Tuesday, October 25, 2011

Annual Pass: What Is The Intention?

When the new annual pass offer was posted the first thing that crossed my mind was that I was buying it, it was not even something that needed to be considered. 

I looked at it this way.  I pay all year round anyway so paying in advance is no big deal.  Add to the fact I get a mount, another game and an invite to the beta and you basically have a no brainer here.

As it turns out I actually saved money because of this.  By paying in advance I saved $2 per month on my subscription cost and I saved the money I would have spent to buy the mount.  Yes, I would have bought the mount anyway.  I have the sparkle pony and the rasta lion so I would have got that too.

That alone means I have saved, at the least, $24 in subscription costs and $25 on the mount for a total of $49 savings.  Nothing wrong with saving $49 if you ask me.  Add to that the fact I get another game free, if I play it or not does not make a difference, it is free, and an invite to the beta guaranteed it as a win/win/win all the way around for me.

When I mentioned I bought the new package to some of my guild mates and explained the advantage to buying it they all seemed to jump on board.  Some are probably going to sign up today even.  Every one of them immediately considered buying it and the few that had issues with it had issues with it for one reason only, the outlay of a years payment.

When I explained that you do not have to pay a year in advance, you can pay one month at a time if you want to, then any reason they had not to buy it was gone.

It is a good deal for everyone that plans on playing for a year anyway.  Worst case scenario would be you get a free mount, a free game and a beta invite but pay full price for each months service.  Still pretty much a win/win/win all the way around.

So what exactly is Blizzard's intention with offering a package deal like this?

It all comes from an accounting stand point.  While it might get a few people that do not subscribe all year long to subscribe for a full year that would be a bonus in their mind.  While it might very well get a few of the people that quit playing to come back and pay for a years commitment even if they are not currently playing cataclysm.  It is not aimed at them as their main focus. 

It is aimed at me and people like me.  People that plan to pay for a year anyway.  The are giving all the bonuses to make sure we take notice and make our yearly commitment in advance instead of paying as we go.  They want to try, as best they can, to get everyone that is currently playing to commit to a year.  That is the intention.

It is completely for accounting purposes.  Even if everyone chooses to pay one month at a time when agreeing to the year contract, every month on that contract can be counted as revenue generated in the quarter that the commitment was sold in, or assigned anyway they see fit.  Commitment contracts are really fun for accounting and playing with numbers to make them look better then they really are.

They are trying to boost their quarterly numbers for the sake of their stockholders.  Nothing more.  They have to answer to them first, not us.  The stockholders took note of losses since cataclysms release. 

While us fans argue over if the loss of players matter, some saying yes, some saying no, the stockholders opinion was the only one that blizzard actually took notice of, and they said, yes, the loss is a problem. 

Just look at what recently happened to netflix.  It lost 810,000 subscribers and its stock fell 23%.  In comparison, netflix is much bigger then WoW, lost (percentage wise) much less then WoW did, and it hurt them.  It hurt WoW too and this is their response to try and keep the stockholders from biting their heads off.

This is being done to address that problem, to save the game in the eyes of the stockholders, not us.  They want to be able to show the stockholders at the next meeting that even though they have lost a fair deal of subscribers their profits have gone up instead of having to say, we lost subscribers and all the money associated with them. 

That is the reasoning behind such a fantastic deal.  There is absolutely no reason for anyone in the game not to buy this deal.  They want, they need, as many of us regulars to buy it.  Even if all you can afford is $15 a month and can not spend more up front you can still take advantage of the deal.  You can still get the free game, you can still get the free mount, you can still get beta access, all for the same exact $15 per month you are already paying anyway.

If you look at it from our standpoint blizzard gets nothing by giving this to us.  If anything, they lose.  They lose the money some would have spent on Diablo.  They lose the money they would have made selling a mount.  They lose the money from people that always paid monthly like me but now pay in advance so my cost is now cheaper.

It seems they are buying time for this next expansion and hoping it will reverse the bleeding that cataclysm has caused.  This sale is just a way for the accountants to pad the books by using future commitment numbers as current numbers (a common practice) to make it look like they are doing fine, to make the stockholders happy long enough for MoP to come out. 

Then they will all collectively hold their breath and cross their fingers and hope that the month MoP is released it doesn't lose customers the same as it did the month cataclysm was released. 

