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.

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.)

Take-Two has confirmed that they just laid off 30 staff from their Visual Concepts studio (they are the developers of the 2K Sports titles). (Link)

The reason for the lay offs?

"In order to properly align its resources with its current and future goals, and to continue to develop games as efficiently as possible, 2K Sports has eliminated approximately 30 positions at its Visual Concepts studio. These reductions will not affect 2K Sports’ ability to create and deliver AAA titles, including its upcoming release of NBA 2K11."

This is some of the activity I've been on the lookout for since my earlier post on the Red Dead Redemption PC port. Could this be a sign of Take-Two trimming the hedges with future lay-offs on the way? Many of the Rockstar offices have been pretty scared the past several months waiting to see what their future holds.

The reason for this might simply because of the amount of money they can potentially lose because of the franchise, Gamespot explains. It makes sense though, based on the timing. Next quarter is probably when we'll see some more activity.