Gold Seller Ad's on Official WoW Forums

Posted by Daeity On Tuesday, August 31, 2010

This is actually a little bit of history which I'd like to preserve on the blog.

Back in late January 2009, Blizzard's advertisements were accidentally swapped out with Gold Seller ads. (Links: wow.com, cgenetwork.com, 1up.com)


Other than this one incident, I recall that it happened a few times actually: on BNet Forums, WoW Forums, and the waiting room of Diablo 2.

But in each case, most (if not all) news instances started to "disappear" and people later forgot. It didn't help though that threads were locked, forum entries were deleted, and Blizzard told sites to remove the news either.

So it's difficult finding information on these accidents now and it's something that Blizzard would prefer that you forget. =]

Reading over the forums, you'll see that Blizzard employees and players alike will all insist that "Blizzard has NEVER been breached. They've never been hacked. They have security measures in place that make them foolproof and 100% protected."

(Note: I never understood that logic so I simply chalk it up to "Blizzard Indoctrination". It's funny because if a game developer creates games that melt video cards and are full of bugs, cheats, issues that take years to fix, exploits, and can easily be hacked and exploited.. why would anything else they create be so different?)

Although employees insist that "To this date Blizzard has never been breached", in an earlier post I listed many cases of Blizzard database breaches, how Blizzard employee accounts have been compromised (and used to spread keyloggers on official forums), and other hacking activities. When the Blizzard employee accounts were compromised, Blizzard sent notifications to websites to remove the information ("Reputation Management"). And those were just the breaches that made public headlines! Who really knows how many breaches there have been?

Some of these are just accidents and "glitches" while others are major security breaches.

This has been going on for years, but it's obvious that it has been forgotten by most. That's why preservation is so important. =]

World of Warcraft China: Interesting Facts - Part 7

Posted by Daeity On Saturday, August 28, 2010

NA/EU Realm Populations

In North America and Europe, realm population information is extremely difficult to come by.

You pretty much have to rely on WarcraftRealm's CensusPlus UI Mod (Link). Right now, for example it's shows a total of 5.5M characters (however, these are characters from Level 10-80 and each account can have a maximum of 50 players across all realms.)

So, you can understand that the numbers aren't that accurate.

Blizzard also doesn't share Realm Population information because of obvious reasons (those details can only hurt them, not help them.) Even the definition of Low, Medium, and High Population realms can change - there's no fixed number as I have stated previously.

Blizzard has even confirmed this to be true. The populations are relative, meaning that they can shift back and forth at any time, depending on the population of other realms and their relation to the servers (Source). Population caps can even be increased/decreased depending on the number of servers being utilized or out of commission.

That troll from Blizzard even had something to say on this specific matter (before I attached Blizzard's confirmation, of course): Is it made up like most of the other "facts" on this site?

(Blizzard just confirmed it to be a fact Mr. Blizzard Troll. I guess that's further confirmation that he's just a support agent, and doesn't actually know anything about Blizzard's internal operations.)

China Realm Populations

So to summarize, in NA/EU it's almost impossible to determine census information because Blizzard will not share the information.

But in China, it's operated by NetEase so it's a totally different story! They're completely open to sharing player information on each realm. =]

Census information is pulled straight from the WoW servers by Beijing Network Technology Ltd. (there's no Census UIMod needed on each user's PC), and is publicly available here. Below are the numbers during peak gaming hours on WoW. In this case, there were approx. 790,000 users logged in concurrently.

Alliance: 338300 - Horde: 451655
So basically, a 3:4 ratio which is not bad.

The number of realms in China has also been growing steadily (many new realms launched this year and last), and some Chinese players have noted that many people are now returning in CWOW in anticipation of WOTLK's imminent release.

However, the first thing you'll notice is the incredible imbalances on the realms. I've attached screenshots below.

Some servers have 1200 horde and only 40 Alliance on the server. That's a 1:60 ratio! These drastic differences have also been confirmed by CWOW players.. they'll have thousands of players on one faction, but less than 50 on the other. It's not uncommon at all.

There also doesn't appear to be a lot of realm balancing activities. As you can see, realm A:H ratios are all over the place and most realms operate with one side significantly bigger than another. Because of this, it turns most realms into a PVE (everyone working together on one side) type realm.

To confirm my assumption, I checked with several CWOW players. They said that PVP is not very common in China, and it's mostly PVE. A more recent comment even stated, "even on PVP servers, PVE is much more popular."

As opposed to NA/EU Realms, the CWOW gaming culture seems to favor "Playing Together" rather than "Playing Against Each Other" (on average). There are many realms with a 1:0.01 ratio for example. And that's very accurate information (as hard as it is to believe for US players) and can be confirmed by any Chinese players playing on those realms. Server populations have actually improved quite a bit bit over the past few weeks, which is a good sign for WOTLK. =]

It's all pretty neat actually, and also explains why Guilds and gold PUGs are so huge and why gold farming is more popular and strategies used are almost identical. (For example, rare gold farming strategies that are applicable to NA/EU might not work in China or players probably aren't even aware of them.)

Based on those figures, I have to wonder if the same is true for NA/EU realms? When talking to US players, they often claim that their servers have 1:2, 1:4, or even 1:10 ratios (either they out-number the opposite faction, or vice versa.) They never had any evidence to back up their claims though, since realm population is not shared by Blizzard.


New WoW and Starcraft 2 In-Game Items at Blizzcon 2010

Posted by Daeity On Thursday, August 26, 2010

Predicted last month (Link), this is also a good "sneak peek" of other upcoming virtual items that will be made available at the SC2 store. You'll also see similar virtual items in Diablo 3 no doubt.

Blizzcon 2010 attendees (online and IRL) will receive an exclusive In-Game WoW Pet and SC2 players will receive an exclusive Character Portrait (Murloc Marine) and have special unit model changes made (e.g. decals on your armor.)

If you really want these decals for your SC2 models and you can't attend - don't worry. There will be plenty of other options available when the SC2 store opens and you can have your own choice of $10-25 decals (or some other form of unique model change or modified texture). =]

Blizzard might even donate the initial proceeds to charity!

At Blizzcon 2010 (this coming October), there is also supposed to be a "HUGE" Diablo 3 announcement. Game Director Jay Wilson said, "I can say that this Blizzcon, in terms of Diablo news, will be the biggest one that we've ever had."

I really haven't been following Diablo 3 that much, and I don't have any inside contacts that are working on that specific project there so I have no idea what the announcement will be.

But, I am completely expecting to be disappointed.

Here's what I'm thinking off the top of my head (in order of most likely in the unlikely event the news will indeed be "huge"):

1. It better not be anything stupid, like introducing multiple new classes. "Huge news everyone! There are two new classes!".. "Just kidding.. there's THREE! OMG!" *cheers and yelling from the crowd and many erections*
2. Maybe #1 but also throw in some new "features" to promote, like crafting skills, a PVP arena (or other PVP related stuff similar to WoW), new spells (also similar to WoW), hired NPCs, and/or some web and mobile components that are tied into the game.
3. That D3 is ahead of schedule and we'll see it sooner than expected like next year. (They won't give an exact date though.)
4. Diablo 3 will not just release for the PC, but also the PS3 and XBOX360. Yay.
5. Diablo 3 will be an On-Demand gaming platform (improbable though, as it's too soon.)

I can't see there being any other kind of "big news". He also said that it will be the "biggest one we've ever had", so I really hope it's not just the introduction of 1 new class.. but it probably will be.

Blizzard Loves Botters

Posted by Daeity On Wednesday, August 25, 2010

As mentioned in previous posts, Blizzard bans players at a rate of 100k per month. It's probably closer to 60k now, though, due to diminishing subscription numbers.

For the longest time though, they were making a profit of approx. $12 million dollars per month just by banning players. (The cost of new subscription, old subscription, WoW license + expansion packs.)

It's a pretty big chunk too. Banning players apparently amounts to approx. 10-15% of Activision Blizzard's Quarterly Net Income!

Not only that, but on the "books" it gives the appearance that they have 2 players when, in fact, they only have 1 player. This doubles their "Active Subscription" numbers to please the shareholders and improve customer confidence. Banning players is just another "alternative revenue stream" really. And, they'll be making even more money (per banned player) when Cataclysm comes out.

