Five More Crackpot Theories about the Scroll of Resurrection

You know, there are crackpot theories, and then there are crackpot theories.

Here are five of mine about the revamped Scrolls of Resurrection.

1. The Scrolls are for the Q1 Earnings call. Offering it right at the beginning of March will mean that everyone who comes back for it will count as an active subscriber during the important part of the quarter – the end. Timing is vitally important here.

2. The Scrolls are to counter Mass Effect 3 and SW:TOR. This isn’t rocket surgery, people. Bioware launches a game in late 2011 which zips up to 2 million subscribers; Blizzard counters with 4.3, perhaps the most fun patch of Cataclysm. Bioware launches a new game this week; a day later, Blizzard offers players a level 80 toon to revive their account for 30 days.

Striking while wallets are already open is a good move by Blizzard.

3. The Subscriber Loss is becoming a big deal. Subscriber decline is more of a PR problem than a financial one, but it’s still a big problem, and becoming a bigger one in light of the 2012 expectations placed on Blizzard. During the last earnings call, Thomas Tippi, the Activision/Blizzard COO/CFO, said:

Specifically, this year, we expect growth from Blizzard.

This is a very strong statement that the analysts took note of. While a contraction of subscribers may be acceptable while profits rise, it is a black mark on a company balance sheet which relies upon “the high-margin Blizzard product slate.” A subscriber loss indicates that growth has stalled on a product. That product will generate a fixed revenue, and cannot be counted upon to increase revenue without somehow increasing ARPU through raising prices on existing services, offering additional services, or lowering operating costs. Wall Street sees a product that has hit maximum market penetration; Blizzard has to show that it’s at least a stable subscriber base, if not actually increasing.

There is also the following statement:

Blizzard revenues are also expected to be down in the quarter [Q1 2012] due to tough comps, as last year they benefited from a higher subscriber base and the strong holiday launch of Cataclysm.

Cushioning statements like this, cautioning that subscribers will be down from a year ago in March, are trying to avoid uncomfortable comparisons with previous expansion launches. No matter the truth behind it, analysts think that SW:ToR has hurt Warcraft’s subscription numbers.

Further decline in the subs will be terrible press.

4. The Scrolls are a high-ROI subscriber boost. This should be obvious – for the cost of two pieces of digital artwork, updates to the SoR program administration, and customer service time, Blizzard nets a few tens of thousands of subscribers. Maybe it’s a few hundred thousand. That’s a pretty good investment with high margins. You have to watch the little things in Blizzard’s earning calls, like another quote from Tippi:

In addition, we continue to undertake productivity improvement initiatives across key areas of operating expenses.

If you don’t speak corporate-ese, this means that Blizzard is going to be trying to do more with less, or at a minimum with the same as what they have now. There is a huge stress on the Blizzard’s high margins in the earnings call, and that means costs will be slashed across the board. Blizzcon was an inevitable tragedy in hindsight – too much money without direct ROI. The February 2012 layoff of 600 employees is likely related to this – corporations often eliminate positions to reduce salary costs while revenues remain at their current level.

The Scrolls will provide a cheap way to boost subs that does not require much marketing on Blizzard’s part. They’ve even opened up a thread on the New Player Forum - a place where recruiting has been forbidden for several years – to allow strangers to SoR each other.

With apologies to my friends on that forum, my first reaction to that was “that’s a really cheap way for Blizzard to make money.” There wasn’t an official place for people to do that before, so they put it on the forums. No need to build a special site, or set up a service – just allow a thread on the forums and point interested players to it.

It’s pretty smart if you’re trying to maximize your margins.

5. Non-subscribers need incentives to subscribe – that’s why they’re not current subscribers. This sounds trite, but it’s worth mentioning, given that current subscribers aren’t getting showered with gifts. People who have left the game are, by definition, not satisfied with the product as it is (or was). Offering them an incentive to return is necessary if Blizzard wants to increase revenue.

This isn’t unique to Blizzard and World of Warcraft, of course. Back in the days when long distance telephone costs mattered, your optimal strategy was switching every few months when a new offer came out from the other companies. If you didn’t want to switch, you could still call up your current provider and tell them MCI was offering X deal and you were thinking of taking it. The problem here is that there isn’t competition per se within Warcraft, though there certainly is within the broader category of leisure time.

