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Customer Value

Discussion in 'UHall' started by Yewish News, Feb 2, 2008.

  1. Yewish News

    Yewish News Guest

    Before anyone raises an eyebrow at the figure I am about to cite, please note that I am British and our currency is very strong against the dollar. I do not have 10 accounts.

    Each year I spend approximately $1200 on Ultima Online, and I have been doing so for let's say 6 years. In truth it's more, but I didn't have all the accounts open at the start so I did the math and worked out that I have paid for 5 accounts over the course of 6 years. This means that EA has basically had $7200 out of me.

    Those figures established, I wonder what EA would do to keep me as a customer? In other industries, I'd be offered something to keep me on as a customer. Take for example my Mobile Phone contract, I spend a lot of money with T-Mobile so they basically gave me a free phone (Nokia N95, and this is when they first came out) and a reduction on my monthly line rental. They admitted to me that it meant they'd not make a profit on contract for 6 months, but they worked out that it was worth it in the long run.

    Does EA not have a similar policy? Just a thought.
     
  2. Yewish News

    Yewish News Guest

    Just to add to my original post:

    I think that historically this hasn't been a consideration for most MMORPG's. The competition wasn't that thick and the industry was so new they had a fairly unprofessional approach toward it. Now that its a multi-billion dollar industry, isn't it time that someone really lead the way on this?
     
  3. Clx-

    Clx- Guest

    Seems logical - Haven't seen much logic in any decisions taken regarding UO for quite a few years though..
     
  4. Kaj

    Kaj Lore Keeper
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    The difference between UO and your mobile phone is that T-Mobile just had high start up costs. Maintaining their network is relatively cheap. The phones are bought via contracts with Nokia for a low price. Hence their company is just a goldmine, where more customers with contracts mean a more solid income. Processing a text message doesn't actually cost them *any* money. The servers and equipment will be 'online' regardless.

    Versus UO. They need to have a constant team of developers and employees, so they have relatively high costs at all points in time. Do the math:
    20 people at an average $45k per year = 900k. Which is A LOT, if you have to take into consideration that these people also need an office, get ill etc, and you need servers and bandwidth. If you have 100k paying customers (which will average out at below 12m income per year, due to payment costs etc), there's very little spare to buy gifts for your customers. And of course EA isn't into philanthropy. So some $$ needs to be made to keep everyone happy.
    A big title game costs a few million to develop. And even that's stressing it usually.
     
  5. Yewish News

    Yewish News Guest

    <blockquote><hr>

    The difference between UO and your mobile phone is that T-Mobile just had high start up costs. Maintaining their network is relatively cheap. The phones are bought via contracts with Nokia for a low price. Hence their company is just a goldmine, where more customers with contracts mean a more solid income. Processing a text message doesn't actually cost them *any* money. The servers and equipment will be 'online' regardless.

    Versus UO. They need to have a constant team of developers and employees, so they have relatively high costs at all points in time. Do the math:
    20 people at an average $45k per year = 900k. Which is A LOT, if you have to take into consideration that these people also need an office, get ill etc, and you need servers and bandwidth. If you have 100k paying customers (which will average out at below 12m income per year, due to payment costs etc), there's very little spare to buy gifts for your customers. And of course EA isn't into philanthropy. So some $$ needs to be made to keep everyone happy.
    A big title game costs a few million to develop. And even that's stressing it usually.

    [/ QUOTE ]

    Sorry, but you're wrong. I get discounts from everyone really - Virgin Media (TV/Internet). British Airways (Flights). My Web Host. Etc. You think none of these groups have costs?

    T-Mobile employs a huge staff in the UK and overseas, has a string of buildings to maintain, has to upgrade their network on a regular basis (upgrade to 3g cost billions for example) and their profit margin is not that big. Virgin Media has billions in debt and British Airways has had it's own share of financial difficulties since 11/9. If anything, it's UO that has the low overheads. It didn't cost them billions to roll out their last expansion, but a new fleet of planes or the step up from 20mb cons to 50mb on Virgin is going to cast $$$$$$$$$

    So, really your point is moot. And it's all about RETENTION. If they want to retain their customers they need to give us a reason to stay loyal.
     