"But if a player get's banned, why then is it so easy for them to start back up again? They're probably highly technical right? They use new PCs, new MAC IDs (or spoofing software), employ proxy servers to mask their IP addresses, change their accounts around, right??"

Well, no actually. Let me explain.

Blizzard collects a TON of uniquely identifying and personal information about you.

Let's review the WoW Client and associated Warden system.

Warden, as you know, is a polymorphic (hidden) application that hides on your system and constantly changes it's code to remain hidden and obscure it's activities. It collects a ton of information from your PC and forwards it all to Blizzard.

If you weren't aware of this, here's some information to bring you up to speed:

http://us.blizzard.com/en-us/company/about/privacy.html
http://www.worldofwarcraft.com/legal/termsofuse.html
http://www.wow.com/2007/11/15/blizzards-new-warden-and-our-privacy/
http://www.eff.org/deeplinks/2005/10/new-gaming-feature-spyware
http://www.computerandvideogames.com/article.php?id=127684

According to Blizzard, the purpose of the software is:

- to make sure you can play the game without fear of hacks or keyloggers
- to protect your account from being compromised
- check for hacks and bots to prevent cheating
- survey for future games so that developers can better understand our systems. "During each survey period, we obtain information regarding the CPU, RAM, operating system, video, audio, HD/CD/DVD, and network connection you use to connect to World of Warcraft." (Link)

There's a ton of information that Warden collects. It includes, but certainly not limited to:

- IP Address
- PC Name
- User Names / Logged in User Name
- MAC Address
- OS Version, Patches installed
- Browser Version
- Software Installed
- Website URLs open at the time of the scan
- Documents on desktop, or documents open at the time of scan
- Accesses every process and program running on the PC
- Sniffs email addresses
- Webpage favorites and bookmarks

How serious is Blizzard in stopping this type of activity?

Even though they have the information available to completely ban cheaters for good, or at least make it extremely difficult for them to create a new account, they don't.

Blizzard collects a ton of unique information about your PC constantly but they only ban the ACCOUNTS and nothing else.

To be clear:

- Blizzard does NOT ban by IP Address (they know if it's static).
- Blizzard does NOT ban by MAC Address (very easy to do, highly effective).
- Blizzard does NOT ban by user name, address, credit card information or any other unique info.

This means that if you're a horrible cheating exploiting speed-hacking PVP bastard, and someone catches you and reports you, all you have to do is simply create a new account and power-level your toons back up to 80 within a week. That's it. Feel free to put it on your old credit card too, Blizzard doesn't care.

How serious is Blizzard in protecting the user?

Warden is also supposed to protect your account from key loggers and trojan horses, not just detect cheaters and botters.

I installed 3 common WoW keylogging applications (on a testbed PC of course), Warden did not detect them or warn me at all when logging into the servers. I suppose it's possible that Warden's account protection features haven't been updated in 5 years.. after all, most of their efforts seem concentrated on trying to detect cheaters and botters (and build up a list of "Players To Be Banned").

Warden has been so ineffective in protecting users that Blizzard had to release the Authenticator token. It wouldn't take much though to get Warden to detect keyloggers and actually protect users, but that would cut into their Authenticator sales.

All of these facts point to a single truth: Blizzard is serious about detecting cheaters, but not serious about protecting the user. They want the return business after all. :)

Warden 2.0

In an earlier post, I had said:

"And because they can introduce the services any time they want, they only have to release them if they are showing poor performance for that quarter."

Coincidentally, Warden 2.0 was released on June 23, 2010 in the middle of the quarter when their profits were the lowest they've seen in 21 months.

There was a huge BLITZ on banning accounts, Blizzard got some good PR and gave the impression that they're making WoW safer for players and stopping hacks, but nothing has really changed at all. Banned players have re-activated their accounts and Blizzard received a massive spike in profits from the "returning players."

It's just like when police have "blitzes" themselves.. speeding blitz, unsafe vehicle blitz, sex trafficking blitz, drug blitz, etc. It's only effective that one time, there's never any follow up or consistency, and it's really just to rebuild confidence and address complaints. Nothing ever changes though. If Blizzard was serious about protecting honest users, bans would be permanent and based on the person not the account.

Warden 2.0 is a very clever alternative revenue stream for Blizzard.

Even though they can create new accounts at any time, botters, hackers, cheaters will always need to employ new methods to avoid detection however. Mostly because it's inconvenient when they get caught and they have to start from scratch. They never have any worries about not being able to play again.. it's just a renewed investment of time.

It's under Blizzard's best interest though to keep detection algorithms up to date however. The more players they can ban, the more reactivations there will be, and the more profit they reap. =]

tl;dr; Warden is an ineffective anti-cheating method by design and is employed as a means to reap profit.

WOTLK China Release Date Finally!

Posted by Daeity On Tuesday, August 24, 2010

Blizzard has officially announced that Wrath of the Lich King will launch in mainland China on August 31, 2010. Hooray!

Here's the official announcement: Source

China's last expansion pack was September 6, 2007 (Burning Crusade). And WOTLK launched in NA/EU on November 13, 2008.

If you want more information about WoW China, check out the series starting with this one.

Blizzard is hoping that this new development in China and the launch of Cataclysm will help revitalize decreasing user counts. Blizzard has officially stated that their numbers have remained about the same since Feb. 2008, however player counts have actually decreased. They're predicting a significant amount of new subscriptions in China, which I will be monitoring with great anticipation. =]

One of the worries, of course, is that because this delay has gone on for so long (users are just sick-and-tired and are playing other MMORPGs) and many characters have moved to other servers (Taiwan mostly, and EU/US in some cases) to play WOTLK, that this launch won't nearly have as many new players as they had hoped. It _should_ be about 2 million new subscriptions within the first week.. anything less than that would be cause for concern. =]

Starcraft 2 Paid Services Coming Soon

Posted by Daeity On Sunday, August 22, 2010

As predicted last month, Battle.net is introducing new paid services for Starcraft 2.

Namely, Paid Name Services. =]

Your first name change is free and subsequent name changes will be accompanied by a fee.

Here's the direct link to Blizzard's news announcement: Source

This is really just the beginning and there will certainly be more paid services and other forms of micro-transactions incoming for Blizzard's other new games too.

What's interesting though is that Blizzard stated that SC2 would never have any micro-transactions. And, a long time ago they also said the same thing ("Blizzard Says No Micro-Transactions for WoW") about World of Warcraft. (Source 1 & Source 2)

When I talked about Blizzard's directives to monetize Battle.net (how Blizzard doesn't always tell the "truth" and I predicted that SC2 would have paid services like name changing) it met with a little bit of hostility. =]

I allow anonymous comments on the blog so that people can easily make posts without having to create new accounts. However, there have been many comments (Blizzard fanboys and Blizzard themselves) that I've had to delete because of swearing, but mostly because they provide no insight, supporting documentation, or signs of intelligence (e.g. "ur wrong!!"). It could also be that "Blizzard indoctrination" that I've been writing about. Apparently, it was a "retarded theory" that Starcraft 2 would have paid services though (that's actually what the Blizzard employee posted.) =]

So, apparently the PS3 has finally been hacked.

The manufacturer's webpage (http://psjailbreak.com) is currently down, but the USB Dongle is available from OZModchips (Link) at a debut price of $170.

Prices will eventually drop (you know, that whole supply and demand thing) if that's a little out of your price range. =]

The dongle, called "PS Jailbreak" allows you to copy your original PS3 games onto a FAT32 hard drive, and play from there. It was designed for the latest 3.41 firmware, however it works on some of the older versions as well.

Other than that, it's for PS3 games specifically, so you cannot dump PS1/PS2 or Bluray movies. It's very user friendly, does not void your warranty (you do not need to open up the case), and online play currently works with it.

I'll be following PS3 hardware and software sales numbers to see if this will actually have any impact on piracy rates.


* Update (08/20/10):

Apparently the dongle might not be anything special and can be cloned onto most USB devices. There's one version floating around right now that only functions on dev kit PS3's. It might not be too long before we see a USB image for retail PS3's on torrent websites. I'm sure we'll find out soon enough once people's orders start arriving (could be a JIG dongle with some minor protection to protect sales.)

