I wasn’t going to do this any more.
I wasn’t going to look at NCsoft’s quarterly financials, yet again track how City of Heroes / Villains had yet again dropped in terms of revenue, make a guesstimate of how many players it still had, then move on to some other bete noire.
I wasn’t going to do it because it is dull and a bit sad. CoH/V was on the decline and that was that. It didn’t feel right in not only watching a place you once liked fall away, but going over to measure the rate of decay as well.
With the announcement that CoH/V is going free-to-play (and is free-to-play now as CoH/V: Freedom, so give it a shot) there’s an interesting opportunity: to see how F2P changes the revenue stream of an existing title.
Why Go F2P?
In short, CoH/V has been losing players for a long time now and Going Rogue didn’t bring them back (or back for long, anyway). Q2 2011′s results don’t change that picture – total revenue continued its downward trend. Observe (and click to enlarge):
It’s a pretty clear trend, and one only broken by the release of the paid Going Rogue expansion in August 2010. Q2 2011 saw yet another “lowest quarterly revenue performance in CoH/V’s history” at around 2 787 m Won / US$2.5m – a 9% decline on the previous quarter and a 14% decline compared to the same time last year.
Turning that quarterly revenue into the number of players by dividing the US$ by $45 (i.e. 3 x $15 for the quarter) returns 55 595 active subscribers, but all those veteran players on quarterly / annual subscription plans (that return less than $15 a month in revenue) need to be factored in by adding another 10% – 15% or so (based on historical data) and that leaves CoH/V with a sub-base in the low 60k realm. And declining.
It’s pretty clear why CoH/V is going F2P. The big expansion didn’t see players stick around and the long-term revenue trend for Paragon Studios’ only existing title is down, down, down. New blood is desperately needed in-game, and the most obvious way to get that is through opening up the game without upfront or ongoing payments.
Which Is Interesting Because…
This is, to my knowledge, the first NCsoft West title to make the switch from box-cost+sub-free to F2P. NCsoft West has launched titles with a F2P model – Dungeon Runners and Exteel for instance – but not converted one before.
CoH/V could easily be used as a test study for other NCsoft West titles that aren’t performing to see if there is a F2P future for them as well.
The major issue I’ve seen with CoH/V’s F2P offering is confusing and unattractive. The New Free Player offer looks very similar to the older CoH/V Trial restrictions of heavily restricted communication that I had issues with. However, I’d need to play around with it a bit to see what it is like and I’m not sure I’m up for that.
Returning players get a different offer – the Premium Players offer – where they find that their character’s access to Inventions Origin enhancements (basically sets that give special bonuses) don’t work until they are unlocked / purchased. That’s basically a nerf to a lot of returning players, and I’m not sure, “Come on back – you’ll be weaker than you remember!” is an enticing offer.
Still, we’ll see. CoH/V: Freedom launched in September 2011, so there are two more quarters of revenue data incoming before we will see the impact of the shift to F2P.
Spinning And Churning
As part of the press push to get the CoH/V: Freedom, Paragon Studios’ Studio Director and Executive Producer spoke to Rock Paper Shotgun about the change. One statistic he dropped was about CoH/V’s retention rate:
“Our retention rate is insane; going into the Freedom launch, there was a 95% chance that if you were playing the game 30 days ago, you’d be playing it today.”
On the face of it, that is an excellent retention rate, but looking at CoH/V’s financial figures, there is no doubt that it is in player acquisition the game suffers badly. Having very low churn rate is helping keep CoH/V afloat, but even losing only 5% of the player base every month can see the overall player base shrink by over 40% across a 12 month period thanks to compound effects. Obviously CoH/V’s player base isn’t declining at that rate – some players obviously come back and some new ones join – but it certainly isn’t growing at the overall level either.
Or wasn’t, prior to going F2P. Will players come to check out CoH/V for a game that has both the advantages and disadvantages of age? Or is it a move of too little, too late? It will be up to the revenue to tell the tale sometime around February 2012.