This is a gambit.  A risk.  If MoP turns out to be as badly received as Cataclysm has been and causes more people to leave, even in small numbers like 5%, then the whole franchise might be in for a huge change because the stockholders will demand it.

We will find out for sure on May 15th when MoP is released I guess. 

Now stop reading this and go buy that annual pass now.  It's worth it.


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  2. Interesting approach. But even after some consideration I don't agree. Investors may not be the brightest when it comes to gameplay. But they are very bright when it comes to tricks like that.

    Bliazzrd manager: Dear investors, we may have lost 10% subscribers, but revenue rose by 15%.

    Investor: The sub rate didn't change, did it? How did you do that?

    Manger: Well, we allowed players to buy one year in advance for 70% of the price and already put these future earning in the balance sheet.

    Investor: Ok ... that doesn't really solve the underlying problem, does it? I mean, you basically sacrificed overall revenue to increase today's revenue?

    Manager: Nonono! The next expansion will be a HUGE success.

    Investor: Ok ...

    My point of view is still this: First. You are anything but a typical player, GrumpyElf ;).

    Second, most players who accept this offer, were probably scammed. But they will never know, so who cares ?

  3. I know it does not solve the underlining problem, you know it, anyone that plays wow knows it.

    To investors WoW is a tiny division of a much larger company. They will see the + or - at the end of its line and that is all they will see and base their opinions on.

    A plus and they move on and minus and they will ask why the company is carrying dead weight.

    Do not think of WoW, or blizzard as a whole, as the company itself. It is a small part of a much larger picture.

    All investors will want to see is that it is not a money pit and as long as a lot of reports do not have a minus on them each shareholders meeting, they will not question it. Hence the reason this is a gambit.

    They are hoping this can fake a couple of pluses and that MoP brings it back to true pluses when it comes out.

    They only have to fake two quarters, this should do it.

    I am very typical. Just much more grumpy. :D

    Would love to see how you consider the offer a scam. Saving money and accepting free gifts doesn't seem like a scam.

  4. well.. I think the scam behind it is the same as happened with WotLK at its end..

    Remember when ICC came out? at the beginning of the year, let's say march or something like that? when did cataclysm hit? december 7th. That's 9 (9!) months of actually NO new content.

    oh wait, halion... i don't consider that one boss real content...

    I fear the same with MoP, that it will take soooo long to develop that we sit around with nothing to do after killing Deathwing... and that's the reason why I didn't buy the annual pass...

    Because, at least, I can unsub and play SW:ToR or something..

  5. I've written down my own version here.

  6. @Adrian

    I guess if you plan to not play during that long down time of no content you could consider it a scam. If you plan to continue to pay anyway, then paying $2 less per month is a bonus, not a scam.

    For people that let their accounts lapse all the time it is bad I guess. I pay, and play, all year round, so it is great for me.

    May 15th MoP is coming out. Mark my words. ;)

  7. May I ask when you started to play WoW and do the 12 month subs :)

  8. Almost 4 years ago, I do not do 12 month subs. I always used cards. But have no issue switching to a sub version.

    You can still pay with cards even if you make a 12 month commitment.

    The 12 month commitment they are asking for does not need to be paid in advance. You can still pay as you go, or with cards.

    Heck, I never would have subbed if it were not for them giving me bonus things to do so. I was content paying with cards and paying $2 a month more.

  9. What happens if you stop to buy more time with cards? Wouldn't that be an easy way for many players to buy Diablo III and test it for one month at a really cheap price of a 1-month WoW sub?

  10. In Germany there are a lot of offers in shopping malls where you get a little discount on your parking ticket when you buy something in the mall. And a lot of people are buying things they don't really need just to get the discount.
    I think Blizzard is targeting this audience with the annual pass and I think it is going to work since a couple I know cancelled both their WoW accounts about a month ago because they didn't like the game anymore and now they signed the annual pass and probably won't even play WoW.

  11. Your credit card and your "subscription" are only charged if you run out of time.

    If you have 1 year worth of time on your account already, from card for instance, (like I already had 9 more months built up and 2 cards I never used, so for me, this is all completely free, I already paid for a year a long time ago) and sign up, basically it is already paid for being you already had the coming year paid for.

    If you decide to use cards for the next year, your credit card will never be charged for anything.

    They only want the credit card as security that they will pay the full year. Like you said in your post. If you are not planning on paying a full year, it is a loss. If you are however, it is a huge plus.