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I think the real mismatch for EA and Gamers is that EA is effectively selling a SaaS product but pricing it like it's an boxed product. It's not just unlikely

I think the real mismatch for EA and Gamers is that EA is effectively selling a SaaS product but pricing it like it's an boxed product. It's not just unlikely but, in fact, impossible for the operating costs of the servers to be worth keeping on forever since no (significant) additional income will be coming in from the title after some point X. SaaS companies have been dealing with this for years quite successfully via their "pay as you go" monthly subscriptions. This keeps the money flowing in and motivation to keep the servers on. And, better yet, it gives the consumer confidence that the service provider is going to pay attention to the product long-term, not just during launch day. My recommendation for EA moving forward would be to move to subscription pricing for any games that operate as online-only - single- or multi-player. Exact pricing is important as well. My initial instinct was to say that they should prorate the cost, something like $5/month but I quickly realized why this wouldn't work. Obviously most gamers are fickle and have short attention spans. 90% of buyers probably wouldn't buy month two and it wouldn't work out. Instead, I would recommend pricing the game at something like $60 for two years. Same price and clearer value to me as a customer. Suddenly I'm not worried if they are going to shut off the servers in four years because that's not what I'm paying for today (and really never was). I'm paying for the opportunity to play this week and, if I love it, play it over and over again for two full years. Is that worth $60? Absolutely! And what about in two years? If I'm still loving it, hopefully they let me renew for another two years, maybe even at a discount. And if the game ends up sucking and nobody renews, they can turn the servers off (or throttle them down) without feeling bad. The real risk with the current system isn't in case the game is a flop and they turn the servers off prematurely. It's actually if the game is legendary, like SimCities of past, and the passion to play keeps momentum for decades. How can EA keep the lights on?

