IP Based MMOs Are High risk

Star Wars Galaxies

The droids you are looking for have been found and slaughtered

By now you’ve probably all read about the real reason for Star Wars Galaxies’ closure. Turns out it had nothing to do with profitability (well, OK, not strictly true but, even if SWG wasn’t making huge profits, we can assume that it wasn’t making a loss), developer motivation or lack of fan devotion but rather because SOE’s license ran out on the Star Wars IP. Yep, it was only a five year deal. Gee, kinda short sighted don’tcha think?

OK, OK, I’m sure SOE had the option to renew the license should they have wanted to and, in reality, the decision was theirs to shut down SWG rather than George Lucas’ due to a combination of lack of high profitability and the impending sense of doom that Star Wars: The Old Republic filled their increasingly stained pants with. Bottom line, if SOE had wanted to save SWG and renew the license, they could have regardless of how economically insane the decision might have been (I’m guessing a five year Star Wars license costs somewhere in the realm of five to ten gazillion dollars – I know, I missed a career in finance, right?).

Still, the simple fact is that had SWG not been utilising a Star Wars license and had instead been based on an original IP then the game would still be running today. And probably next year. And the year after at. I mean, heck, just look at games like Vanguard, Asheron’s Call and Anarchy Online (to name but a few) that continue to successfully tick over for years regardless of low interest. Perhaps they aren’t the most widely supported or updated MMOs on the planet but they still keep thousands of players happy, plenty developers and designers in jobs and bring in a modest annual turnover in the process. Everyone’s a winner, baby.

Not the case with IP driven MMORPGs though that require massive renewal fees. I mean, for any game to able to afford a license cost for some major sci-fi or fantasy brand then it’s going to have to be bringing in a fair amount of cash to justify the cost. This, in turn, means the game needs a lot of players and a lot of subscribers, making the entire venture high risk not just for the development studio but for the player as well. There are a lot of unhappy folk out there seething over their favourite Star Wars game getting the axe. Quite understandable too as MMOs are not something that you just casually invest in but rather, often very strong, communities of friends and peers.

So ultimately it’s the fans who suffer. Yes, maybe SWG wasn’t the most popular MMO around (of course SOE would’ve coughed up the license fee if it had been) but I do feel that its players deserve more than just being told it’s getting shut down with no hopes of them being ever to play it again. Buy a single player Star Wars game and you can play it ’til your heart’s content for as many years as you want without worrying about George Lucas asking for more cash – unfortunately this isn’t the case with the online world though, much to detriment of you and me.

Perhaps SOE should have been more upfront about this license expiry right from the start, informing fans that the MMO – depending on its popularity – had a limited lifespan? At least that way players would’ve known what they were in for and better prepared themselves. Maybe it would’ve scared a few people off but, in my opinion, you just can’t beat transparency and honesty.

All-in-all, it makes me worry about the future of some of the other IP based MMOs out there. Lord of the Rings Online, Warhammer Online, Age of Conan, Star Trek Online… how long can we truly expect them to last before their IPs come up for renewal again and the developers decide it’s not worth the cost? Sure, maybe LOTRO is doing fine now but what about in three years? And WAR, AoC and STO are hanging on by a thread as it is – can we really expect Mythic, Funcom and Cryptic to fork out for what will no doubt be atrociously high license fees when they can’t even hold onto full development teams? IP based MMOs are starting to seem like quite a risk for all involved now.


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  1. LOTRO is good until 2014 and Turbine has an option to extend to 2017. But you can bet if LOTRO is hurting in 2014, there will be no renewal.

    As for who had the option to shut down SWG, from what I have read the ball was entirely in the court of LucasArts. Smed saying that it was a mutual agreement was putting a brave face on things and protecting SOE’s relationship with Lucas, as they still license the Cone Wars IP. You can’t be warring in public with somebody who is still your partner.

    Licensing a known IP is a risk/reward proposition. Having the IP gets you immediate name recognition. However, it also sets (unreasonable) expectations.

    Plus the licensee wants money today and at regular intervals. So the threshold for shutting down a game like, say, The Matrix Online, is much higher as it has that additional fixed cost. Plus the licensee has a responsibility to protect and exploit/milk/profit from the IP. If you’re running a service that is looking shabby and run down, it might be expected that the licensee might not

    • Stabs says:

      I just can’t see that in 1999/2000 SOE would have signed a deal allowing Lucas to later pull the plug unilaterally. Suppose SWG had been the WOW of last decade with 12 million current subscribers and Lucas wanted to pull the plug just because they felt like being dicks, or felt their cut wasn’t big enough or whatever.

