurrent users are particularly important metrics for measuring the health of community sites whether it's a free site or subscription model, as the active subscribers are the lifeblood of a healthy user base which as we all know leads to many shiny, happy things like repeat visits, attraction of new visitors, renewal of subscriptions and other growth factors.

Nowadays we're starting to see experimentation with not only a wide range of models but also hybrid models that involve revenue streams from things like virtual object micropayments and taking a percentage of currency transactions. It's not even just apples vs. oranges anymore. It's a whole big fruit basket out there.

[Chip Hinshaw]

15.

I am a skeptic about most things (hmm ... two comments in a row I've admitted that) and the WoW claims of over 5 million subscribers are suspicious to me. Fueling those suspicions, in part, is the fact that substantially lengthy queue times in WoW seem to coincide with the publicity surrounding the 5 million subscriber news. Yes, of course I have to agree that it could be exactly what it is, but I like to be suspicious. Please don't deny me my conspiracy theories!

[Daniel McMillan]

16.

It is so exciting to me! So many different kinds of people play these games, that it is astounding.

In 2001, I predicted that MMO's would be the boldest new market segment to game development in one of my first Gamespy Interviews (despite developers being gun shy about consistent revenue models because it was so early). So I switched my focus to prioritize "all about the MMO." Then spent a lot of time playing almost all of the "first class" worlds available, having starting with the first graphic MMOG "The Realm"(of which I was also a contract artist) and now I simply can't go back to "people-less games."

Starting my career in SEGA & SNES cartridge days, who would have thought the road led to MMO, but believe me, I feel like I was born to design at least two of them, and we have made excellent headway as far as community, and conceptual feedback.

Now that technology is catching up - MMO builders can think about being persistently dynamic, or they can continue to follow the basic level-cycle style that has been so polished in WoW, but was also very notable in DAOC, EQ, and so on.

Last year they announced 40 million broadband users in the US> Some of our people on the Frontier 1859 Community mentioned that its' close to that in the UK. Our Australian people suggest that they are getting into it as well, and our fan-sites in France & Spain - suggest, well - that I can't read French or Spanish!

Even so, all of the new generation of players being cultivated in massive enterprises such as WoW, will be looking for something more as they get a little more mature - and we are going to be there for them. The trick for tomorrows world is going to be diverse programming to choose from. Asia is finally reaching out to the US market with dozens and dozens of MMO's cranked out of a serious factory. I've played many of those as well, and they are easy to download and install.

Creating more personable characters, each with human-like qualities, lifespan, spirit and fragilities is where I'm really aiming within the context of our Frontier 1859, but the system itself can be implemented in any kind of sincere role playing genre.

Some of the games I've played have generated many friends over the years, such as:

The Realm Online - 1 yr.
World War II Online - 8 mo.
Dark Age of Camelot - 1.8 yrs.
Earth & Beyond - 7 mo.
SWG - 8 mo.
Toontown - 3 mo.
EVE - 6 mo.
City Of Heroes - 6 mo.
Second Life - 14 days
Saga of Ryzom (beta) - 1 mo.
Guild Wars (beta) - 3 weekends.
World of Warcraft - 10 mo.
Darkspace - 1 week
Tantra - 14 hrs.
Slayers - 4 hrs.

My hope for Terra-Nova Blog was that we can help encourage one another. I think Edward's Arden Institute is a fine example of progress, because educators and entertainment industry people can both file a claim on the new Comstock, and that also helps us continue to improve technology.

[Byron Deeter]

17.

As a VC investor in the gaming space, I love to see the community having this debate - because it's been a real challenge for us to normalize virtual world performance to get some true comparisons. A few quick thoughts:

I appreciate the candor of Daniel (with Puzzle Pirates) and others...I think comfort in making these numbers public shows his confidence in the viability of the virtual community/business and will increase credibility for everyone going forward.

For what it's worth, the "paid MMO subscriber" number I've gotten comfortable with is ~15M WW, which I've tried to build bottoms-up, but also roughly foots out with Castranova's 10M number (Synthetic World's has a great discussion on this) + 4M additional WOW subs + 1M other.

As Asian “free-to-play” models become more prevalent in North American and Europe, the subs number becomes less relevant, and you try to get to more traditional ecommerce metrics of average transaction size, cost of customer acquisition, lifetime expected value, etc…

However you slice it, the financial world cares about expected profits. We’d rather that came from one enthusiastic customer that results in a billion dollars of net income, but are also willing to accept a billion customers who each cause the company to earn a dollar!

[Foe]

18.

Sulake recently disclosed Habbo's monthly audience of unique users (4 million per month in July 2005):
http://www.sulake.com/pressroom_releases_07112005.html

[Mike Sellers]

19.