Don't get impatient with this one, there will be plenty of people releasing trojan horses that will either infect your PC or brick your PS3. Wait until it's fully tested by other foolish users. =]

$170 is a little pricey, but it will probably drop when you start seeing the image available. And of course, the vendors will issue many warnings about where to obtain the USB device from. You'll see some standard scare tactics like: "Torrent sites can't be trusted", "Risk of trojan", "Risk of ruining for PS3", "Buy from us, you can trust us." etc. etc.

Here are some other interesting tid-bits of information about WoW China thanks to the guys from wow-in-chinese.forum2jeux.com and other sources.

Gameplay, Culturally, and Socially

  • The first thing you'll notice is that CWOW players are much more closed towards foreigners, or perhaps shy.
  • There are no Chuck Norris, Murloc, or Justin Bieber jokes. Most of general chat is full of gold sellers (raids, power leveling, trades, etc.) or gold buyers.
  • Trolling and name calling is minimal compared to most US realms.
  • Raid leaders have a tendency to bring in too many healers.
  • Most players use cookie cutter builds and are not open to alternate builds.
  • Raid mates will sing karoke on raid voice chat.
  • Many people in game area available for hire for in-game gold to do practically anything you want (raids, power leveling, protection, scouting, delivery). It's possible to go from level 10-70 without ever spilling any blood and level very quickly.
  • You can purchase raid gear for gold or gamecards.
  • CWOW users are currently limited to Burning Crusade content, but playing with latest patches - including WOTLK talents, character balancing, level 70 glyphs, achievements, etc. There's a misconception that BC is new in China, however it's been out since 2007 (released 8 months after NA/EU). WOTLK was "expected" to be released this month (middle of Aug 2010), but it's still in limbo.
  • CWOW has a huge gold market. "It seems like nearly everyone is either a buyer or a seller." Because of the unique economy, many of the realms have Auction Houses that only have "enchanting materials, glyphs, and games. That's it. Click "Sword" and it's empty." Also, "I would say the Chinese are slightly more motivated (gold has real world value) and slightly more organized by working in teams to make gold). I never saw this on US realms."
  • Guilds are massive 300+ players than run 2-3 daily raids.
  • Due to many bugs in Vanilla and TBC bosses, most raids use these bugs for fast progress (~50% of bosses are bugged.)
  • Gold raids are the most common form of pugging, in some cases it's the ONLY form of pugging.
  • Player reputation is very important and well-known players will get favored spots in high level raids even on under-geared alts. However, most players will lend their characters to their friends so it's hard to know who you're really playing with.
  • Many of the Chinese players can speak english, and will often answer you with a "?" first to see if you type English.
  • Most Chinese type in English or Pinyin, or use a Chinese-to-English translation mod.
  • Fake Chinese ID cards are sometimes used to create accounts (can't use your own, too young, etc), so if you lose theaccount you're pretty much screwed and will not be able to recover it.
For more information, there's an English-speaking WoW Chinese community here. They can also get you started on CWOW or TWOW if you're interested. =]

Game Time Regulations

  • Players are required to associate their Chinese ID card to their account to prove that they are 18 years of age or older.
  • If you are younger than 18 years old (reflected on ID Card), you are limited to 3 hours of playing on the account. After 3 hours of playing on the account, all XP gains and loot would stop (called "Health Lock") to prevent "children" from over-playing.
  • If you are an adult, you can play for 18 hours per day. It's 3 six-hour sessions with a 2 hour session in between called "tired time". Children can play a total of 6 hours per day over a total of 2 sessions, with 1 session of 2 hours of "tired time" as well.
Censorship

Pretty much anything with bones or a skeletal body has been modified. The skeleton of your corpse is replaced by a little mound of dirt with a gravestone, certain icons with skulls have been replaced by box icons, skeleton NPCs have been fleshed out so they look more like zombies, decapitated head icons have been changed, blood has either been removed or recolored, and piles of bones have been replaced with sandbags.

However, all of the cosmetic changes are based on the NetEase CWOW (free) client and it's possible it use a NA clientpatch to have the same graphics as NA/EU. Almost all censorship is client side.

The9 originally implemented these changes "to promote a healthy and harmonious on-line environment." (Source) However, the changes have also been carried over to NetEase as well to satisfy the Chinese censorship review.

There's really no clear answer as to why this censorship is required. Some say that it's cultural, about respecting the dead, and that animated bones are taboo. Others say that because China is an atheist country, the mere existence of undead content indicates that there is an afterlife and contradicts the government's official position on the matter.














If you're still interested, there's more information here and here.

World of Warcraft China: Interesting Facts - Part 5

Posted by Daeity On Thursday, August 19, 2010

Because virtual currency is so easy to procure, easy to sell (it's a $2 billion legitimate industry in China), encouraged by World of Warcraft operations, and has such real value you can imagine that a lot of players are involved in the amassing (and selling) of gold.

Many users still play the game for fun (they have jobs or alternative sources of income). But there are also professional farmers (what they do all day) and players who play for fun but also farm "on the side" to pay for gadgets, gifts, subscriptions, etc.

Although no official statistics on that exact breakdown exists, there are enough to the point where it has completely reshaped the economy and industry of WoW China.  So it's definitely a lot.

Many of the activities that take place on WoW China realms would be completely unrecognizable on NA/EU realms. Here are some examples of the types of services offered by many players in CWOW:

  • Users can be paid based on each task completed, flat rate, pay by the hour, or pay by the day. Real currency or in-game gold plus others are acceptable.
  • You can pay users to go out and collect items (mining, herbalism, skinning), mats (disenchants) and/or quest items (if shareable) for you.
  • Pay a user to grind Rugged Leather for you, you pay them based on what they bring back.
  • You can pay a user to play your account for non-leveling related services. Crafting, questing, etc.
  • Pay a person to sit on the Auction House all day and sell/buy certain goods for you.
  • You can pay players to scout for you (whether it's a location, the AH, or a vendor for limited supplies)
  • Pay a user to run errands for you, deliver goods to users who are not near mailboxes, etc.
  • Any task you can think of is open up to negoiation. (The Chinese government is trying to crack down on virtual sex trade and gambling too, so that can happen as well although it's more black market.)
  • You can buy high level guards (Level 70s on CWOW) to escort you while you quest ("Hire-a-Carebear").
Other than those services, two of the big ones are:

Power-leveling Services
  • You can pay using QQ Coins, virtual gold, or real currency for a set number of levels (or all the way to 70).
  • It's extremely cheap to get power leveled and it's very common for users to be sharing accounts. You never know who you're playing with. =] It's also the reason why account hacking is so common.
  • High level players will also hang around Stratholme, Scarlet Monastery, Shattered Halls and ZulFurrak selling power levelling services or dungeon runs (for items). Sometimes they sit in the zones or in large gathering spots advertising publicly or whispering travelers. It's also not unusual for a high level character to hang around starting zones selling leveling or dungeon running services - pay by gold if it's an alt, or pay in real currency/QQ coins if they are new.
  • It's interesting to note that on NA realms there are gold beggars in major cities. But in China, there are no low level gold beggars. Instead it's the reverse: all of the high level characters are begging for gold in the starting zones. That's how valuable WoW gold really is!  =]
Raid Auctions
  • There are several "Gold PUG" groups that raid on a daily basis. Many options are available to you.
  • The teams are made up of about 20-25 experienced raiders who bring along a group of "customers" with them. No vent or speech software is used.
  • They will clear out Black Temple, Sunwell, etc. and kill everything (even level 60 dungeons). After each boss, the customers will bid for the items that drop (100g for example) and the highest bidder pays gold before receiving the item. At the end of the raid, all of the gold collected from the customers gets split amongst certain members of the raid party (depends on their reputation, work status, if their gear contributed to the success of the raid, etc.) Some of the raiders need to work their way up before they can start earning more. A normal raider can earn anywhere between 300g to 1000G per run. If the raiders are skilled, they can reduce the total number of gold earners and profit even more per player.
  • Originally from Korea, these are gaining in popularity on NA/EU realms except that they're called "Gold Bids" or GDKP's.  (More Information)
More interesting stuff about WoW China in Part 6..

High Probability of New Realms for Cataclysm

Posted by Daeity On Wednesday, August 18, 2010

Blizzard hasn't said anything official on the matter, but most players are assuming that new realms will not be created in anticipation of World of Warcraft's next expansion pack.

The following was even posted by a Community MVP on the WoW Forums:

However, those non-Blizzard employees aren't exactly known for telling the truth or even being aware of simple activities that take place behind the scenes at Blizzard.

