Answer to Stropp: How Long Should A MMORPG Be Kept Alive?
Posted by Tobold's Blog [HTML][XML][PERM][FULL] on 3 December 2012, 9:28 am
Stropp is asking: How Long Should A MMORPG Be Kept Alive? and answers it by "I’m of the opinion that a game should be kept going as long as it still has X number of players logging in every day, and the cost of keeping it going is not an undue burden on the company." There are two major problems with that answer: What is X? And what is an "undue burden"?

My answer is similar, also resulting in an X which is unknown to the players. But it would be an X which is known to the game company: I'm of the opinion that a game should be kept going as long as it's return on capital employed is higher than the cost of capital. Note that this is a higher barrier than saying "the game is profitable". A game could theoretically be "profitable" by having a profit of $1 per year. But as then the company would make considerably more money on their investment if they closed the game, pulled the money out and put it on a savings account, in my mind that constitutes an "undue burden" on the company.

Note that capital employed does not include the "sunk" cost of developments. So even if going by my answer, a game could still be a bad investment: It could make more money keeping it alive than killing it and paying your debts back, but the extra profit might not be big enough to pay back the sunk cost before a hundred years. I don't think a MMORPG should be abandoned just because it wasn't quite as much a money maker as expected. But it needs to make more money than the cost of capital to be not a financial burden to a company. Read up on the Japanese economy if you don't see what the harm is in keeping zombie companies and projects alive artificially.
Tobold's Blog



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