thebokehwokeh2 14y ago
This is truly delusional. Your model assumes that the current model, (buy once own forever), isn't making them enough money to keep the lights on. The issue here isn't that EA is not making enough to keep the lights on. It's that EA wants to make more, and more, and more and more, and more... And is too lazy to figure out a true solution to piracy. Nobody will pay $60 to "rent" something for 2 years. You already pay $60 to own for life. If it were some insane price like $10, then yes. That makes a whole bunch of sense. It's the model that Netflix, Spotify, and the iTunes Store subscribes to. Saas will only work if it provides value at an extremely minimal price. What happened with Sim City is not a failure of the Netflix, Spotify, iTunes store model. It's just that EA, as a company, is just simply blinded with so much greed to understand the way the world works today.
- jblow 14y ago
  Have you looked at EA's financials? They have been losing money for years.
  - davidp 14y ago
    I was curious so I went and looked: Mostly true, according to their SEC filings[1]. On page 28 of their 2012 10-K[2] we see their net earnings: 2012: $76M 2011: ($276M) 2010: ($677M) 2009: ($1088M) 2008: ($454M) So they juuuust squeaked back into profitability last year; probably mainly due to the slowly improving economy (games are luxury items and folks are only now cringing less when they spend on them). It's hard to know yet whether this ugly launch was actually a bad move for them; dollars don't lie and they appear to be paying enough to get some heavyweight execs. [1]: http://investor.ea.com/sec.cfm http://investor.ea.com/sec.cfm [2]: http://files.shareholder.com/downloads/ERTS/2357335259x0x590179/108820DF-CD66-41CA-9DBD-0D18119A4CD5/2012_Proxy_Statement_Annual_Report.pdf http://files.shareholder.com/downloads/ERTS/2357335259x0x590...
    - harlanlewis 14y ago
      > So they juuuust squeaked back into profitability last year; probably mainly due to the slowly improving economy (games are luxury items ... The jury is still out on how the economy affects video games. It's often argued that video games perform similarly in recessions to the 'sin industries' - alcohol, cigarettes, gambling, etc. Some quick googling found plenty of articles about whether the video game industry is 'recession proof', but nothing I found unequivocal enough to cite.
lttlrck 14y ago
Subscription still doesn't prevent them from stopping subscription renewal and switching off support.
- tobyjsullivan 14y ago
  I may have failed to clearly communicate my point. My intention was that they could do a lot more to manage expectations of their customers which would, most likely, greatly reduce the ill will they are currently experiencing.
  - nitrogen 14y ago
    Managing expectations in this case is code for convincing consumers to be happy about being ripped off.
    - illuminate 14y ago
      Of course, "managing expectations" is forever about the mitigation of disappointment.
      - nitrogen 14y ago
        Well, it's one thing to mitigate unavoidable disappointment, it's entirely another when the disappointment is manufactured.
seanp2k2 14y ago
>"Instead, I would recommend pricing the game at something like $60 for two years. " While I personally understand all the costs involved and would perhaps be willing to do this (kinda like the WoW model where the game had an up-front cost plus recurring service fees), I think many would feel scammed by this model. My question is: what is wrong with the model where single-player is totally offline, but multiplayer requires a matchmaking server that DOES validate the license? This model is already out there and works well enough (though it is 2013 and we could /probably/ figure out how to make open directory server software and/or employ P2P tech to lessen the financial burden AND increase reliability / stability / community relations...). The bigger issue here is that American companies are trying to move us to a subscription model for /everything/, so we're always in debt and most will never truly own anything of significant value. Lease your housing, your car, your computing, your gaming, your textbooks, your cellphone, your couch, your money, etc.
- mattmanser 14y ago
  It's an economic consideration, by allowing offline play they believe they'll be leaving more money on the table than if they make it online only. They'll convert people who would have just got a cracked version into buying it. Unfortunately for Maxis they obviously didn't hire any programmers who had a clue how to write scalable server code. And the result is that they have managed to lose a lot of sales in the first few key weeks because of bad reviews. But economically speaking, sound decision, just poorly executed. On your last point, this is an unfortunate side effect of digital goods. In Europe we can hope for a growing political movement that this is deeply anti-consumer and will be legislated against, far more likely here than in America, but it will be hard for courts to decide where to draw a line. So ultimately I doubt it will ever happen.
  - sirobviouspoint 14y ago
    > But economically speaking, sound decision, just poorly executed. I'm not sure it counts as a 'sound decision' if you take a very risky option that hasn't panned out well for competitors in the same market on the premise that if you beat the odds, you'll get a bit more money. I think EA underestimated the cost of their "always on" DRM, and didn't adequately assess the risk against the payoff - and now have taken a business hit from it. For example, literally no one I know that I used to play Sim City with for hundreds of hours as a kid purchased this game - precisely because of EAs decisions regarding always on DRM and their history with Spore design. They've effectively driven away over a dozen people in their 20s, perfectly willing to fork over $70-100 on a game they like. (Or $200 or $300 or $1000 on a really good game they like; I'm looking at you table-top guide books, trading card games, and minifigures.) I consider that exactly the opposite of 'sound decisions'. tl;dr: You have to assess the risk that you're going to poorly execute your choice to make a 'sound decision'; I'm not sure EA did.

thebokehwokeh2 14y ago

This is truly delusional. Your model assumes that the current model, (buy once own forever), isn't making them enough money to keep the lights on. The issue here isn't that EA is not making enough to keep the lights on. It's that EA wants to make more, and more, and more and more, and more... And is too lazy to figure out a true solution to piracy. Nobody will pay $60 to "rent" something for 2 years. You already pay $60 to own for life. If it were some insane price like $10, then yes. That makes a whole bunch of sense. It's the model that Netflix, Spotify, and the iTunes Store subscribes to. Saas will only work if it provides value at an extremely minimal price. What happened with Sim City is not a failure of the Netflix, Spotify, iTunes store model. It's just that EA, as a company, is just simply blinded with so much greed to understand the way the world works today.