As of right now, every post I have been able to find on the matter (official and unofficial forums) claims that "word on the street" is that no new servers will be opened. So that's the belief of most WoW players. I can understand the logic: there's no growth, so why would they increase the number of realms?

But, the problem is that most players base their decision on declining subscription figures and subsequently mistake servers with realms.

Each realm is just a virtual object operated by a cluster of servers. Some realms utilize more servers than others, and information on multiple realms is actually stored on the same servers. There are a ton of processes and activities taking place on servers that in fact manage multiple realms.

It would be very easy to create a new realm (it's just a data object) without actually changing the quantity of servers.

New Realms ≠ New Purchases or Servers

Blizzard CEO Mike Morhaime even stated that there was no growth from December 2008 to February 2010.

To be clear, there was no player growth when WOTLK launched however Blizzard still created 12 new realms in the US.

Nov/08 - Dawnbringer
Nov/08 - Drak'Tharon
Nov/08 - Fizzcrank
Nov/08 - Galakrond
Nov/08 - Grizzly Hills
Nov/08 - Gundrak
Nov/08 - Saurfang
Jan/09 - Borean Tundra
Jan/09 - Garrosh
Jan/09 - Wyrmrest Accord
Jan/09 - Winterhoof
Mar/09 - Nesingwary

At the time, player distribution across the realms was even the same as it now. (i.e. 50-60% of servers half full, and an even split between high population and low population servers.)

Keep in mind that each "realm" also has it's own set of rules. A "high population" on one realm does not necessarily mean the same quantity of users on another realm. It all depends on server load, distribution, and how it's configured. Why leave multiple servers idling when their processing power can be used to support the load of other realms?

For example, let's say each realm can only support a maximum of 6,000 players on each faction. The realm never even hits half that amount (of players) during peak times. So, then you just create a new realm, split up the servers managing the one realm into two, now suddenly you have 2 realms without increasing the number of servers. And both servers can be "upgraded" from low population to medium/high population each. If the servers start to get stretched, additional servers (running low load) can be simply added to this cluster to increase number of players. Or an existing realm can just be opened up to free transfers. (This is just an example and not exactly what happens. There are actually hundreds of servers/blades involved. From a server administration perspective though, it's easy to manage and coordinate.) =]

Why would Blizzard even care about opening new realms?

For the same reason they did it for Wrath of the Lich King.

We know that there was no actual player growth at the time, and servers weren't over capacity with players (in fact about 50% of the realms were at half capacity), so why did they create new realms?

Company Perception and Reputation Management:

Making an announcement that you have to create new realms for "unexpected growth" or "rapidly increasing user base" or "significant number of sales" gives the impression of player growth. Even if you just announce that new servers "need to be added" it gives the perception that player counts are growing.

Investors, share holders, managers, and players love to hear that. It reinstates confidence in the company. =]

Blizzard also wants to be known as the #1 provider of the best MMORPG in the world. So you need to control the perception of your company and give the impression of constant growth and more profits. (Even though Quarterly Reports show hardly any gains at all, and actual player counts are really about half of "active subscribers".)

It Makes The Players Happy:

It's good for public relations too. Players want new realms to be created, so that they can create characters from scratch and try to get ahead of the others.

There's also the fear of high levels harassing the new low level characters. Remember all of the 70-80's hanging around Outlands waiting for the freshly made Death Knights to step through the portal? That same fear exists now. Except now, it's level 80-85's that can fly well overhead hunting Level 20's and finding them very quickly. With new realms, at least the option is available to start brand new just like everyone else.

There's also nothing worse than joining a server when everyone is already Level 80, there's no low-to-mid level advancement and all of the zones are empty.

Throw on your tinfoil hats! New realms might actually mean reduced servers and player counts.

Something interesting occurred to me while I was researching this. I really have no idea if this happens or not, but it's a possibility and I'm just throwing it out there. =]

Because the exact number of server-to-realm ratio has never been announced, and the fact that servers manage multiple "parts" of different realms, it's entirely possible to reduce the physical number of servers (because of declining players) but also create new realms with the added bonus of increasing customer/investor confidence.

As new realms open, all that is required is changing the internal definition of what a Low, Medium, or High population server implies. A high population could mean 10,000 concurrent users but it could just as easily mean 8,000 concurrent users.

People will get dispersed as realms are split up, but because of the large size of World of Warcraft - would anyone even notice? Factions all gather together at single locations anyways and if realms are split up, users would just assume that they see less players while questing because the world is so vast and they could be anywhere.

If it ever became an issue ("gasp! the users are starting to notice"), all that's required is opening up free transfers to the realm. =]

So basically, there shouldn't be any new realms based on WoW's growth, but it makes logical sense to launch new realms just like they did for WOTLK (which was in a similar circumstance, and users ALSO said there wouldn't be new realms at the time.) Of course, now that this information is public and Blizzard knows-that-you-know.. who knows? =]

In 2008, Vaneras wrote:
"The decision of whether or not to open a new realm is entirely based on the population size on existing realms, which is something that we are continuously monitoring. We will of course open new realms if and when it is needed :-)"

In 2008, Nethaera wrote:
"New realms are released as we feel they are necessary and we don't normally announce them ahead of time. I can't answer any of the above since they are all contingent on timing based need. If we end up needing more realms, we'll create them based for the specific purpose they need to fill."

In 2008 and 3 days before release, Nethaera wrote:
"It's too early to say whether these will be necessary or not."

In 2010, Crepe wrote:
"As always, new realm are opened due to population issues. If you wish new realms, you need to find 200,000 of your closest friends to subscribe."

In 2010, Crepe wrote:
"New realms are put up when population needs require them. We won't know until they go up."

If Mekkatorque was here, he'd say the chances of new realms being opened are less than 12.7%. =]

Other than that, the launch of Cataclysm is just a few months away (first week of December). Hope you all have your orders in!

------------------------

FYI - Another official posting on the WoW Forums:

Pretty much everyone is saying that there will NOT be any new realms due to low subscription numbers. I like to swim against the current though. So basically, there shouldn't be any new realms created, but it still might happen on launch day or within a couple months after. WOTLK for example launched in November, and new servers opened in January and then March. There's a good chance you'll see something like "Due to the unanticipated number of new players - we need to open up new realms!" at least by March of next year (especially after Christmas sales). What a great way to please the investors or give the impression of massive growth though, even if there is none. =]

I had mentioned earlier how it's very common for players to sell gold to purchase WoW hourly subscriptions.

"China has an internet cafe on every corner. Every single of them can access the web for 'codes' that can be entered into the blizzard website for time. For 15 rmb (2 dollars) you can play world of Warcraft with all expansions for 2000 minutes. (For this reason I have 8 accounts, because I do pay monthly fees and often play 2 or more accounts at once I can pick and choose what I like to have online. I really enjoy the freedom provided by metered time instead of a monthly subscription." (Source)
But it gets more interesting..

In China, the majority of workers (primarily Service and Industry jobs) work an entire day for less than 60rmb ($9 USD). Less than one hour of work in World of Warcraft (grinding gold) can easily cover your WoW subscription for several months. But more than that, 1-2 hour of gold farming each day can pay for your food, rent, game subscriptions, internet fees, toys/gadgets, etc. You can actually make more money playing the game then you can from a real job.

Think you can make 4500G per day? That's the same pay as an Electrical Engineer. 3000G per day? No need to be a Professional Nurse, just play WoW - you can make the same amount of money and play a healer! (Source)

Given all of the gold making guides, you don't even need to be that skilled at farming.. even casual players using standard farming techniques can pay for their living expenses.

But isn't that against Blizzard's Terms of Use?

In NA/EU, it's frowned upon to buy/sell accounts or gold. However in China, WoW is operated by NetEase and there are different rules surrounding the game.

It's actually perfectly acceptable and quite common for players to share accounts, buy/sell items, gold, or accounts, or convert virtual gold/items into real world money. WoW gold is really just another common commodity in China and can be bought or sold quite easily. =]

Recently, the Chinese government had announced that they are "banning gold farmers" with new legislation. However, it's been exaggerated by news outlets and there are tons of loop holes in their proposed system. In fact, their new laws will have no impact on gold farming at all (it's actually targeting something else).. and they don't even have any enforcement measures for the buying and selling of in-game virtual items.

