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Lt. Commander
Join Date: Dec 2007
Posts: 120
The argument behind F2P transitions for MMOs has been that monthly fees serve as a cap to the money that MMO creators can rake in. Monthly fees cap monetization in three ways:

- They eliminate any revenue players would supply the game in any amount under $15.
- Buffet access to game rewards means players who MIGHT spend well in excess of $15 a month, don't.
- They encourage players who don't spend $15 in a given month to leave, discounting the possibility that they might spend $45 once every three months.

These all, taken together, have been used as an argument for F2P conversion of buffet subscription MMOs. (STO was never fully buffet access because of the C-Store but these all applied in some measure.)

I've been reading a book on probability and this has the gears turning. Lockboxes do everything that F2P conversions try to combat, just in different ways and at different thresholds, with additional drawbacks. The only saving grace is if they contain things that only some players would want. I think PWE and Cryptic are tricking themselves in some regards as to their efficacy and could easily see models of reforming the system if you bother looking at it sideways.

NOTE: I am not necessarily saying to get rid of lockboxes. I am calling for a look at how they work and whether reforming the system is a good idea. This isn't a hate thread. This is analysis.

Let me elaborate:

Pretend it costs $200 on average to get a D'Kora ship.

Because of limited sample sizes (with one being a VERY limited sample), a single player trying to get a D'Kora might get it in 1 try or 50 or 500 and some will never get it; that's how probability works. To the player who has to buy 500, that ship cost them $625. Great for Cryptic's bottom line, right?

... Wrong.

Because single skews in the data trend don't matter. Cryptic's sample size is larger than the player's. The player experiences an abnormally high cost in their limited sample but Cryptic is issuing hundreds or thousands of these ships, provided lockboxes are selling. (If they aren't selling, they aren't a very good item to sell.)

Because Cryptic's sample size is larger, the net result is that Cryptic's net revenue gain per ship should be almost precisely the average: $200.

So you have a case where Cryptic just effectively charged a guy $625 in order to make $200. Because they ended up charging other people less.

That would be well and good except... what is the satisfaction level of the guy who spend $625? What about the guy who spends $1000, can't get one, and quits? Now, we can reasonably estimate that these make up a small fraction of people who buy lockboxes. Let's say, I dunno... 5%.

And there's a chunk of players who get the ship in significantly fewer tries. I'm sure they're thrilled.

Now... Here is the problem:

The dissatisfied high spender will burn out and quit. They also suffer the risk of added financial consequences of addictive spending behavior such as, I don't know, having an unexpected bill that results in them getting an eviction. And yet, Cryptic's benefit caps out $200 because they have a larger sample size.

Meanwhile, the player who does the opposite and gets a ship in relatively few tries can't do the opposite of quitting, which is, well, to suddenly become two people.

I'm going to play with some wild guess numbers. The numbers are not important but the principle behind them is.

Say there are 250,000 players. Say 10% of them spend money at all on the game. Now, of those remaining 10%, let's say an average of 80 lockboxes are sold (an average which is skewed heavily by high spenders buying hundreds or thousands and people who just buy the keys to resell; this is consistent with my past analysis assuming only 25k actually spend money). Now, let's say only 40% of that 10% buy keys/lockboxes. That's 10%. Now, let's say only 5% of those 10k spend significantly more than the average cost of obtaining a ship, say $300 or more and an average sale among this group of $500.

That's 500 people a month you burn out.

And maybe in the grand scheme, that sounds like an acceptable loss.

EXCEPT. Those 500 people were spending disproportionately higher amounts of money.

Cryptic got $250,000 from them. Cryptic lost them in the process. Being high dollar spenders, they are much, MUCH harder to replace than the average player.

You would have to recruit 500 people on average to have a chance at getting 1 spender who spends an equivalent amount to just one of the 500 players you lost. You would have to double the game's entire population EVERY MONTH to have a shot at getting similar high dollar spenders.