      So there’s two possibilities. 1. SOE’s contract lawyers when the deal was originally drawn up were astonishingly negligent, to a We just bought the Brooklyn Bridge cheap off some guy in the pub level. 2. Smed could have saved SWG but chose not to under pressure from Lucas Arts (they do have Clone Wars as a lever).

      • Fumbles says:

        It was known that the license had a term attached back in the day, the unknown was for how long. I’m sure there were extension options available as well, SWG just does not have the revenue to justify an extension and with the eminent release of TOR competing over IP fans they were smart to let it go.

      • Gordon says:

        I think it’s more the latter. No doubt it just wasn’t worth SOE’s while to pay the renewal fee especially when it was likely the subscription figures would drop even lower when SW:TOR came out. Makes me wonder how long they’ve know this for…

  2. ScytheNoire says:

    I agree that closing SWG was just a dumb move, it makes no sense. Those who enjoy that game are most likely not going to enjoy SWTOR, because they play so differently. SWG does no harm to SWTOR, there is no reason to end it, it’s not a threat, they play very differently. This just shows a lack of knowledge on the part of Lucas, they don’t know why certain people play certain MMO’s.

    I also agree that using an existing IP is dangerous because the ultimate final word always lies with someone else, not the game designers. This means that people who have no clue about the game or gaming can destroy something simply on a whim. It also means that money ends up going to those IP rights holders, money that many studios probably need.

    Look at Blizzard, they created all their own IP’s by simply borrowing ideas from other IP’s. Both Warcraft and Starcraft borrow from Warhammer & WH40K, but Blizzard owns the IP, thus, Blizzard makes all the profit and Blizzard has the final say on how their IP is handled, not someone who has nothing to do with gaming.

    BioWare sorta has this in that they have been the main driving force behind The Old Republic IP, but it’s still Star Wars, and Lucas will have the final say to screw something up. Yes, existing IP’s can bring a huge audience, but it’s definitely a double-edged blade.

    • Gordon says:

      Absolutely agree. I mean, I like playing popular IPs as much as the next guy but it’s kinda scary thinking that any MMO I enjoy could be taken out from underneath our feet due to license fee issues. Here’s betting Star Trek Online is going to be next in the firing line…

      • Stabs says:

        Scythe, much as I hate the decision some SWG players will move to SWTOR. Maybe not many and quite possibly they’ll be a vocal pain in the bum on the forums but it’s likely to be a non-zero number.

  3. Klepsacovic says:

    “Still, the simple fact is that had SWG not been utilising a Star Wars license and had instead been based on an original IP then the game would still be running today.”
    Would it? I wonder how it would have gotten running with nothing to attract players except gameplay. That wasn’t sarcasm, but really, we should consider how many people play a game because it’s a name they known compared to hearing how great it is. My guess is that before WoW took the title of Bringer of New Players to MMOs, SWG had that title, all due to the name. Without that name, I think it could have still worked, but less so, perhaps so much less so that it would be yet another shuttered or f2p game.

    • Stabs says:

      Galaxies would have been an amazing game without the IP. Many of the bad things that later happened to it only happened because of having to live up to the pressure of having “the best IP in gaming.” The Combat Upgrade/New Game Experience, now considered to be one of the worst decisions in gaming was made purely on the basis that WoW was attracting more players and it shouldn’t be as popular as Star Wars.

      Galaxies was a very unique and highly experimental game. Almost like A Tale in the Desert level of niche in its gameplay. If it had been left alone it would have progressed like Eve Online, much quieter start, slowly building up more and more people.

    • Gordon says:

      Yeah, I know… basically SWG did well because it had the Star Wars license attached to it. I guess I just mean that if it hadn’t been for license costs, the game would still be running today.

  4. kaozz says:

    Yeah, it makes me a bit weary after what happened to SWG.

  5. Azuriel says:

    To be honest, I find a lot of these argument kind of dumb.