jblow 14y ago
Have you looked at EA's financials? They have been losing money for years.
- davidp 14y ago
  I was curious so I went and looked: Mostly true, according to their SEC filings[1]. On page 28 of their 2012 10-K[2] we see their net earnings: 2012: $76M 2011: ($276M) 2010: ($677M) 2009: ($1088M) 2008: ($454M) So they juuuust squeaked back into profitability last year; probably mainly due to the slowly improving economy (games are luxury items and folks are only now cringing less when they spend on them). It's hard to know yet whether this ugly launch was actually a bad move for them; dollars don't lie and they appear to be paying enough to get some heavyweight execs. [1]: http://investor.ea.com/sec.cfm http://investor.ea.com/sec.cfm [2]: http://files.shareholder.com/downloads/ERTS/2357335259x0x590179/108820DF-CD66-41CA-9DBD-0D18119A4CD5/2012_Proxy_Statement_Annual_Report.pdf http://files.shareholder.com/downloads/ERTS/2357335259x0x590...
  - harlanlewis 14y ago
    > So they juuuust squeaked back into profitability last year; probably mainly due to the slowly improving economy (games are luxury items ... The jury is still out on how the economy affects video games. It's often argued that video games perform similarly in recessions to the 'sin industries' - alcohol, cigarettes, gambling, etc. Some quick googling found plenty of articles about whether the video game industry is 'recession proof', but nothing I found unequivocal enough to cite.

lttlrck 14y ago

Subscription still doesn't prevent them from stopping subscription renewal and switching off support.

tobyjsullivan 14y ago
I may have failed to clearly communicate my point. My intention was that they could do a lot more to manage expectations of their customers which would, most likely, greatly reduce the ill will they are currently experiencing.
- nitrogen 14y ago
  Managing expectations in this case is code for convincing consumers to be happy about being ripped off.
  - illuminate 14y ago
    Of course, "managing expectations" is forever about the mitigation of disappointment.
    - nitrogen 14y ago
      Well, it's one thing to mitigate unavoidable disappointment, it's entirely another when the disappointment is manufactured.

seanp2k2 14y ago

>"Instead, I would recommend pricing the game at something like $60 for two years. " While I personally understand all the costs involved and would perhaps be willing to do this (kinda like the WoW model where the game had an up-front cost plus recurring service fees), I think many would feel scammed by this model. My question is: what is wrong with the model where single-player is totally offline, but multiplayer requires a matchmaking server that DOES validate the license? This model is already out there and works well enough (though it is 2013 and we could /probably/ figure out how to make open directory server software and/or employ P2P tech to lessen the financial burden AND increase reliability / stability / community relations...). The bigger issue here is that American companies are trying to move us to a subscription model for /everything/, so we're always in debt and most will never truly own anything of significant value. Lease your housing, your car, your computing, your gaming, your textbooks, your cellphone, your couch, your money, etc.

mattmanser 14y ago
It's an economic consideration, by allowing offline play they believe they'll be leaving more money on the table than if they make it online only. They'll convert people who would have just got a cracked version into buying it. Unfortunately for Maxis they obviously didn't hire any programmers who had a clue how to write scalable server code. And the result is that they have managed to lose a lot of sales in the first few key weeks because of bad reviews. But economically speaking, sound decision, just poorly executed. On your last point, this is an unfortunate side effect of digital goods. In Europe we can hope for a growing political movement that this is deeply anti-consumer and will be legislated against, far more likely here than in America, but it will be hard for courts to decide where to draw a line. So ultimately I doubt it will ever happen.
- sirobviouspoint 14y ago
  > But economically speaking, sound decision, just poorly executed. I'm not sure it counts as a 'sound decision' if you take a very risky option that hasn't panned out well for competitors in the same market on the premise that if you beat the odds, you'll get a bit more money. I think EA underestimated the cost of their "always on" DRM, and didn't adequately assess the risk against the payoff - and now have taken a business hit from it. For example, literally no one I know that I used to play Sim City with for hundreds of hours as a kid purchased this game - precisely because of EAs decisions regarding always on DRM and their history with Spore design. They've effectively driven away over a dozen people in their 20s, perfectly willing to fork over $70-100 on a game they like. (Or $200 or $300 or $1000 on a really good game they like; I'm looking at you table-top guide books, trading card games, and minifigures.) I consider that exactly the opposite of 'sound decisions'. tl;dr: You have to assess the risk that you're going to poorly execute your choice to make a 'sound decision'; I'm not sure EA did.