Here are the facts we know.
- The latest press release concerning The Secret World’s B2P conversion (made in December 12, 2012) has stated that, since the conversion was made the title has sold over 70,000 units or nearly a 30 percent rise in total sales, and a 400% increase in player activity.
What does this represent financially? I present a back-of-the-napkin calculation of the success of TSW’s B2P conversion.
- After going B2P, The Secret World was being sold for $30US if bought digitally and direct from Funcom’s store. However, Amazon and a number of other sellers were running a heavily hyped promotion giving away the game for $15US (regarded as them offloading their $15 30-day game time licenses following B2P), and TSW became Amazon’s top seller (The Secret World on sale at Amazon right now and #1 in game best sellers).
- Shortly after release, it was announced in August that TSW had moved 200K units. At that time the box price had yet to be discounted and was being sold for $50US.
- Let’s look at the figures we’ve been given. One month after the conversion, Funcom has sold 70,000 copies. As a 30% rise in overall sales, the number of boxes sold prior to the conversion was x*0.3=70k, x=70k/0.3=233.3k. This is only slightly higher than the number of subscribers at launch, 200k, so almost all of the pre-B2P box sales were made at the original non-discounted $50 price. Assuming that all of the original subscribers and new B2P adopters returned, this would mean a total of 233.3k+70k=303.33k active players. Given player activity increased by 400%, this provides an estimate for the number of subscribers pre-B2P: 303.33k/400%=76k minus a few tens of thousands if not all of the original players returned.
- Being generous, let’s assume not everyone was aware of the Amazon sale and the average B2P sales price lay somewhere between $15-$30: say midway, $22.50.
As a percentage of the overall box revenue generated by TSW, the B2P conversion has contributed:
- 70k*22.5/(70k*22.5+233.3k*50)=11.9% to box revenue over all time.
However, when factoring in subs this percentage drops significantly. Assuming that each initial adopter subscribed on average an additional 3 months (accounting for quitters), the percentage of overall revenue (box + subs) the B2P conversion has contributed is:
- 70k*22.5/(70k*22.5+233.3k*50+233.3k*3*15)=6.7% to revenue over all time.
However, now that TSW has gone B2P, it has lost its subscription income. Pre-B2P, when TSW was doing badly enough to warrant conversion it was making with 76k subscribers:
- 76k*$15 = $1.14M/month = 72% of the income generated by B2P sales in a month since conversion = $1.57M = 70k*$22.5
The number of new B2P sales is unsustainable however. As shown by the fact that the number of launch players (200k) plateaued immediately after release, B2P box sales should be expected to sharply drop off this and later months. The audience for a grindy, boring, always online, performance hungry, modern day puzzle adventure game is just that limited and reaching saturation.
So congratulations Funcom, you have truly jumped out of the frying pan and into the fire. The press release 30% increase in sales seen should be seen for what it is, a one-time mere 6-11% increase in revenue. This is a disaster. Deep discounting and steam sales work because they produce sales 2-10+x the ordinary volume, outweighing the revenue that would be generated with a static sales price and volume. For example “2D dungeon crawler The Binding of Isaac, for example, saw sales multiply by five when it was marked down by 50 percent [on Steam], and once it hit the front page as a temporary “Flash Deal” (for 75 percent off), sales multiplied by sixty.” 30% is nothing.
Congratulations. Your B2P conversion has been an unqualified success (sarcastic). In one month, you have just barely managed to exceed the income that was being generated from monthly subs pre-model and which will not sharply drop off as box sales are a one-time purchase only.
Note: item shop transactions have not been factored in. However, we would like to believe people are not so stupid as to buy overpriced bind-to-character vanity clothes and that the cash shop’s overall contribution to revenue is negligible.
No wonder the company is continuing to close studios and lay off staff. Goodbye Funcom!