China Banning Gold Farmers
Gold Farming Confusion
Gold Farming Ban Not Really A Ban

In NA/EU, you may have a difficult time trying to find trust-worthy gold sellers, or someone to sell your account to. It's all very shady, the services are few and far between, and it can be a challenge to find someone you can trust.

In China, however, it's the exact opposite. There are large (and trusted) businesses and corporations that focus on the sale and purchasing of virtual items. Gold or items can be bought at gaming stores, convenience stores and city streets.

QQ Coins can also be used in exchange for gold or in-game services, which can be converted into real merchandise on many online or gaming stores. Occasionally, you may also receive a random whisper from a gold seller in-game. They give you their QQ (IM) address and you can pay them with QQ points which can be obtained with real money. The Chinese Ebay "Taobao" and other Chinese websites sell gold online directly to your WoW mailbox too. =]

There's no secret "cloak-and-dagger" activities (like in NA/EU) required to sell your account or gold - it's all done right out in public and it's very much the norm.

I'm actually kind of jealous. I have over 300k of gold idling that I'd love to sell. =]

"The most common way to buy gold, however, is to trade time card codes in-game for gold to a person who needs a card. It's entirely possible to never pay any of your own money to play WoW if your dedicated to earning gold from others and have a niche as either a raider or power level or farmer." (Source)

Because of this standard industry in China, it's the reason why so many players are engaged in gold farming activities (if a couple hours playing WoW paid more than your real job, wouldn't you take advantage?), gold has real value, and it has completely reshaped the in-game and real world economies in China.

Because of this paradigm shift, players also engage in gold making "services" that you wouldn't normally see on NA/EU realms. And it's also very easy for new characters to be power leveled and geared up (15 rmb/$2 USD right now can buy you high-end epics and many hours of power-leveling.)

But more on those unique "gold making services" in the Part 5.

World of Warcraft China: Interesting Facts - Part 3

Posted by Daeity On Tuesday, August 17, 2010

As most of you know, China uses a different WoW subscription model then the rest of the world. They pay by the hour using game cards (that can be recharged) and they only pay for what they play.

In China, WoW can be downloaded for free and WoW gamecards can be bought virtually anywhere - game stores, online, 7 Eleven, corner stores, etc. 30 yuan will buy you 4000 minutes of gametime and 15 yuan will buy you 2000 minutes of gametime. That's $0.06 per hour played.

(If adjusted for Purchasing Power Parity (PPP) however, that's about equivalent to $0.24 per hour in the US.)

For that same amount (30 yuan), that can also buy you approximately 2000G. So, it's very common for players to sell their gold to purchase WoW hourly subscriptions, but I'll talk more on that later.

Although Korea and Taiwan are in East Asia, they pay monthly based subscriptions just like NA and Europe. Although, Koreans also have an added pay-by-the-day option ($1.65 per day vs $8 per month) for Starcraft 2 or they can play for free if they have a WoW Subscription. =]

NetEase Operating Costs

According to NetEase, they spend approximately $146,000 per day to maintain their servers. That's $4.44M per month on average.

By comparison, Blizzard US spends $4.25 million per month to operate their own servers.

There are approximately 489 realms total in US and EU, 39 in Taiwan, 33 in Korea, and 342 realms in China. At the time of initial testing, however, that China realm count was much lower. Those costs seem pretty high, but because they were done during testing phases, the figures have probably come down a little since then.

Total Number of CWOW Players?

Blizzard has never officially announced the total number of players from each geography, but rather an all encompassing "11.5M" figure.

Because of the low subscription fee (6 cents per hour), you might be thinking that Blizzard can easily pad the numbers. For example, there might be 3 million players that only play 1 hour a week. But the studies mentioned in the earlier post involved tens-to-hundreds of thousands of average players and several million data points. So their average estimates would be pretty close.. but even then, that's why the use of specific words (estimates and averages) are so important. =]

Now according to NetEase, World of Warcraft makes up about one-third of NetEase's total online gaming revenue. NetEase also provides online game services for Fantasy Westward Journey, Westward Journey Online II, Westward Journey Online III, Tianxia II and Datang.

NetEase Total Online Gaming Revenue (in $USD)

Quarter Ending March 31, 2010
Gross Profit: $172.32 million
Total Revenue: $159.0 million
NetEase WoW Revenue: $53 million
Blizzard's Licensing Fees: $29 million

Quarter Ending June 30, 2010
Gross Profit: $175.72 million
Total Revenue: $162.4 million
NetEase WoW Revenue: $54.1 million
Blizzard's Licensing Fees: $30 million

Note: Depending on the terms of the contact, Blizzard's royalties (55%) can either be based on net revenue or gross profits. I'm using the lesser figure in my calculations (to favor Blizzard once again.) Blizzard also collects a $25 million flat licensing fee and minimal annual revenue shares of $180 million from NetEase. They got a pretty sweet deal by going with NetEase instead of The9 - they were only giving Blizzard a 22% royalty.

By going by the most recent revenue numbers, and the fact that the average WoW player puts in 4 hours per day:

28h per week = 121.24 hours per month x 3 months = 363.72 hours per quarter = $21.82 per quarter spent by the average CWOW player (~$7.27 per month)

That's approx. 2.6 million players in March and 2.7 million players in June.

Previous figures put the worldwide WoW population around 6.7 million active subscribers (versus 11.5M), but that was assuming an average of $15 per month. Let's plug these new numbers in to get a more accurate subscriber count.

Blizzard Gross Profits: $301.75 million (incl. royalties)
Blizzard Operating Costs: $12.75 million
Blizzard Net Revenue: $259 million (excluding China)

At a rate of $15 per month, that means that there are 6.0 million players.

However, WoW Europe pays 12.99€ (~$25 USD) per month. And there are much more EU players than NA, so that number is fairly inflated and Blizzard is probably making somewhere closer to $20 per month per subscription on average.

At a rate of $20 per month, that means that there are 4.5 million subscriptions outside of China.

That's a maximum total of 7.2 million players worldwide during the quarter ending June 30. (Note: This figure does not include the banned vs. growth rate figures or the sale of services - hence the reason why it is a maximum figure. I'm just looking at the range between $15-20 per month in subscriptions only, however retail/digital sales and services are a HUGE portion of their revenue but are not included. Because of this, the number of players are much less than approximated above.)

World of Warcraft China: Interesting Facts - Part 2

Posted by Daeity On Monday, August 16, 2010

Number of Players and Average Game Time

Current estimates (another) put China's user base at approx. 4 million players (out of Blizzard's claimed 11.5 million "Active Subscribers").

Although many users had migrated to Taiwan realms for WOTLK and less hassles, it's interesting to note that Blizzard's revenues were much higher on average during the quarters when fees were not collected in China. (During that same time, Blizzard stated that their player counts were the same.) I'm guessing that not many players had moved back to the China realms during that time.

Most recently, 16,000 WoW players interviewed by Sina.com stated that ~44% intended to return to CWOW servers, ~25% intended to keep playing on TWOW servers, and ~30% were giving up the game (e.g. tired of the drama, there are plenty more games out there, etc.)

To The Blizzard Employee Reading This:

Please tell your superiors to open up server transfers between all geographies (e.g. US to China, Taiwan to China, China to Taiwan, etc.) You can claim that this is all your idea and create a return-on-investment case detailing how this project will increase player growth in all geographies, is excellent for public relations, significantly improve customer loyalty, and how Blizzard can make tons of revenue in additional services for a process that is very simple and inexpensive. (You'll probably even get a promotion or pay raise out of this. Yay. But hurry up, plenty of other Blizzard employees regular this blog.)

In regards to average game time by WoW players in China, there haven't been as many studies as I was hoping. But here's a summary of what does exist:

- A 2006 Study from Research and Consultancy Firm Niko Partners stated users in China averaged 4 hours per day.
- A 2006 Morgan-Stanley Study (as per IDC) stated that user in China averaged 3-5 hours per day.
- A 2007 "Assessment of U.S. and Chinese Online Gaming Environments" stated that the average user in China averaged 5 hours per day.
- And finally in 2010, a very recent study (June 30 to be exact) stated similar findings to those above but also added that approx. 20% of players play 5 to 8 hours per day and approx. 22% play for more than 8 hours per day!