The 4M unique users per month number is interesting... but by itself is insufficient to understand much about HH, as we've seen here. With a snapshot concurrent usage of about 20K, there would seem to be some other factors at work here: lower session length or frequency than might otherwise be implied by 4M unique users -- to say nothing about how many of those 4M are free-riders. OTOH for a largely ad-driven world, maybe the relevant numbers are user-hours per month so you can gauge ad exposure and derive average revenue per user that way.

Byron, your 15M figure is both welcome and a bit frustrating. Several years ago a highly placed EA exec told me he thought the worldwide MMO market was probably no more than 500K. A little over a year ago a VC --who was studying the same market data we were-- told us they didn't think the worldwide market was much over a million, certainly not over two (this, btw, was just a few days before WoW released and gained over 250K subscribers in its first few days). So your multiplication of those numbers is welcome in that it acknowledges the breakout quality of this market. OTOH, while WoW's success may be anomalous (safest to assume so anyway), it certainly shows that our previous market size estimaes were overly conservative.

The central question for me comes back to, how many people can a reasonably successful MMOG expect to attract, and does this make a good business proposition? Unfortunately the ambiguity and sense of inflated numbers surrounding game populatins (and ARPU, etc.) makes this question more difficult to answer, which (unnecessarily, IMO) raises the risk profile of any new MMOG.

[Warren Grant]

20.

Thanks for the details on "Sink" and "Drift", Richard. I guess those terms will be even more appropriate once Pirates of the Burning Sea goes live :)

Can we add "Burn" to describe the sudden and rapid departure of a large segment of the population - as with the departure of the veteran players of SWG - and thus complete the pirate analogy? :P

Another factor complicating all of these calculations is of course that its not an all or none proposition. I would currently count as a metric for City of Villains because I am subscribed, but I am also subscribed to SWG (although leaving in 2 days), playing DAOC via a cousin's tertiary account, and I am in beta for Roma Victor for that matter.

Companies may be striving to obtain customers for their game, and measuring their success based on active accounts (or other basis as mentioned above) is of course important, but that same customer may be willing to remain subscribed to multiple games at once.

Really what I think companies are competing for in the end is customer "attention" and the longer they can retain that in comparison to any other games that person may play, the greater the likelihood they will remain with that game at least until they burn out on it and drift away. In that sense then, the amount of time each player spends playing over a given period is a better reflection of mindshare, and thus a better metric of where they dollars may go the next time they decide to subscribe to something.

To illustrate, in my case I am primarily playing City of Villains at the moment (90% of my playtime, and approximately 20hrs per week), I am leaving SWG because it has lost too much of its population to enjoy gameplay as a Trader (I can't sell to people who aren't there) and for a variety of other reasons to do with the game changes called the NGE) and merely keeping tabs on the city I established (5% of my time), but also spending 5% of my time exploring new games and trying out developing efforts like Roma Victor, or revisiting old ones like DAOC. I am seeking a new game experience that will offer as much depth and involvement as SWG did, and playing COV in the meantime because I was subscribed. COV is winning the battle for my mindshare and is the most likely candidate for my next subscription dollars.

[Andy Havens]

21.

I love comparing apples to penguins. Or poetry. Or bad breath.

I spent 10+ years in wireless telco, and, yes, gross ARPU (Average Revenue Per Unit) is regularly used as one major business metric. Among others. You put it on a dashboard with about 12 other standard industry measurements and compare it, as best you can, to what all the players are doing and try to get an idea of whom to benchmark in terms of best-practices, who to beat (if you're in the thick of competition), or whom to bet on, if you're buying stock or spending VC dollars.

Other metrics in a subscription-based service-revenue business include gross customer volume (which, as has been noted, is hard to peg right now in MMOs/VWs), net ARPU, churn (which is mentioned here), canibalism (returning customers, who cost you money to turn-off and then back on again), advertising cost per unit acquisition, operating cost per unit, change in operating cost per unit (usually measured year over year, but, in new ventures, sometimes quarter-to-quarter), market share, incremental-market-share, share-of-wallet, and mind-share (which is almost impossible to measure, but which some VP always will ask you to try to measure anyway). On top of that, you have metrics that every company, regardless if it's service or product based, has to look to; overall productivity and profitability numbers, etc.

Asking about ARPU -- or gross player volume -- out-of-context of the overall business health metrics is like asking "Is somebody tall enough?" For what? Playing basketball or jockeying the Kentucky Derby? It depends on the goals of the business, or the particulars of a specific short or long-term goal. In the early days of wireless, for example (up until the mid 1990's), nobody was making money. The cost of building towers was so expensive, and the number of customers so few, that you would have had to charge everyone thousands of dollars a month to actually show a profit. Everyone investing in cellular did so at an extreme risk, betting that once all the networks were built, every 16-year-old girl in America would want to yak on their phones in the mall for 9 hours a day. They were right, and reaped huge stock rewards in the late 90's. But the net-ARPU in the early 90's? Negative. And actual ARPU was projected to FALL because we wanted the service to get cheaper as time went by, so that more (millions more) people would use the service. When usage hit the "sweet spot" around 1994, we started printing money...