Based on an estimated take $2.7 million per month on lockboxes (Dunnlang's numbers), this provides roughly 10 months of sustainability for lockboxes as a revenue source.

I suspect Lobi Crystals are designed to retain those high end spenders and I suspect the prices on the Lobi Exchange were set high to provide incentives specifically for those few high rollers not to leave after spending above average amounts.

This is why Lobi Crystal items seem outrageously priced to most of us: because they aren't targeted at most of us. They are an attempt to keep big spenders from burning out and leaving.

I estimated in another thread before that a business plan designed for 3-5 years of viability on average, leveraging high consumer turnover while directed at 28 year old Chinese males would probably be viable for 11 to 18 months in the U.S.

With the fuzzy math here, it looks like ten months. I'm sure it works out to more than ten because low spenders are easier to replace and more likely on the whole to multiply.

But at the end of the day, Cryptic's projected monetization is capped at the hypothetical $200 per box; people spending more doesn't make Cryptic more money and has a net effect of costing Cryptic money.

This doesn't mean Cryptic is doing poorly now. I have no doubt they're seeing very healthy, very robust numbers right now. However, the trend of how well they're doing could be pretty alarming because it's a rapid burnout.

Flat out selling lockbox grand prizes for $200 (in addition to offering them in lockboxes) might solve things. Auctioning the grand prizes might solve things. Either of these should keep current revenue pretty constant.

I can see the sense of the DCUO model where subscribers can open boxes for free now from a business plan perspective. Upfront, it's less money for the developer. However, it's a steady source of retaining customers. For the first 12 to 24 months, it's massively less money than STO's model.

But then a funny thing happens. It begins to overtake STO's model for monthly revenue in around a year. Now, even at that point, STO would be maybe $25 million ahead of them but they would be in growth and STO would be in rapid decline. If that's the model Sony is looking at, I totally get how that makes sense.
Lt. Commander
Join Date: Dec 2007
Posts: 120
# 2
05-31-2012, 08:24 AM
An interesting set of inferences and hypothesis. Not being an expert, I can't assert that it's correct, but depending on the numbers, it seems sound. I think some of the percentages are on the high side but still serve to illustrate the point. Does the Lobi store and things like it actually assist in retaining the high spenders?
Lt. Commander
Join Date: Dec 2007
Posts: 120
# 3
05-31-2012, 08:45 AM
Quote:
Originally Posted by V-Mink
An interesting set of inferences and hypothesis. Not being an expert, I can't assert that it's correct, but depending on the numbers, it seems sound. I think some of the percentages are on the high side but still serve to illustrate the point. Does the Lobi store and things like it actually assist in retaining the high spenders?
We'd only be able to guess that if we could see Cryptic's numbers on the subject, really. It sounds like it would, and it does make sense. Those prices do seem to be aimed at people who can afford to amass a large number of Lobi crystals. And considering that you get such a small amount from opening a lockbox on average, they would have to have spent quite a bit on keys and such.
Lt. Commander
Join Date: Dec 2007
Posts: 120
# 4
05-31-2012, 08:45 AM
Hasnt PW been doing lock boxes much longer than STO? If there is a downward trend to be seen, they would already be aware of it.
Lt. Commander
Join Date: Dec 2007
Posts: 120
# 5
05-31-2012, 08:53 AM
Quote:
Originally Posted by k4pt41nk4ng4r00
Hasnt PW been doing lock boxes much longer than STO? If there is a downward trend to be seen, they would already be aware of it.
Maybe yes, maybe no. Perfect World has been operating games in China for quite some time, and things like lock boxes, robust micro-transaction stores, and a nigh-unforgivable in-game grind are all staples of Eastern MMO's.
Perfect World Entertainment has only be operating relatively recently, and it seems like it's just in the last several months that we're seeing a lot of the more mainstream Eastern MMO affectations making their way into our games here.
So yeah, while they may have had such things before PWE acquired Cryptic, it was really only in their home markets, which may have taken to such things differently.
Lt. Commander
Join Date: Dec 2007
Posts: 120
# 6
05-31-2012, 08:55 AM
Really good explanation L99, and it would support PWE and their affliction for constantly having to make new games to keep the high spenders happy and the money rolling in.
Not so good for sto though with that outcome....
Lt. Commander
Join Date: Dec 2007
Posts: 120
# 7
05-31-2012, 09:18 AM
I do wonder if PWE really determines where the "sweet spot" for a lot of these lockbox prizes lands. I've not purchased any keys, simply because I realize it's totally a gamble and the odds of winning seem somewhat unreasonable, compared to have much you have to spend.