Those are 3 independent studies that claim 28 to 35 hours per week are spent. Other studies from blog webpages claim that the average is over 25 hours per week, but they were missing sources and citation. So, it's pretty safe to say that the average CWOW player puts in approximately 4-5 hours per day. I'll be using that figure for some upcoming calculations regarding monthly fees and total number of players.

As of right now, Chinese players have only been able to play The Burning Crusade since it was first launched in China on September 6, 2007 (8 months after the NA/EU release.)

There's been a lot of drama between government regulators, Blizzard, The9, and NetEase but it appears that WOTLK will finally see a release in China sometime within the next few months. (By comparison, NA/EU release date was Nov 13/08).

Here's a summary of the most recent WoW China activity after The9 lost their license to operate World of Warcraft.

Apr 2009 - The9 loses license to operate WoW
May 2009 - The9 sues Blizzard, also creates "World of Fight"
Jun 2009 - Servers offline (The9 -> NetEase)
Jul 2009 - Servers offline (The9 -> NetEase)
Aug 2009 - Servers offline (The9 -> NetEase)
Sep 2009 - Servers offline (The9 -> NetEase)
Oct 2009 - Servers back online
Nov 2009 - NetEase ordered to stop charging players and new registrations (deemed illegal).
Dec 2009 - Servers online
Jan 2010 - Servers online
Feb 7 2010 - NetEase attempts to re-approve TBC
Feb 8 2010 - NetEase ordered to halt new accounts again
Feb 12 2010 - Gave "approval to release" TBC in China (even though it was already out)
Mar 2010 - Subscriptions collected again & new players allowed
Apr 2010 - Business as usual
May 2010 - Business as usual
Jun 2010 - Business as usual
Jul 2010 - Business as usual
Aug 2010 - Announced that WOTLK would finally launch
For 7 months, they were not allowed to accept new players and for 4 months there was no revenue. There was practically no growth for a year. But, let's hope things stabilize for NetEase. (More information if you're interested in this.)

On an interesting note, WOTLK has been available on Taiwan realms (TWOW) for some time and many guilds and players have moved from their CWOW to TWOW servers due to their closer proximity and acceptable latency. Not just because of the WOTLK expansion pack, but also because of their ongoing issues on the CWOW servers (constant up-and-down, servers offline, new accounts being blocked, etc.)

There are also many Chinese players who have tried to make the move to US Realms for some of the same reasons (realm issues, wanting to get into new exp. packs), but they have met with new challenges.. other than bandwidth latency.

There is a very common misconception that if you're Chinese you're automatically a "Chinese Gold Farmer". Fact is, the number of "gold farmers" (under it's classic definition) is actually very low (1-2% of total Active Subscribers) and are actually located in your own realm's geography. But that doesn't stop Blizzard from banning China-based IP addresses without actually investigating the user.

Here's what Blizzard had to say on the matter:

"Chinese IP's are not blocked on the US or Taiwan realms, but sometimes accounts using IPs are banned due to large amounts of exploiters or gold sellers using the network. It's possible for some personal accounts to get blocked as well (highly unlikely) is where this probably stems from."

I think investigations should be based on a user-by-user basis, rather than just banning entire IP ranges because of some bad apples. Because of the amount of money involved too, most of these gold farming businesses in China buy dedicated US VPN servers for maximum bandwidth.

Consider this: If NA/EU realms were constantly crashing, down for maintenance for months at a time, new expansion packs were a year late (but released in China a year early), you never knew if the expansion pack would ever be approved by NA/EU government regulators or when they were going to shutdown the realms "for good this time", and there were ways to correct any latency issues, wouldn't you try to setup a CWOW account just so that you could play the game? And after all is said and done, wouldn't you just want to get your WoW fix and be free from labeling or harassment?

As it stands now, though, you may even want to signup on the CWOW servers right now once I explain some of the other interesting facts about CWOW (however you have to wait for the next parts of this article.) =]

* Update (08/20/10):
Here are direct links to the other parts of the article.

Part 2 - Average game time played by CWOW players.
Part 3 - Subscription model, and total number of CWOW players vs worldwide.
Part 4 - Gold has real value and easy to buy/sell.
Part 5 - Unique in-game services on China realms.
Part 6 - Overview of gameplay, culture, government regulations and censorship.
Part 7 - Census information, ratio of Alliance vs Horde, and PVP is uncommon.

Blizzard's Next Gen MMO - Environments

Posted by Daeity On Sunday, August 15, 2010

In my earlier post, I had mentioned how Blizzard was raising the bar on graphic quality for their new MMO compared to their previous releases. But I had forgot to mention one other thing I was informed: "be prepared for something spectacular when it is revealed".

Knowing the casual gameplay style in combination with the huge variety of environments, I think I've nailed down what the game is going to be like - except for the actual "storyline" or "lore". That can take many possible paths.

But if you're interested in the types of environments you'll probably see in the game, here's some work by one of the (Cinematic) Environmental Artists working on the Next Gen MMO who specializes in high poly art.

(Read below for some interesting notes on the artist and how it relates to the oft-whispered "Codename Titan".)

His most recent work (August 2010) and then 13 others since he started working for Blizzard:

May 2010 - Mar 2010 - Feb 2010
Feb 2010 - Jan 2010 - Dec 2009
Nov 2009 - Nov 2009 - Nov 2009
Nov 2009 - Nov 2009 - Sep 2009
Aug 2009

He was hired by Blizzard in August 2009. His comments indicate that he's been very busy at work, but that he's been creating this art as part of his studies and research for projects that he is currently working on.

A lot of his previous CG work prior to being hired to Blizzard was mostly for fun and learning, however his environment work suddenly changed after being hired by Blizzard. If you look at his pictures, you'll see what I mean. At first, it was about research - then it became about testing and experimentation.

If you ever wanted to learn about some secret project someone is working on, you can either ask them, ask someone related to them, do some dumpster diving, or find out what they're researching and studying. If suddenly a lot of storyline developers are researching World War 2 history (analyze web traffic trends), chances are they're working on a WW2 game. =]

Here's his demo reel from before he was hired by Blizzard by the way: Link

This was probably the one Blizzard recruiting and management saw before making their decision to hire him. They liked his stuff. =]

The Remote AH is a Botter's Dream Come True

Posted by Daeity On Friday, August 13, 2010

You may start seeing some automating scripting software (paid or free) for Blizzard's web-based and mobile Auction House (Link) sometime in the near future.

Apparently, there's really no security protection in place other than Blizzard limiting the number of transactions per day (200). Blizzard is probably analyzing basic utilization trends to try and find automated activities but it won't be very successful. It can easily be defeated, however, by properly scheduling the script and using multiple accounts on different proxy servers.

A couple of my contacts in the "gold-exploitation" communities are saying that it's an excellent way to make gold, particularly Neutral AH sniping. They have been experimenting with a custom made AutoIT script and since there are no measures in place to detect scripting software, they're not too worried about getting caught. They've been stretching their search schedules to see how far they can push the bots without being detected, while also trying to emulate "real player" interactions (e.g. checking the AH, refreshing prices at random intervals, posting fake auctions, buying cheap stuff, etc.) They've been making about 50-100k gold per day, and they don't even have to be sitting at the PC. Far more efficient then boring grinding and other farming strategies. =]

It's pretty easy to create an AutoIT script too and at $3 per month for the Remote AH, it's definitely worth the investment considering that these guys alone are selling $150-$300 per day in gold (their estimates for the past week.) That amount is equivalent to a well-paying full time job ($50-100k per year) and that's only on two realms.. imagine if they expanded to multiple servers? They just wanted to say, "Thank you Blizzard for making gold exploitation so easy and safe!"

Of course, as competition increases their (the exploiters) profits will go down - but even then, there are still very few people even now that use automated scripts within the game to manipulate the AH system.

With the AH system now accessible through a web interface (rather than inside a moving/changing 3D world), it's so much easier to create scripts and bots with faster reaction time and without worry of detection.

In an earlier post, it was discovered that Blizzard was making quite a significant profit from banned players (botting & exploits). It looks like they have just introduced another new service that makes cheating activities even more accessible and allows them to make even MORE profit from cheaters.

Even if they get discovered and banned, even better! Their game subscription and Remote AH subscription expires at the end of the month - so they get to keep that revenue plus the amount made when they purchase a new account during that same time frame.

(Note: Depending on the response rate of the web-based AH versus the in-game AH, there might be opportunity for some interesting exploitation. So you might start seeing some new AH strategies popping up..)