The counter to all of this is that regular subscribers feel slighted by being loyal customers. This is why phone companies discount phones (and even rate plans) for long-term customers, why they have retention departments. This is why airline and hotel loyalty programs exist, and to be very frank it’s a god damn travesty that Blizzard hasn’t come up with something like this. This is a big mistake, something contributing to long-term subscriber decline, and once they get past the Q1 earnings call I hope that they realize this.

Long-term subscriber retention requires planning and work up front, but it prevents you from having to blast out Scrolls of Resurrection every 3 months between content patches.

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33 Comments

Filed under Cynwise's Warcraft Manual

33 responses to “Five More Crackpot Theories about the Scroll of Resurrection

  1. Those all seemed somewhat reasonable. I was hoping for truly ridiculous theories.

  2. Jez

    Interesting read Cyn, I absolutely agree about long term retention. I played Puzzle Pirates before I played WoW and because I played for so long I get a special long term subscriber price – and therefore am still subscribed even though I very rarely play these days.That said there is definitely a difference in economies of scale between YPP and WoW.

    • Since I have my wall street hat on, I think that Blizzard would and should shy away from making the subscription cost cheaper over time. That erodes their high-margin business model.

      In-game rewards would be one way to give back without hurting the bottom line. I like @dakotarik’s suggestion of Blizzard Points, a common currency to purchase in-game rewards across Blizzard’s product line. This appeals to long-term customer loyalty versus just subscriber loyalty. (Company vs. specific game.)

      Thanks for the comment!

  3. Ha

    Specifically, this year, we expect growth from Blizzard.

    Could you tell me the context of this quote?
    It does not say that they expect a growth of active consumers of WoW. They are saying that they are expecting growth.They introduce a game that will sell pretty good (Diablo) and a new WoW expansion. This (most likely) is the growth they are talking about.

    WoW is a cash cow. If I were an investor I would expect Blizzard to invest as little as possible in WoW while trying to slow it’s decline for as long as possible.

    I love these moves by Blizzard. They actually have loyal consumers who recruit new consumers (with mounts) and who try and get back ‘lost’ players. They provide in game rewards (low development/production costs) while removing some barriers (cataclysm.for free and to a lesser extent not having to level through outdated content). They outsource their marketing to their consumers (who might be more effective at recruiting) without actual tangible rewards. It’s pretty impressive!
    Why wouldn’t they do this?

    But then again, I sometimes have laugh when I see the similarities between Blizzard and Tobacco companies.

    • The quote comes from the SeekingAlpha transcript of the earnings call, immediately before the quoted section. You can read it in its entirety there.

      Companies report growth in two fundamental ways: market share and profit. While I don’t disagree that they are including the 2 expected product launches in 2012, Blizzard also has to show that their business is not shrinking.

      There is a lot of debate as to whether Blizzard has decided that Warcraft is a farmable product line or not. To the investors, it doesn’t matter – what matters is how the subscriber base will contribute to the EPS. If the subscriber base shrinks, ARPU must go up to maintain the same level of profits (and therefore EPS).

      Please note that my crackpot theories are not condemning the Scroll, at all. I think it’s a good, solid move. I’d applaud it as a shareholder. I’m just trying to be honest about why it’s happening, and why it’s happening now.

      Thanks for the comment!

  4. Ha

    Pokemon Battles, pure genius. You create a relatively easy-to-develop alternative gameplay within your subscription game that supports the F2P model to increase the stores activity.

    I am expecting a focus on the store -> Packagedeals where you can buy a matching mount/pet combo together for a discount, some on use items that will modify appearances and similar cuteness.

    I do not know who exactly is working for EA/Blizzard, but they impress me every single time. Battle.net might eventually revolutionize/change ‘gaming’. The annual pass might just be a beginning..

  5. They could do better, only a crappy mount for a “new” player, it is a weak incentive to old players “offering” SOR, they could had made better with the annual sub a few months ago, if they charged lower sub fees for a year, to old players.

    Yes I know a free game, a mount and entry to MoP beta, but was this enough to older players that have it all?

    Also I would like to ad this simple scenario:

    So now with SOR we could possible see a influx of “new” level 80 players , that do not know there class, because “maybe” they boost a level 1 alt, to 80 and skip all the experience you get playing during leveling.

    Will this improve the game experience to us the “other” players ?

    • sam

      this has nothing to do with other players. Its a bandaid for subs. A well played one unfortunately. Unlike me most other players I know drool over every mount and pet in the game.

      And the kiddies that have taken over their parents accounts love those little rewards.