  6. Sneaky Que

    Sneaky Que Babbling Loonie
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    We have this already, they are called VETERAN REWARDS!
     
  7. Yewish News

    Yewish News Guest

    <blockquote><hr>

    We have this already, they are called VETERAN REWARDS!

    [/ QUOTE ]

    I disagree, they are not really going going to retain customers.
     
  8. Guest

    Guest Guest

    I think a good rule of thumb is that the total cost to the company of an employee (salary+benefits+office+administration+equipment) is generally twice the employee's salary. The price of servers has dropped off a cliff (unless they're running off the original hardware in which case scrounging replacement parts/support can get pricey). Gross margin expectations are all over the place - I have no idea what it is in the online industry. But in the end though, it's a moot point - it's a business, not a tax. We don't get a vote on what what's done with the money once it leaves our hands.

    What I find interesting is that games like Guild Wars can sustain servers off the cost of expansion packs alone - no subscription fees at all.
     
  9. Guest

    Guest Guest

    <blockquote><hr>

    20 people at an average $45k per year = 900k. Which is A LOT, if you have to take into consideration that these people also need an office, get ill etc, and you need servers and bandwidth. If you have 100k paying customers (which will average out at below 12m income per year, due to payment costs etc), there's very little spare to buy gifts for your customers.

    [/ QUOTE ]
    Yeah, EA is really hurting with that 10 million dollar profit in your equation.
     
  10. Setnaffa

    Setnaffa Certifiable
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    Not entirely true. I worked as a contractor for a major Wireless company back in 2001-2002. We deployed 17,000 computer systems in their Western Region. I can confirm they have a huge facility and administration cost. Servers and networks don't just keep working on their own. Marketing is very expensive and new technology costs billions (3G networks, HSUPA, etc.). The current frequency auction will cost most communication companies billions as well.

    As for developers, writing games is no more demanding or costly than writing software to control the flow of data/voice from millions of phones and making sure the proper accounts are billed for each and every connection.

    To pay for all of their costs, Wireless companies have a sneaky way of reducing churn (losing customers). They force you into long-term contracts (1 year for service changes and 2 years when you get one of their "free" phones). To get out of one of these contracts, you have to pay a huge penalty. Now if EA did something similar and offered me 4 Transfer/Advanced Char tokens, 20% Storage Increase, and a 7th character to sign up for 1 year, I'd probably do that. The cost to me would be $120 per account, but the items they inticed me with are really just pixels, so no real cost to them.

    Unfortunately, they haven't thought of such a thing. EA has really failed to understand that subscriptions need to be properly serviced (Customer Support, billing, etc.) beyond the initial game sale. Unlike something like Madden, the sale doesn't end on the store shelf - that's actually where it starts. They've tried, but they haven't invested enough into keeping their subs. If they were smart, they'd hire the VP or President of the Servicing division of any major wireless company. At $144 per subscription per year, every 6,944 accounts would add $1,000,000 to their sales. Just a little investment on their part, could make this game fully populated again.




    $45K per dev? That might pay for their benefit package, but that's not even entry level pay for a developer right out of College. The last time I was a pure developer back in 1998 I was making over $90K, and that was 10 years ago.
     
  11. Babble

    Babble Guest

    This is the gaming industry where on average a gamer stays 1 years then buggers off to the next game.

    I am pretty sure developers and ea are still puzzled how so many people still play uo with their service and their incompetence to get new customers.

    Was a cute quote when the DAOC producer was surprised how many people still played UO.
     
  12. Nixon[I-C]

    Nixon[I-C] Certifiable
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    <blockquote><hr>

    This is the gaming industry where on average a gamer stays 1 years then buggers off to the next game.

    [/ QUOTE ]

    Is that really the case now though? I don't believe so when it comes to online games.

    I'm sure most of us here started as average gamers, yet we've been around for years. WoW has been sucessful for multiple years now, as has EQ and other games.

    The fact that the market seems to be expanding, shows that if anything, the companies should be doing more to keep you playing their game and spending your precious $$.
     