If you're a honest player, though, here a couple tips that can keep you from being cheated by this new system:

  • When you post auctions, set the price correctly the first time. Double-check before submitting! If you enter the wrong price, it can be sniped before you can retract it.
  • If you're using the Neutral AH to transfer items from account-to-account, buy them out IMMEDIATELY. Do not wait for more than 20 seconds otherwise you're at risk of having your items taken. Even 20 seconds is a generous time frame.

World of Warcraft's Alternative Revenue Streams

Posted by Daeity On Wednesday, August 11, 2010

In one of my previous posts, I calculated the maximum possible number of WoW players, but those figures did not include alternative revenues collected during the same time frame.

Since the quarterly figures also included such sales as transfers, faction changes, and other paid account services then it would mean that the WoW player counts are even less. But since this transactional information is not public, it's impossible to tell what percentage of their overall Net Revenue is related to subscriptions vs paid services.

Blizzard is under a lot of pressure from their "boss" to introduce new products or add new sources of revenue to combat World of Warcraft's decreasing revenue: "If consumer demand for World of Warcraft games declines and Vivendi Games has not introduced new MMOG or other products that replace World of Warcraft’s potentially decreasing revenue, or added other sources of revenue.."

And it's very interesting to see the strategic deployment (ie, "well timed" delivery) of new account services or virtual products that have been planned for months or possibly years. It's as if the new revenue streams need to be constantly introduced each quarter to combat significantly declining player counts.

(Note: This list does not include major content releases/patches.)

2nd Quarter ending Jun 30 2010 - $289 Million Net Revenue
- Celestial Steed & Lil’ XT Pet introduced at the beginning of the quarter (Apr 15th, 2010)
- The horse was just a reused 3D model so it hardly cost them anything. But it sold at $25 for a minimum of $3.5 million on the first day. Because those sales were part of their Net Revenue, that actually amounts to about 100,000 players. So instead of a maximum of 6.7M players during that quarter, it would be a max of 6.62M.
- Exclusive RAF Flying Mount introduced Apr 30, 2010.
- Remote / Mobile Auction House service ($3 per month) introduced at the end of the quarter (Jun 2010). So many of the profit increases won't be visibile until Q3 2010.

1st Quarter ending Mar 31 2010 - $306 Million Net Revenue
- Celestial Steed leaked to the public to build up interest.

4th Quarter ending Dec 31 2009 - $294 Million Net Revenue
- Race Change service ($25) introduced at the start of the quarter (Oct 09)
- Pet Store introduced in the middle of the quarter (Nov 09). $10 to $25 virtual pets.

Interesting Note: They had a "special" on Pandaren Monk's where they donated 50% of the sales to charity. That special ended on Dec 31, 2009 (coincidentally, the end of quarter). Not only that, but they sold something that cost $0 to make, made quite a bit of profit, while simultaneously receiving tax relief and public relations. Brilliant. =]

3rd Quarter ending Sep 30 2009 - $301 Million Net Revenue
- Faction Change service ($30) introduced at the end of the quarter (Sep 09)

2nd Quarter ending Jun 30 2009 - $324 Million Net Revenue
- Nothing new introduced.

1st Quarter ending Mar 31 2009 - $314 Million Net Revenue
- Nothing new introduced.

4th Quarter ending Dec 31 2008 - $325 Million Net Revenue
- Character Re-customization service ($15) introduced at the end of the quarter (Dec 08)
- Wrath of the Lich King released (Nov 08)

3rd Quarter ending Sep 30 2008 - $271 Million Net Revenue
- PvE to PvP Paid Transfers ($25) introduced at the end of the quarter (Sep 08)
- Recruit a Friend program introduced in the middle of the quarter (Aug 08)

2nd Quarter ending Jun 30 2008 - No Quarterly Report
- Nothing new introduced.

1st Quarter ending Mar 31 2008 - $275 Million Net Revenue
- Character Transfer and Character Name Change cooldown reduced from 3 to 1 month. (Feb 08)

4th Quarter ending Dec 31 2007 - $279 Million Net Revenue
- Name Change service ($10) introduced in middle of the quarter (Oct 07)

3rd Quarter ending Sep 30 2007 - $269 Million Net Revenue
- Scroll of Resurrection introduced at the end of the quarter (Sep 07)

2nd Quarter ending Jun 30 2007 - $324 Million Net Revenue
- PvP to PvE Paid Character Transfers ($25) introduced at the end of the quarter (Jun 06)

(That's just a quick run-through, but if I missed anything I will update it.)

It's very interesting to see that all of the major paid services were all introduced at the end of each quarter. Based on those trends, we might see something new (probably a remote service of some kind) introduced in September 2010. And then next quarter (Q4) is when Cataclysm will be coming out.

Not only that but there's another interesting trend: New paid services (or any kind of alternative revenue stream) are introduced just before quarter end (e.g. 1-2 weeks prior) when the most amount of sales are made! You see, there's a rush because of the new service and everyone wants it as soon as possible. In the end, that rush pads their Quarterly Report profits. And because they can introduce the services any time they want, they only have to release them if they are showing poor performance for that quarter. Of course, follow-up quarters will have significantly less sales, but I'm guessing that there are probably major content releases between each of these activities to keep users interested. =]

Note: Did you notice that major services/changes are released when profits are low for that quarter? But when profits are high, nothing new is introduced.

As you can see, their Net Revenue has remained very close in proximity from 2007 to 2010 as well. If that number is remaining constant (although it's actually trending downwards), but they keep deploying more-and-more paid services over the years, that would indicate that player counts are declining even faster than predicted in the previous post.

The big next step to increase profit is getting WoW players back into China with the WOTLK and the Cataclysm launch. I'm sure we'll see a lot more "alternative revenue streams" (ie, paid services) after the Cataclysm launch, or possibly PR stunts to increase sales of an existing service or virtual item.

Much of this will depend on the success of Cataclysm (mentioned a lot in earlier posts).

What do I think those services could be?

- A lot more mobile services definitely! The Remote/Mobile AH is just a start.
- Checking in-game mailboxes. Inventory, bank, character, and talent management through mobile. (*EDIT: Apparently, the new "Mobile Armory" does some of this already. Guess I was right =] )
- In-game chat with Guild, General Chat, Trade Chat, etc through mobile/remote.
- Integration with Battle.net to allow chat between accounts (e.g. SC2 and WoW players).
- Mobile application that alerts you when other WoW players are nearby, giving you details on their avatar after you "handshake".
- Further integration with Facebook, linking the virtual world with your profile page.
- "GPS tracker" so your Facebook friends know where you are in Azeroth.
- More virtual pets, mounts, and special character customizations only available for real money (special hair cuts, glowing eyes, imposing skull faces, exclusive dances, flaming horns, jewellery, fashion wear, etc.) I think there would be many people who would pay $5-10 for bright glowing eyes.
- Special virtual pets sold with very limited quantities so that people rush for the one-time-only "elite pet" or charity pets for those with a soft heart.
- Depending on the success or failure of Cataclysm, we might see more non-vanity and game-effecting virtual items being sold.
- Change all vanity pets so that they can engage in special combat with each other (they level and grow) to sell even more vanity pets. This would be very easy to do.
- Reduced price structure of existing Paid Account services to attract more players - "Weekend specials", "Christmas Gift Specials", etc.
- Guild Paid services for entire Guild Transfers or group/individual rates for multiple character transfers, realms transfers, renaming, and faction changes.
- Blizzard has been experimenting with Player and Guild Housing, but they also don't want cities to appear empty. It's therefore hard to say if this will ever be introduced, but if it is, the Blizzard store will have house items for sale (e.g. paintings, rugs, bookshelves, etc.) Personally, I don't think this will ever be introduced.
- More "community" integration between Battle.net's games, like pets/mounts for playing the other game, and then once you're hooked: paid premium services.

The list can just go on and on. There are a ton of possible alternative revenue streams, but those are just the simple ones off the top of my head.

Blizzard's "Active Subscriptions" vs "Real Players"

Posted by Daeity On Monday, August 9, 2010

* UPDATE:

The original article below was from August 2010, when World of Warcraft's total subscriber base was 11.5 million. However, for a more updated version (e.g. 12 million subscribers and taking a different approach to estimate numbers), please look here.
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Unfortunately, mmogchart.com stopped tracking World of Warcraft's growth back in 2007. However, based on announcements, Blizzard has stated that they have over 11.5 million "Active Subscribers".