However, if there was a guaranteed method, such as a specific amount of LOBI or other currency would get you the grand prize, I might be much more inclined, but I also know there is no way I would spend more than $30 to guarantee the big prize, when others are spending in the hundreds of dollars.

Also, being a lifetime subscriber, as the C-store prices of things seem to increase, and the returns on the D exchange drop, I find I become more and more stagnant in what I am even wanting to purchase, even if the prices were much more reasonable. The charge for respecing a character, too, has a chilling effect on what I want to buy and try out, since that's another cost on top of a new ship.

Obviously, there are others who disagree and are funding the game substantially, but when looking at the costs to try, say, the Caitain carrier, purchase some more effective C-store fighters, and pay for a respec, the costs are well outside of what I would be willing to spend (especially after dropping $250 on a lifetime membership). I'd rather either just play the ships I have, use an alt, or stop playing until I earn enough C-store points through my allowance to buy a new ship in 6 months (again, a crazy amount of time to need to wait for the allowance, considering the lifetime subscription).
Lt. Commander
Join Date: Dec 2007
Posts: 120
# 8
05-31-2012, 09:34 AM
Quote:
Originally Posted by V-Mink
Does the Lobi store and things like it actually assist in retaining the high spenders?
If we go by L99's theory then it does give them a bonus . (I wanted to say added incentive but I refrained)
Considering that the high spenders are practically rolling in Lobi , they can easily get their bonus and/or consolation prize from the Lobi store .
So even if they did not win a ship , they have the ability to buy a boat load of semi-exclusive extras that only they an afford .
(yet even they get screwed because they lack the ability to become "wealthy" ingame , as they cannot sell their Lobi purchased items on the exchange)

On a semi-different topic , when I read the numbers L99 was throwing around , I came to think :
From this perspective , 70$ for a monocle actually makes sense . Heck , from this perspective , it's even cheap .
Just like from this spending perspective , the Lobi prices seem "reasonable" .
Lt. Commander
Join Date: Dec 2007
Posts: 120
# 9
05-31-2012, 09:35 AM
A good analysis with some very valid conclusions.

However, I think you are underestimating addiction and sheer bloody mindedness.
You assume the person who blows $500 will quit, and yes this would be the sensible thing to do.
It would also be a sensible thing to do to quit spending once you past about $20 (the cost of a C-store ship) . . . and yet they continued.

Gamblers are rarely sensible individuals.

Having said that STO's lockboxes don't really offer enough in the way of mid level rewards to really sink the claws into the gambling addicts . . . you know the kind of reward that whilst not worth the amount of money already put in will still encourage them to keep trying.

Not that I want to give them ideas on how to exploit venerable people. . . .
Lt. Commander
Join Date: Dec 2007
Posts: 120
# 10
05-31-2012, 09:38 AM
The logic and arguments are sound from the view point of someone who is not a professional, now both Dunnlang's calculations, and the ridiculous lobi prices make sense.

But what i don't understand, is that this is a STAR TREK game, it would take years to incorporate the decades of material that the Star Trek IP is made up of into the game. It would take even longer if we add the various novels, comic books, and other video games, and with the new movies and countless fan works, there truly is an infinite pool of resources in the Star Trek IP.

What doesn't make sense, is that why is Cryptic and PWE adopting a strategy that guarantees a run for 3-5 years, when a game like STO could very well run indefinitely?
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