  13. Kaj

    Kaj Lore Keeper
    Stratics Veteran

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    <blockquote><hr>

    Not entirely true. I worked as a contractor for a major Wireless company back in 2001-2002. We deployed 17,000 computer systems in their Western Region. I can confirm they have a huge facility and administration cost. Servers and networks don't just keep working on their own. Marketing is very expensive and new technology costs billions (3G networks, HSUPA, etc.). The current frequency auction will cost most communication companies billions as well.

    As for developers, writing games is no more demanding or costly than writing software to control the flow of data/voice from millions of phones and making sure the proper accounts are billed for each and every connection.

    To pay for all of their costs, Wireless companies have a sneaky way of reducing churn (losing customers). They force you into long-term contracts (1 year for service changes and 2 years when you get one of their "free" phones). To get out of one of these contracts, you have to pay a huge penalty. Now if EA did something similar and offered me 4 Transfer/Advanced Char tokens, 20% Storage Increase, and a 7th character to sign up for 1 year, I'd probably do that. The cost to me would be $120 per account, but the items they inticed me with are really just pixels, so no real cost to them.

    Unfortunately, they haven't thought of such a thing. EA has really failed to understand that subscriptions need to be properly serviced (Customer Support, billing, etc.) beyond the initial game sale. Unlike something like Madden, the sale doesn't end on the store shelf - that's actually where it starts. They've tried, but they haven't invested enough into keeping their subs. If they were smart, they'd hire the VP or President of the Servicing division of any major wireless company. At $144 per subscription per year, every 6,944 accounts would add $1,000,000 to their sales. Just a little investment on their part, could make this game fully populated again.




    $45K per dev? That might pay for their benefit package, but that's not even entry level pay for a developer right out of College. The last time I was a pure developer back in 1998 I was making over $90K, and that was 10 years ago.

    [/ QUOTE ]
    Again, I said start up costs are high. Costs to keep it running are relatively low. Of course the amounts spent in the mobile phone market are huge compared to a game like UO. But comparing those numbers is not a proper comparison. Everything will seem bland compared to the amounts of money generated in the fuel market. Shell had a profit of over $800 per second in 2007.

    As for your example with the transfer tokens etc, that would decrease the value of them and cease all RL cash purchases of those items. So in the end, EA would lose out. I spent around $100 alone in ML upgrades, and bank expansions in the past 2 months.

    As for the wages. I'm not sure about US wages.
    I do know that a coder straight out of college in the EU will be happy to make €28k/year here. $45k/year was just an example. I don't know the exact numbers.
     
  14. Babble

    Babble Guest

    On average I would say yes, if you take the other games.
    UO is different as it has housing, but that does not mean that ea management knows that too.
     
  15. Paris_Hilton

    Paris_Hilton Guest

    <blockquote><hr>

    Not entirely true. I worked as a contractor for a major Wireless company back in 2001-2002. We deployed 17,000 computer systems in their Western Region. I can confirm they have a huge facility and administration cost. Servers and networks don't just keep working on their own. Marketing is very expensive and new technology costs billions (3G networks, HSUPA, etc.). The current frequency auction will cost most communication companies billions as well.

    As for developers, writing games is no more demanding or costly than writing software to control the flow of data/voice from millions of phones and making sure the proper accounts are billed for each and every connection.

    To pay for all of their costs, Wireless companies have a sneaky way of reducing churn (losing customers). They force you into long-term contracts (1 year for service changes and 2 years when you get one of their "free" phones). To get out of one of these contracts, you have to pay a huge penalty. Now if EA did something similar and offered me 4 Transfer/Advanced Char tokens, 20% Storage Increase, and a 7th character to sign up for 1 year, I'd probably do that. The cost to me would be $120 per account, but the items they inticed me with are really just pixels, so no real cost to them.

