Michael Pachter, the Wedbush Securities analyst, is an interesting figure in the videogame business. The fact that a financial analyst for a securities firm has his own show on Gametrailers.com is something very strange if you think about it. But with the popularity of the industry being what it is, we gamers want all the information we can get, even regarding the business side of things. Unfortunately, that side of the business is something we don’t always want to hear. In a recently released research note, Pachter revealed that he feels that videogame companies are ignoring profits by not attempting to monetize online multiplayer.
Subscription based multiplayer is something that gets thrown around frequently these days, especially with the success of the Call of Duty series. Activision has millions of players playing their multiplayer game and the only profit beyond the original $60 purchase is if the players happen to purchase a map pack or two. Pachter feels that the number of quality hours provided by games today far surpasses what should be available for $60 and is hurting the industry:
“We firmly believe that until the publishers address monetisation of multiplayer, game sales will continue to be challenged by the publishers’ altruistic decision to provide significantly more entertainment value per hour than ever in history.”
If you compare Black Ops to something like God of War 3 you can see the point he is making. GoW 3 is a $60 game that can be beat in eight or so hours. Now some may play it more than once, but it is still an eight hour game. Compare that to the $60 Black Ops which has an eight hour single player campaign on top of a multiplayer mode that people will spend days and days on. The fact that someone is potentially playing a game for literally 100 or so days and have only paid the game publisher $60 is what is frustrating to Pachter
“Considering that each of the publicly traded publishers exists to maximise shareholder value, we view their reticence to monetise multiplayer as a betrayal of shareholder trust, and can only hope that each implements plans to address the impact of increasing free multiplayer going forward. Even if we are mistaken and charging for multiplayer doesn’t result in packaged goods growth, we think that investors will be satisfied if publisher revenues once again begin to grow due to contribution from multiplayer monetisation. In our view, monetisation of multiplayer is one of the greatest opportunities for the publishers, and we think that it would be a serious strategic error to pass on this opportunity.”
As someone who enjoys multiplayer, I hate whenever this topic comes up. I understand that these companies need to make money in order to keep providing us these games, but there is a limit to what they can get away with. Yes, the hardcore gamer who buys several games a month is probably likely willing to get a subscription to a game. Then again maybe they wouldn’t, as they would keep moving on from game to game, not wanting to tie themselves to one individual game. On the other hand you have the casual gamers who may buy a game or two a year such as Madden or CoD. Asking them to buy a $300 system, a $60 game, and in the case of Xbox another $60 to play online, and then potentially another fee on top of all that? I don’t think they will be willing to do it either.
Just because millions of people play online games religiously doesn’t mean millions will be willing, or able, to pay more to keep playing. Millions play online now because it is reasonably accessible and affordable. Would it be worth losing a significant portion of the player base to have small hardcore audience pay $20 a month? Maybe it is to these companies. However, if they do go down that route I know one less customer they will have online. Gaming is expensive as it is already, I don’t need any extra fees on top of what I have paid already.