World of Warcraft is thinking of microtransactions, and that’s a good thing

Following on the heels of another reported loss of 700,000 subscribers, there’s been buzz lately of Blizzard discussing that the stalwart subscription-based MMO World of Warcraft will be introducing in-game microtransactions in the future. While this might be an Azeroth-shattering revelation to those who have been used to shelling out the same number of dollars— and nothing more—each month to play their game, to others it’s a wise move, if handled well.

We believe WoW made $93MM in April in total revenues—not a bad sum—but a far cry from the $204MM it made just seven months earlier. Activision also announced a loss of about 1.3MM MAUs from the game’s Eastern-hemisphere playerbase recently, a move that our numbers showed in real time. That, of course, is an issue for a subscription-based title. And in a market where players are increasingly used to—and spending money on—in-game items, the lack of microtransactions beyond pets and mounts looks like it’s starting to hurt.

What we generally see after a switch to free-to-play is an influx of new players and a spike in revenues, which, if the cards are played right, can be sustained. But to switch entirely to F2P is currently too much of a jolt for WoW, and doesn’t make sense with the current metrics. For example, in order to have sustained the US revenues the game saw in 2011, it would have had to convert 53% of the total free-to-play audience in the US at the time. However, there are now more F2P gamers in the country—and worldwide—so it’s becoming easier to capture this audience. But there’s also more competition.

Games with micro-transactions have long been trumping subscription ones in total revenues in the US, but the decision to switch to a hybrid or F2P model was one that didn’t make sense for all games, one of them, currently, being WoW. With a dedicated player base and relatively stable MAUs, WoW would need a convergence of factors to make the switch beneficial. It looks like those factors are starting to stack up, but haven’t hit critical mass.

Despite major declines in total revenues between September 2012 and April 2013, the game has seen an increasing conversion rate for the its current, add-on, extra-game store, and its microtransaction revenues have held pat overall. What it tells us is that dedicated WoW players are interested in—and will spend money on—microtransactions. By bringing this system into the game, and allowing for powerups and performance-based microtransactions, WoW hopes to further entice players to spend.

WoW Chart

WoW is following in the footsteps of a number of formerly subscription-based titles that have dabbled in the hybrid or free-to-play realm, like Star Wars: The Old Republic, Aion, and more recently, RIFT. Many industry players have eyed this hybrid space, but navigating it requires a lot of knowledge. How do you get someone to shell out $50 for a retail title, or $15 for a subscription, and engage them enough to spend more money on microtransactions? The current plan has a precedent, and is a good easing into the space, giving gamers what Blizzard already knows they want (in-game transactions), but not alienating the hardcore fan base. It remains to be seen, however, whether they’ll clinch the transition and remain relevant to a new generation of gamers.

Learn more about our F2P/P2P digital games market research and our title-level KPIs.

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