    1) According to MMOData, SWG was sitting at fifty thousand (50,000) subs halfway through 2009. That is down from peak 300,000 subs in 2003-2004, and the steady decline from 2006 onward. Chances are good sub numbers didn’t increase beyond those last data points. Maybe an MMO is still profitable with < 50,000 subs, I dunno, but profitability is not some binary switch where as long as $1 is being banked it is business as usual – there is opportunity cost to consider, nevermind the length of these contracts. You mentioned keeping developers/designers in jobs, but you can also keep them in jobs by having them actually develop/design better games rather than keep old games on life-support.

    2) I do not see anything inherently more risky with licensed IPs than original IPs. The end of a contract makes for a convenient ending place just like the end of a lease does for an apartment, sure. And if you want to renew a 5-year contract, you have to balance how much profitability there will be over those 5 years; maybe the executives aren’t put on the spot, as it were, if there were no license contracts to consider. Then again, does this not work the other way? Does Sony not make more of a heroic effort to support a clearly dying title rather than close up shop APB-style once the numbers start tanking? As Klep said, it is also an open question how much of SWG’s success was as a direct result of the first two words in its title.

    3) I find fascinating the worldview in which a finite MMO is apparently not worth playing at all, regardless and in spite of all MMOs being such. I guess you did not come right out and say they were not worth playing, but that is what I read in this line:

    Sure, maybe LOTRO is doing fine now but what about in three years?

    I understand the concern, I can even rationalize the concern (time has value in an MMO relative to how long the reward “lasts,” social networks sometimes takes months to develop, etc). But honestly, I feel like there would be large number of players who, if Turbine announced LOTRO would be shutting down in 3 years, would suddenly decide to stop playing LOTRO right now even if they were having fun. Even if the very odds they would be playing LOTRO themselves after ONE year was 5%. Nobody buys APB knowing servers are shutting down after 1 month, but I do think we as customers place a fairly absurd value on longevity that statistically none of us will actually experience anyway.

  6. Stabs says:

    Conan is out of copyright everywhere except in the USA. If the licence holders refused permission Funcom could keep the game going in the rest of the world without it.

    IP based licence fees can be a millstone, they are effectively a minimum level. SOE had to close the Matrix Online despite keeping other smaller games open (Planetside and Vanguard) and with no competing Matrix MMO on the horizon. It seemed at the time like a negotiating failure to me. Would you, Matrix IP owners, like less money or no money? Somehow the answer was “no money please”.

    • Azuriel says:

      Well, the choices really were “Less money + having your IP associated with a failing game + (presumably) not being in a position to license it out to anyone else with a better game,” or “no money.” I might have an empty room I’m not using, but that doesn’t mean renting it out to some random guy is always better than leaving it empty.

  7. vortal says:

    Personally I don’t enjoy playing MMOs (or games in general) which are based on other popular titles in Film, Books, Comics, TV and other whatnot. I just don’t enjoy it, the fact that it actually is the world that I know and love, really kills the game for me.

    In the end, these IP based MMOs will only sustain if they continue to make big bucks. That is all the company cares about, the creator of these games want to please their player bases, but does Lucasfilm give a hoot about a MMO. I guess not. They will only continue to support these MMOs if they were to become the Cash Cows they always dreamed they would be, if not they pull the plug.

    • Gordon says:

      For me IPs are a mixed bag. They can be great because they immediately grant you a certain amount of immersion but on the other hand they can also place a lot of restrictions on the gameplay (WAR is a great example of this).

  8. [...] ready made world and story that you can develop and plug into. There’s no certainties though that buying an IP will help you in the long [...]

  9. Damage says:

    Just so you’re aware, Asheron’s Call has only missed 1 monthly update in the almost 12yrs it has been online. Yes it only has maybe 300-400 people playing at a given time per server but Turbine hasn’t let that affect it’s content updates, unlike SOE and Vanguard.

  10. hordemaster says:

    I was very sad to hear of the demise of SWG; though of course I wasn’t surprised by it.

  11. Rik says:

    I think someone should remake SWG, only better, without the IP. I wholeheartedly agree that an IP is a millstone, as someone said, and the Star Wars IP is the biggest, heaviest of them all. Since the first movie, the whole franchise has been largely about merchandising.

    Let’s be fair though. The makers of an SWG like game without an IP would need to vastly improve the game play. I think bugs were the main contributor to the decline in subs, not playing Owen the moisture farmer as Nancy McIntyre so callously, and wrongfully, alluded to in her New York Time interview.

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