20 Jan 2012

SWTOR: The Retention Rate Question

Earlier today I was listening to Talk of the Galaxy over on Galactic Public Radio, when they reminded me that the month of game time bundled with the full version of the game was about to expire and that subscriptions were just about to kick in. There was a little bit of debate about how many players would actually maintain their subscription after the end of the month, with the show hosts generally feeling that it’s a difficult thing to predict.

Trying to forecast renewal rates is pretty challenging at the best of times, mainly because there’s very few benchmarks on these figures for MMOs. The most common figure that’s announced is the total subscriber base, although sometimes we’ll hear about how those subscribers are distributed by market. We’re also not given churn rates, so we have no clue about the number of new subscribers coming in versus the ones that are leaving.

So what exactly is there to go on? Well, assuming that the best renewal rate BioWare can hope for is 100%, let’s have a look at what will help them keep that number high and what’s dragging it down like a lead weight.

The Pros

Kicking off with the most obvious, BioWare organised two very large beta weekends just before the game launched, inviting everyone who’d shown interest in the game to download it and try it out. This had two major benefits – it helped persuade people waiting for a 10 day “free trial” to preorder the game, but it also convinced people who didn’t like the game to not pick up the box at launch.

Content starvation is also a critical thing. One month is enough time for someone to hit level cap on one character if they’re playing regularly. For those being more relaxed about it or who have their attention split between games you’re looking at twice that. Plus there’s the reroll factor – people hitting 50 on one character only to roll and start working on the next.

There’s also more subtle methods that BioWare have used to retain subscribers, like requiring a payment method or gamecard before activating the game. The reason behind this is simple – players are more likely to cancel the subscription if they’re prompted to enter their details at the end of the bundled month.

And what about competition? The heavyweight rival World of Warcraft still doesn’t have any new content, and in fact Blizzard decided to make the latest Dragon Soul raid even easier for players to complete. While this might help raiddgroups get over a difficulty hurdle, I can’t see it being a great lure to pull people back. “Hey guys! You know that frustrating boss we were stuck on? He got nerfed! You can come back now!”. For anyone who wanted to see the content, LFR has given them exactly that.

And what about the single player market? Skyrim took an arrow to the knee, Mass Effect 3 is out in March (although the demo is going to destroy Valentines Day) and Diablo 3’s eruption from hell has been delayed. MMO and RPG gamers could be left in limbo until either Guild Wars 2 or The Secret World comes along to pick them up.

There’s also the news that anyone who bought the game and buys a one month subscription or game time card will qualify for the in game title ‘Founder’. While it’s not on the same level as a companion pet or weapon crystal, it’s an added incentive for people to stay in the game till patch 1.2 arrives.

The Cons

The Old Republic’s Achilles Heel right now is end-game content. It exists and it’s built to a high standard (the new Kaon Under Siege flashpoint is incredibly good fun) but it’s very difficult to get in to at the moment. With a population spread widely between the early levels and the cap and many guilds straddling between SWTOR and Warcraft, finding groups is an exercise in frustration. A standard population server might only see one or two groups formed through general chat channels in a 2 hour window. Unless you’re in a large guild populated with level 50 characters you’re going to get very bored very quickly.

There’s also been a couple of observations that have done BioWare no favours on the last day of subscribing. First was stock analyst Todd Mitchell coming out and cutting his price on EA stock, citing concerns with SWTOR’s sales performance and first month play observarions. Mitchell’s no newcomer to the videogames industry, having looked at their performance since at least 2006. Then there was the issue players started having with the unsubscribe page, again drawing attention to the date and fuelling conspiracy theories.

Also, just because Warcraft is asleep at the wheel doesn’t mean there’s no competition for SWTOR at all. As Sypster and Tesh reminded me on Twitter, Star Trek Online has just gone free to play. If you’re prepared to trade Lightsabers for Phasers then this might be a smooth (and cheap!) move. Alas, force powers are not included.

The Prediction

We know things are good but not great in SWTOR at present. We have an analyst cutting predictions and problems with the accessibility of end game content. But by the same token, we have a market with very little competition, either from newcomers or existing stalwarts. So what’s the figure?

Looking at other industries, churn rates for other industries tend to be fairly low. Verizon’s wireless subscriptions tend to have a churn rate of around 1.5%. Netflix use a rolling monthly contract and their churn rate recently rose to 4% following various blunders this year.

Meanwhile, analysts have historically pegged Warcarft’s churn rate at around the same as Netflix with 4-5%. That article’s from nearly 5 years back though, so it’s unclear if this figure is still accurate. There’s also some research from Nick Yee (a research scientist at PARC). His own research (PDF link, ‘Building an MMO With Mass Appeal’, pg 292)  indicates that “only 40% of new subscribers remain in a game for more than two months”.

So what’s the number? With the work that BioWare have put in before the game’s release coupled with this being month 1 and not month 2, I’d put the retention rate at somewhere around 60% to 70%, but probably on the lower end of things. After month 2 I’d expect another drop to about 40-50%, in-line with previous MMOs. This means that from the 2 million in sales at launch, SWTOR will end up with a stable base of about a million players from which to grow. This is broadly in-line with other predictions from a year ago, although we might not agree on the final number of subscribers.

Just like Chris mentioned over at The Daily Blink, subscribing to an MMO once the bundled month is up isn’t an automatic thing any more. With the current economic climate many of us are feeling the pinch and tightening our belts. Although I’ve made the decision to maintain a subscription to both SWTOR and WoW for now, there are a lot of gamers who can’t make that choice. Which one will work harder to earn our cash?

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