What are the goals of the company, the investors, the owners, the employees the players? Those are the questions you must ask before assigning metrics. And, if you want to compare (as stock buyers and VCs often do) one industry to another, are there metrics that are common between two or more industries. Again, to compare my experience: in the early 90's, big VC's were comparing wireless and cable TV as potential long-term (8-15 year) investments. Both required massive engineering build-outs. Both relied on tech-savvy. Both were heavily regulated. Both needed millions of subscribers and had similar monthly bill-points. You could weigh them both more easily than wireless vs. pork belly futures.

Most successful, modern companies have used a variation of the "balanced scorecard" in order to judge long-term corporate health. Generally, the metrics on such a scorecard measure three things; financial success (how well the company provides a return on investment to its owners, be they public or private), customer satisfaction and employee satisfaction. You can't screw any of those pooches and make a go of things in the long-run.

So, my big question is "What are we trying to measure here?" Profit in a shareholder sense? User acceptance? Worldwide domination? Flight from other forms of entertainment? Fun? If I were investing, I'd want to know a whole raft of stats. If I were a player, I'd want to know one thing: does it suck?

Right now, WoW is exciting from the point of view of investors who will be saying, "Crap! Millions (some millions) of people will pay $15/month to play these things." NeoPets is incredibly excititing from an embedded advertising perspective. And SL is exciting from user-contributed-content and commercial platform angles.

Lots of models. Lots of things to measure.

Which apples were we talking about again?

[Richard Bartle]

22.

Warren Grant>Can we add "Burn" to describe the sudden and rapid departure of a large segment of the population - as with the departure of the veteran players of SWG

Yes, you can add that, although it wouldn't count as churn. In general, if people use the word at the moment in terms of player departure, they're talking about a controlled risk - burn through some players in order to gain more. Only for other people's products would they use "burn" to mean "let's take all this money that these players represent and set fire to it".

Richard

[Kafka]

23.

Its interesting as well that these measures are often quoted by the players themselves, the figures bandied about as badges of honour. Perhaps to demonstrate their own wisdom, or to encourage more players to participate in a game that's perceived as popular.

[Hiro Pendragon]

24.

A more interesting numbers question, to you TNs:

How many serious indie developers are in SL? People who make a significant income from SL? 20? 50?

[lewy]

25.

What a great thread. Fascinating posts by AT and Andy Havens in respect to business metrics and the difficulties involved in applying said metrics to online gaming.

As for total worldwide subscription numbers, has WoW really boosted that number significantly? If MK's hearsay information is correct that I think you could argue that the answer is no. Does it make sense to count people who try out a demo and then move on to different things when calculating the potential market?

Speak of Blizzard I've noticed what seems to me to be a sin of omission in their press releases regarding game population. North American subscription numbers would obviously be directly comparable to North American subscription numbers gathered earlier. At one point Blizzard announced that they had one million NA subscribers. In subsequent press releases they have prefered to refer to worldwide "subscribers", which given the popularity of Asian game cafes is probably worthless. Does anyone know what the NA subscription base for WoW currently is? The game is past the 8-10 month average lifespan cited above for EQ for people who joined up at release.

Related to that, I have a question regarding expansion packs. My understanding is that typically a very high percentage of NA subscribers will purchase expansion packs if they plan to stay in game. Are total numbers of expansion packs sold a reasonable basis from which to extrapolate subscription numbers? In other words, are total NA sales of WoW's expansion pack going to be a valuable indicator of WoW's NA population, regardless of whether or not Blizzard want to divulge that information?

[Mike Sellers]

26.

Lewy: As for total worldwide subscription numbers, has WoW really boosted that number significantly? If MK's hearsay information is correct that I think you could argue that the answer is no.

I'd have to disagree. While no one can say for certain, I don't think it's tenable to say that a year ago there were 1M+ people playing MMOs in the US and 5M+ worldwide. While other major games, both in the US and Asia, have lost large numbers of players to WoW, if all of those people playing EQ, EQII, DAoC, SWG, CoH, even Lineage, etc., switched over to WoW, this still wouldn't have been close to the game's current populatoin -- and it's notable that each of those games are still around (it's also useful to look back at posts here on TN and elsewhere from a little over a year ago - no one believed WoW would have a userbase of 1M, much less 5M). Part of WoW's success seems to be it's ability to attract (and retain) those who haven't played MMOs before.