      • People take these rewards for a variety of reasons, and subscribing to collect digital pets and mounts is as valid a reason as subbing to PvP or raid.

        I don’t disagree with your main point (that this is a move to increase subscribers), but please watch how you refer to other players.

        Thanks.

      • Yes is a way to gain subs, but they could had given “older” players more, instead just trying to get more players.

    • “So now with SOR we could possible see a influx of “new” level 80 players , that do not know there (sic) class [...] ”

      To be entirely honest, with the way leveling is now-a-days there is absolutely no reason to believe that you learn much of anything while traveling to 80. Mobs die quite quickly, especially if you throw in heirlooms (which are not a measure of someones knowledge of their class). Tactics that work well in solo play do not work in 5 mans or raids, and /may/ be valid in PVP.

      “Tactics” that work in normal mode Throne of the Tides, Blackrock Caverns, Stonecore, and Vortex Pinnacle do not work in heroic mode when using equivalent gear. You can chain pull those instances and clear them quickly when wearing of-level or somewhat lower level gear, but you can’t do the same when using 333′s and 346′s in heroic mode.

      While there are people who “learn their class” while leveling to 80 and 85, those are not the majority of players you see at 85. Those 80 levels (or fewer, in the case of DK’s) teach you little more than how to press I and queue for a dungeon, how to avoid being kicked from a dungeon group, and how to spam Fireball.

      There’s a reason people say the game starts at max level. You simply do not have the challenge of content or the necessary tools (skills, talent points, pets, etc) to “learn your class” before then.

      • But a player that goes to 1 to 80, with SOR does not probably knows even the name of skills, let alone what they do. Yes I agree, with the max level stuff, its a ll new game, but do not try to compare a 85 Heroic with leveling to 80, not passing for instance the LFD from 1 to 80, doing quests, being with other players in dungeons, and so on.

        I learn something every time I level a Toon to 80, you know at least what skills you have, what they do, you get experience with LFD every time you queue, you learn something with other people during the leveling to 80.

    • Apparently I cannot respond to your latest comment. Joy. :/

      “But a player that goes to 1 to 80, with SOR does not probably knows even the name of skills, let alone what they do. ”

      As any class, you can level 1-80 with whatever your starting spells are. You don’t need to know the names of spells to reach the next level. You don’t need to train new skills.

      The only thing that being level 42, or 60, or 70, or 80, or 85 means is that you successfully did enough stuff to fill up the experience bar N times. It doesn’t require knowing anything beyond how to press tab and 1.

      “I learn something every time I level a Toon to 80″

      So do I, but I take the time to read my skill descriptions, read my talents, look up pets, do outside research on the class/spec… But my first character, back in vanilla? I leveled to 40 without ever training a pet skill. I leveled 12-30 in the Barrens. I meleed as a hunter. I used intellect gear because I ran out of mana. I did dungeons like this and no one mentioned anything beyond “maybe you should go back to Wailing Caverns and get better gear…”

      My second character, still in vanilla? I leveled to 57 without ever using poisons (they don’t much damage and are too expensive!). I used sinister strike with daggers. I used spell casting weapons because they had higher weapon DPS (but lower weapon damage, and the loss of stats made them even worse). I also did dungeons like this and the closest someone came to telling me I blew chunks and needed to L2P was “hey rogue, can you open this chest?”

      Once you start to get some experience with the game, start to actually learn your class (which might take some prodding from friends, or maybe one day you decided to google “best hunter in world of warcraft”), then you start to piece things together. “Hey, maybe I should put Living Bomb on people instead of just spamming Scorch!” and “Oh, so I actually should use poisons!” and “Hunters should be at ranged.. I need to get a bow and replace this strength axe with something else!” and “Intellect doesn’t give me any attack power.. maybe I should replace these items!” That might happen at level 5, or maybe it’ll happen at level 50. For a lot of players (especially new players), they’re level 85 and it *still* hasn’t happened.

      You absolutely cannot assume that someone who is level capped knows what they’re doing. You can’t even assume someone who raids knows what they’re doing (we’ve all been there, carrying that one person who is slightly better than an empty raid spot..). Leveling is completely arbitrary and only prevents friends from playing together.

      There are a few guilds that are pretty nefarious on my server for having hilariously incompetent players. One of the guilds has quite a few members who, during WotLK, were gemming BC vendor gems. You know, the ones with +4 spirit? Yeah. Level capped, in TOC25, with a +4 spirit gem.