Here's an approximate chart of their growth:

Millions of webpages also reiterate Blizzard's official statements and that they have made it clear that these 11.5 million players are "ACTIVE SUBSCRIBERS".

Actual Sales Figures

Something always troubled me though..

According to vgchartz, here are Blizzard's most recent sales figures:

(Note: Approx. sales both retail and digital worldwide and confirmed by NPD.)

How is it possible that they have 11.5M "Active Subscribers" but less than 7M upgraded to WOTLK (released almost 2 years ago) and 7.4M upgraded to Burning Crusade? Let alone, 4.5M players are still playing Vanilla WoW, and there are over 11M players that have been apparently active for over 6 years. Something funny is definitely going on. =]

In February 2010, CEO Mike Morhaime stated that only 30 percent of new World of Warcraft players ever make it past level 10. That's an extremely low retention rate. He also stated that subscription levels had not grown since December 2008 - they had the same number of subscribers now that they did then.

Given their sales numbers, low retention rate, but high claims of "active subscribers" - it just seems impossible. So, let's look at the factual numbers.

Investor Statements

Here are their financials over the most recent 3 month period:

World of Warcraft Gross Profits: $301.75 million
World of Warcraft Operating Costs: $12.75 million (Source)
World of Warcraft GAAP Net Revenue: $289 million (Latest Quarterly Report)

(Note: GAAP means "Generally Accepted Accounting Principles" but when corporations use non-GAAP methodologies, they can inflate or stretch numbers in their books. So it's safe to say that GAAP is the more "honest" figure. If you review their other Quarterly Reports for 2008 and 2009, they also show similar rates.)

Sales during those months were negligible, so their monthly subscriptions totaled approx. $301.75 million gross worldwide.

At a rate of $15 per month, that only accounts for 6.7 million active subscribers! That's almost 50 percent!

(Note:  Chinese players pay on average ~$7.27 USD per month and account for ~23% of all worldwide players.  However, most CWOW players have multiple accounts.  All other geographies pay approx. $15 per month.  More details here.)

But they said 11.5 million subscribers, how is this possible? Rather than focusing on just the latest 3 months, let's look at WoW player growth and loss for the past 4 years.

Player's Who Have Left World of Warcraft

Since there isn't any public information on the number of players that have left WoW, let's look at players who have been BANNED in North America and EU alone.

Here are the official Blizzard announcements since their launch:

Mar 2005: 1,000 accounts
Dec 2005: 18,000 accounts
Apr 2006: 5,400 accounts + 10,700 temp banned
May 2006: 30,000 accounts
Jun 2006: 59,000 accounts
Oct 2006: 76,000 accounts
Nov 2006: 105,000 accounts
Mar 2007: 100,000 accounts
Apr 2007: 114,000 accounts

Blizzard was banning approximately 100,000 accounts EVERY MONTH until they abruptly stopped making announcements. It's now been 3 years since they have made any official announcements regarding player banning, even though the banning still continues to happen.

Well, of course they stopped making announcements. Nothing shakes customer and investor confidence like knowing over a million accounts per year were being banned! =]

* UPDATE:

In May of 2008, it's estimated that Blizzard banned 350,000 to 500,000 accounts over a 3 day period in one of the biggest ban waves ever (most Glider accounts were associated with this ban).

Blizzard never made any official announcements regarding this ban though. It's not unheard of though for Blizzard to ban several hundreds-of-thousands of accounts. Remember when they banned 320,000 B.Net accounts in Apr 2010 and 350,000 B.Net accounts in Nov 2008?

Also of interesting note, check out the exhibits from the MDY v Blizzard lawsuit. Part of the evidence is that MDY sold over 100,000 Glider keys and that the majority of Glider users owned multiple WoW accounts (several had 3 or more). Glider users, on average, purchase one additional WoW account.

What do these trends show us?

There are, of course, many variables that leave open margin for error (e.g. abandoned accounts, players that get banned and stop playing, hacked accounts, etc.) but all of those figures are negligible and to keep things simple, the approximations below will favor Blizzard's figures.

The banning trends showed that approximately 1.0 to 1.5% of the total subscriber base were being banned on a month-by-month basis.

Even though that number was increasing, let's assume that only 1.0% were being banned per month.

On the other side of the coin, World of Warcraft's growth rate is approx. 2.0% per month (1.9138% per month to be exact) starting from the same time as the bans. (Note: Between Mar 09 and now, their growth rate is actually negative, but let's ignore that factor for now.)

So we know that almost 500,000 players were banned by April 2007. Between Oct 06 and Apr 07, World of Warcraft's user base grew from 7 to 8 million players. However, during that exact same time frame 400,000 players were banned.

The mathematics need balance.. so if WoW is growing by 2% per month (Active Subscriptions) but they are also banning 1% per month.. where does that extra 1% come from that properly balances the total number of subscribers?

When a player gets banned in the middle of the month, they typically activate a new account. However, their subscription was already paid for at the beginning of the month. On the books, that amounts to 2 "Active Subscriptions" per month because the banned account expires at the end of the month. =]

That missing 1% are actually WoW sales by banned players who purchase a new account within the same month or next.

So "active subscriptions" are actually double the number of real players. Blizzard's statement that they have 11.5 million "Active Subscriptions" is indeed accurate.. but with a twist, they're not referring to real players on those accounts. They're paid subscriptions, not players.

Summary

According to their official financials, there are currently 6.7 million paying customers. On average, about 100k players were banned per month, however since their growth rate has reduced the ban-rate would go down as well. So there could be anywhere between 6.4 million to 6.7 million real active players currently.

That number actually makes a lot more sense and satisfies their sales figures of WoW and the two expansion packs.

And according to growth (vs banned) statistics over the past 4 years, there were probably between 5.75 and 6.9 million real players during it's prime. Based on annual averages, the subscription count would be double that number, giving you the "11.5 million active subscriptions" figure. Even after favoring Blizzard for high and low figures, it's plain to see that during the course of their constant growth (see chart) about 50% of that profit was made by player-bans who purchased new accounts.

I think what had happened was that at one point World of Warcraft reached about 7 million players, but 40% of those players were banned and they purchased new accounts with new subscriptions which then created their "11.5 million Active Subscriptions" boast (averaged over several months to a year).

Blizzard has also not updated their official "11.5M" statement in over 2 years, so that is the figure that all of their employees "stick with" whether it's accurate or not today. It reminds me of Cingular's "fewest dropped calls" marketing strategy. They aggressively marketed a statistic based on a singular group's highly questionable findings and told the world that out all of all of their competitors, they had the "Fewest Dropped Calls" and the "Allover Network" citing said group as "the leading independent research company". =]

Their marketing strategies are actually quite brilliant and I admire it from a business perspective. I've discussed Blizzard's reputation management in the past and this is just another great example: It's all about wording and how they perceive the numbers. =] They've lead the entire world to believe that they have 11.5 million active subscribers (thinking "players"), when in fact it was really half that amount (possibly less than half.)

(Note: There are players with multiple accounts (ie, 2 accounts, 5-boxers, 10-boxers, etc), but it's a very small percentage and left out of these figures.)

Since growth has stopped and player-bans are down (50% of profit), this is actually a very excellent time for release of their expansion pack, it will help bolster their profit from sales and allow them to restart the cyclical process mentioned above.

So, this is just another interesting side of Blizzard most people don't know about. I love the company, not just from a gaming perspective (I've bought all of their games and will continue to do so) but also from a business perspective.. all of their business processes and methods are as polished as their games.

* Update:

Just a quick note regarding a comment made by one of the readers. Their net revenue / gross profit would also contain the sale of services and virtual items. (For example, transfers, race/faction changes, the Celestial Steed, etc.) I've been giving Blizzard favorable numbers to determine maximum possible number of players. However, if their net revenue contains 20% sales of services, for example, that means that there are even LESS players. So there could be anywhere been 6 and 7 million players, assuming that all profits are based on subscriptions. Include sales of anything else WoW related - and that reduces the number of possible players drastically.

Keep in mind, that merchandise sales are separate. The authenticator, tshirts, mugs, WoW keyboard/mouse, etc are not included in this sales figure (different vendors.)