    Unfortunately, they haven't thought of such a thing. EA has really failed to understand that subscriptions need to be properly serviced (Customer Support, billing, etc.) beyond the initial game sale. Unlike something like Madden, the sale doesn't end on the store shelf - that's actually where it starts. They've tried, but they haven't invested enough into keeping their subs. If they were smart, they'd hire the VP or President of the Servicing division of any major wireless company. At $144 per subscription per year, every 6,944 accounts would add $1,000,000 to their sales. Just a little investment on their part, could make this game fully populated again.




    $45K per dev? That might pay for their benefit package, but that's not even entry level pay for a developer right out of College. The last time I was a pure developer back in 1998 I was making over $90K, and that was 10 years ago.

    [/ QUOTE ]




    "$45K per dev? That might pay for their benefit package, but that's not even entry level pay for a developer right out of College."



    EA doesn't require that the developers they hire be "right out of college".

    Wilki was a former player hired as community service rep (someone informed me of this right here in this forum) then promoted to game designer.

    When he was promoted to game designer it was announced on UO.com but no mention was made of his credentials as a designer, not even that he had designed a necklace out of colored macaroni in kindergarten. In his goodbye post when he left his job as a "game designer" for UO he did mention that he was going back to college to "finish" his degree (how much does your average college dropout earn per year?).


    They recently announced that they hired a new game designer, formerly a UO game master (and probably a UO player before and during that) as near as I can understand. Again, no credentials as a "game designer" were mentioned, which leads me to believe that they have none.


    So if the job as a UO dev pays more than 30k per year I'd be greatly amazed.
     
  16. Lord_Asterix

    Lord_Asterix Guest

    <blockquote><hr>

    <blockquote><hr>

    This is the gaming industry where on average a gamer stays 1 years then buggers off to the next game.

    [/ QUOTE ]

    Is that really the case now though? I don't believe so when it comes to online games.

    I'm sure most of us here started as average gamers, yet we've been around for years. WoW has been sucessful for multiple years now, as has EQ and other games.

    The fact that the market seems to be expanding, shows that if anything, the companies should be doing more to keep you playing their game and spending your precious $$.

    [/ QUOTE ]
    I agree. This is not something like a console game where you buy it, play it for maybe a month then it collects dust. EA needs to form some sort of strategy for UO, not just try and copy parts of WoW.
     
  17. Guest

    Guest Guest

    <blockquote><hr>

    We have this already, they are called VETERAN REWARDS!

    [/ QUOTE ]

    What does the most expensive vet reward go for, 5-6 mill on the high end? That's worth what these days, $7.50-$9.00?

    Account Fees: $59.99 * 2 = $119.98

    Discount % (high end): 7.5%

    And that's only if you cash everything out, not actually keep the stuff and enjoy it.

    So that's like saying, as in the original analogy above, "we don't give you a discount for being a long-time cell phone customer but feel free to pawn your accessories off and consider that your discount (ie. incentive to stay with us)!" -OR- "Your reward is us not shutting our network down!" I personally LOVE the people that say that here!!
     
  18. Babble

    Babble Guest

    I am not sure the message that mmorpgs are to be handled differently than console games, reached ea yet.
     
  19. Cybrdragon

    Cybrdragon Guest

    <blockquote><hr>

    <blockquote><hr>

    This is the gaming industry where on average a gamer stays 1 years then buggers off to the next game.

    [/ QUOTE ]

    Is that really the case now though? I don't believe so when it comes to online games.

    I'm sure most of us here started as average gamers, yet we've been around for years. WoW has been sucessful for multiple years now, as has EQ and other games.

    The fact that the market seems to be expanding, shows that if anything, the companies should be doing more to keep you playing their game and spending your precious $$.

    [/ QUOTE ]


    It has been my experience as a guild leader for many years, that the average UO player stays for about a year, gets bored, and leaves. Sometimes they come back, stay for a week, and then leave again. A very few guild members will stick around for several years and form the core of a guild. But even alot of them are leaving now, one by one, from various guilds, and the game in general.

    The average stratics poster has been around longer than a year. But most UO players that I've known never posted on stratics at all. So stratics isn't a really good indicator for time spent in with the game.

    Again, this is my experience, and may not be the experience of others.

    I tend to agree with the posters who think that in a more competative game market, the game companies should be doing more to keep subscribers, not less.