Speak of Blizzard I've noticed what seems to me to be a sin of omission in their press releases regarding game population. North American subscription numbers would obviously be directly comparable to North American subscription numbers gathered earlier. At one point Blizzard announced that they had one million NA subscribers. In subsequent press releases they have prefered to refer to worldwide "subscribers", which given the popularity of Asian game cafes is probably worthless.

Actually I think Blizzard has been consistent, clear, and conservative in how they measure their userbase -- a laudible thing in today's market that other games would do well to follow. From their recent press release:

World of Warcraft customers include individuals who have paid a subscription fee or purchased a prepaid card to play World of Warcraft, as well as those who have purchased the installation box bundled with one free month access. Internet Game Room players that have accessed the game over the last seven days are also counted as customers. The above definition excludes all players under free promotional subscriptions, expired or cancelled subscriptions, and expired pre-paid cards.

So they don't include expired accounts, demos, or the like, and where monthly subscriptions aren't operative (as in Game Rooms) they count only unique logins from the past week (not month or longer). By way of comparison, if SL's population figures were calculated the same way, it would (for now) drop below 50K users, not the 100K+ cited.

...In other words, are total NA sales of WoW's expansion pack going to be a valuable indicator of WoW's NA population?

Probably, but it depends on how they handle the expansion. If you can continue to play without it, there will be a moving average over probably six months or so -- looking at those accumulated sales would give a reasonably good picture of the NA subscriber base. Some won't ever buy the expansion and some who do won't install it or will cancel shortly thereafter, but in terms of round numbers, its overall sales (not just first week sales or whatever) will probably mirror the NA population pretty well.

[Michael Hartman]

27.

I learned something recently about the way WoW treats LAN party type cafes (at least in the US) that might have some bearing on their numbers.

If you own an internet cafe/LAN party store, they require that you buy an individual copy for each computer you plan to install it on. The fact that anyone who actually PLAYS the game would have to have an account (and thus, have purchased a copy) seems to be irrelevant to them.

So for example, a local LAN party place where we've had events for our annual convention, had to buy at least 30-50 copies (with that one month subscription Mike mentioned) just to install the game on most of the PCs they have.

I have no idea how many total copies/"fake subscribers" this really translates to, but I found it interesting (I also thought it was a pretty lame policy).

28.

"World of Warcraft customers include individuals who have paid a subscription fee or purchased a prepaid card to play World of Warcraft, as well as those who have purchased the installation box bundled with one free month access."

This doesn't really say much about the number of active subscribers. Most people i know own a WoW box. Including me. After the huge attention the game got, anyone with the slightest interest in MMO's will have tried it out at some point.

At the same time i know very few people who have played it for more than a few months. WoW has a very high turnover rate compared to other MMO's. It lacks the long term appeal of more complex games such as Everquest.

"In other words, are total NA sales of WoW's expansion pack going to be a valuable indicator of WoW's NA population?"

I'm looking forward to these numbers.

[Fandyllic]

29.

I suspect lots of the feedback here is from a non-representative subset of the overall MMO demographic. Most of the comments are probably from people who are either hardcore gamers or people who have been interested/involved in the industry for a long time. So, in short, the anecdotal accounts like...:
"At the same time i know very few people who have played it for more than a few months. WoW has a very high turnover rate compared to other MMO's. It lacks the long term appeal of more complex games such as Everquest." --Anonymous
...can probably discounted outright.

I also note a tenor of disbelief in the success of World of Warcraft which seems to be maligned or at least given backhanded compliments from the hardcore gamer community. As a previous casual gamer (I almost never play console games, except Halo for a time, and rarely PC games), I find WoW both fun and addicting. Blizzard has seemed to make the greatest effort to attract casual gamers into its population and keep them.

I'm somewhat shocked at the allegiance to Everquest (I tried it briefly at a friend's house and immediately thought it sucked) since compared to WoW it has some woeful inadequacies. I haven't tried EQ2, but I hear it still doesn't allow PvP, which is also amazingly sad.

From reading the various comments, so far, I suspect many people who post here don't regularly play WoW, because if they did, they would see that concurrent usership is clearly rising. Server wait times for servers at capacity during nights and weekends (prime-time for casual gamers) are getting steadally worse. Blizard seems to add nearly a new server a week worldwide and seems to be having trouble keeping up with demand.

I'd like to hear more comments from people who actually regularly play WoW than outsiders making uninformed comments from the outside.

I must also admit, I'm a Mac gamer who isn't willing yet to buy a PC just for games, so that cuts me out of most of the MMOGs. Blizzard was confident enough in their product to release it on Mac simultaneously with the PC (which is their history, but they really didn't do that with WC3). The only MMO I played prior to WoW was Shadowbane (for about 6 months on and off), also because it had a Mac client and allowed Mac and PC players to play together on the same world.

- Fandyllic

[Best of Saturday Night Live]

30.

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31.

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32.

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