      A month back I was in Lost City of Tol’vir on my just-dinged-85 warlock and the healer was in a mix of DS LFR loot, HoT heroic loot, justice/valor gear, and BOEs. His gems, as a holy priest? +40 parry, +40 parry, +40 mastery, +20 dodge/+20 strength.

      Late WOTLK I had the pleasure of playing with quite a few people who couldn’t avoid dying on Sindragosa, Deathwhisper, or Marrowgar fights (all on heroic, all but SIndragosa with the 5-15% buff.. didn’t get Sindy until 25%.). Many of them had 25+ attempt TOGC25 clears.

      Late Burning Crusade while working on M’uru in Sunwell (before the nerf to add’s health, well before the big 3.0 nerf) I had the pleasure of recruiting a second shadow priest. He was gladiator in 2′s and 3′s. He didn’t understand the concept of debuffs spreading by proximity (Brutallus’ burn) and continually ran into other players with the debuff, spreading it unnecessarily.

      Again, in late BC, before Sunwell was released, Two guildies got glad in 2′s. One was a keyboard turner, the other could not be relied on for interrupts on Reliquary of Souls (the BR rogue with terrible ping was reliable, though!).

      Same guild, a restoration druid could not dispel curses or avoid Doomfire on the Archimonde fight (travel form is hard).

      Same guild, one of the off tanks could not be trusted to tank bosses because he would regularly switch into berserker stance and die, not realizing that it seriously increased the amount of damage he’d take.

      Alt guild, doing Black Temple before 3.0 came out, I had the pleasure of having to focus healing on another healer because he would stand in Supremus’ fire.

      There are a lot of people who didn’t learn jack while leveling 1-level cap.

      • So, this all just proves that, there are people in this game that do not care about learning anything, the class they play, what they are suppose to do and how its done, fights mechanics and so on.

        This is what I do not want in this game, or any game, those kind of people that do not care about anything and are to lazy to improve them self.

        I believe SOR might bring even more incompetence players in the game, so you do not even need to level anymore, so why bother learn anything?

        You just pay to play on game press some buttons and have a few laugh, and that’s it.

        But of course, this kind of people have all the right to do what they want, like me and you, they pay the same money to play.

        So, we both just spent some of our time to say the same thing in different ways, there are people out there, that just do not care about learning and playing better, they just want to have fun in there own way.

        I just want to play a game, with people that want to make the effort to better them self, and not pay to have all done for them, and they just push random buttons and laugh like crazy, So I believe SOR might bring some of those kind of people and ruin the game.

  6. This reminds me of a company that is desperate for people. Make someone a sweet deal to come on board because you need them now.Usually this creates a morale issue for the people that have been there for a while at the same wage rate. I don’t think the retention rate among the scroll people will be very high. They left the game for a reason in the first place and unless you have fixed or changed the reason they left you wont keep them.

    I really love the idea of a rewards program. The points earned could be Blizzard wide and would benefit Blizz in the long run.

    • I like your idea of Blizz-wide points. Earn them in any game, spend them in any other game. Digital assets and gifts would be popular, I think.

      I don’t expect the SoR to have a high stick rating. This will shore up the numbers for this quarter and maybe the next, and then we’ll see how far along Mists is in Q3/Q4. I expect we’ll see a launch this year.

  7. sam

    The problem blizzard has is that like too many other companies out there,they feel rewarding a current customer is pointless. So they wait till you leave then start begging for your money. I think if they’d give people loyalty bucks for time played to spend in the store on mounts they’d keep more people. And it would cost them nothing but a few hours of coding.

    But instead they ignore them till they leave then make a big deal out of how much they want them back.

    It’s like a cheating man and his wife. He ignores the wife because all those other women he doesn’t have look so much better, and after all, she’s there every night. Why worry about her?

    • I don’t know if they think that rewarding current customers is pointless – they try to provide a good product with regular content patches – but rather that a loyalty program is harder to implement than the Scroll, and therefore more costly. Nothing is free.

      If they are already trying to maximize profitability this quarter, getting a loyalty program developed competes directly with getting Mists developed. The Scroll uses existing code and an existing process (with new digital assets) and is therefore cheaper to implement.

  8. These are “crackpot” theories?

    I prefer to believe the scroll offer was a leading indicator of the current solar storm.

    It is a fact that most WoW subscriptions occurred during the Solar Minimum of its Activity Cycle yet we’re entering the period of Solar Maxima now. It is therefore necessary for Blizzard to counter the effect of sunspots on their bottom line.

  9. Personally I have gone through all my accounts and resurrected the ones I could. I have maybe 5ish in total some made for RAF purposes 2/3, one is a main account and another was an old one that was compromised and I never played again.

    For me the SOR change is great, a lot of the accounts I have only had the battle chest so the free upgrade to cata and faction change was awesome. The insta-level 80 was very nice too final have a priest and my own warlock at 80, which have been the hardest classes for me to personally level (I have everything else so its all good for me now) but some of the ones I really enjoy playing.

    It also gave my youngest brother his first level 80 so we can play together properly now and I can make sure he gets a fair ride in dungeons, heroics and LFR.

    They mentioned something about the gulf between level 1 and endgame content a little while ago. Of course they’ve dramatically decreased levelling time in almost all zones which I applaud them for and I think this is one of the main reasons this change was made (especially seeing as it is going to attract former subs) I know personally if I was SOR’d by a friend who played on a different server I’d think twice before accepting just because of the level grind.

    Do I think this is from the good of Blizzards heart? No, definitely not. I feel its a way to boost sub numbers before the pre-expansion dip happens, to make it seem less like a continuous decrease in sub numbers since the SWTOR release.

    Blizz know exactly what they are doing, for every move from another company they have a counter (4.3, SOR, Mists Beta) and they capitalise on the failings of the new MMOs to keep everyone hooked, you’ve gotta give it to them.

  10. Frustrated I am. With Cata, I sent a SoR to a co-worker. He re-upped for most of the content, then became bored with it when SW:TOR came out. Now all I got was a free month, instead of a (semi-)cool mount.

  11. I’ll offer another minor crackpot theory: Perhaps they are testing the waters for selling insta-level-capped characters for players to just jump straight into raiding. Raiding has the best ROI of any content design, and it’s always made sense to me to have players sucked into it as soon as possible.

    …I don’t like it as a player, but it makes sense from the business side.

    • Or, if not insta-level-capped characters, we could see more pre made 80s show up for purchase during Cata, perhaps 85s during Mists?

      It’s very plausible, and makes a lot of business sense. (See: increasing ARPU of existing subscribers). I don’t see it being hugely imbalanced, and it’s very much like the Death Knight advantage in Wrath.

      Huh.

  12. You know what’s kind of damning for Blizz right now? When TOR got top billing on something like The Big Bang Theory, and the reference to WoW was “remember back in the day when we’d get together and play WoW all weekend?”

    Blizz has to fight the perception that WoW is now passe, and I’m not certain that the SoR is the way to do it. It’s a band-aid, and it’s not going to fix the larger issues of profit and subs.

    According to the latest rumor, D3 will be released on April 17th, but in order to meet even that deadline Blizz had to cut PvP battles from D3. The investors are getting restless, and they were thrown a bone in the layoff announcement.

    I just get the feeling that Blizz is throwing everything but the kitchen sink at the problem, and if D3 stumbles on launch, they could be in real trouble.

    • I think you’re right about perception and kitchen sinks.

      I think we are going to see many things over the next 3-4 quarters which are about getting short-term subscribers with little regard for long-term subs. It’s not that Blizzard doesn’t care about long term subscribers – they most certainly do – but that they have to have the subs NOW. Not later, now.

      The Annual Pass is already artificially inflating sub numbers if you look at actual playing customers versus paying customers (important for long term, irrelevant for short). The SoR will have a similar effect, since we won’t ever see the churn numbers.

      If they start giving me level 80 characters for hanging around, then I KNOW they’re really getting to the kitchen sink stage. :)

      • If it wasn’t for the fact that the people I know who left WoW are happily playing TOR, I’d be tempted to send a few folks some Scrolls of Resurrection.

        Of course, when I perused the BioWare forums, you’d think that BioWare was on the edge of ruin. I guess myopia is alive and well.

  13. One thing they are losing out of via the SoR is box sales for tbc and cataclysm. They are actually giving these away for free. You don’t have to subscribe to get the upgrade – just accept the SoR and enjoy your 7 days. Now they’ve been selling those for cheap, and they would equate to about 1 months subscription these days anyway. But it does point towards the ‘subscriber numbers’ being the important factor.

    The boost is also ‘free’ – which leaves me thinking that I might just transfer the character I boosted off after 7 days and not pay $15 for the mount….

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