Market Insight

World Of Warcraft switches business models in China

August 01, 2016  | Subscribers Only

Chenyu Cui Chenyu Cui Senior Research Analyst – Games, IHS Markit
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NetEase has implemented subscription for World Of Warcraft, in place of its 'Game Time' card offering. The monthly subscription costs RMB75 ($11) and users can get discounts if purchasing more than three months.

Players can transfer the existing play time to subscription, and have to use it within the next two years. In order to promote these subscription payments, quarterly subscribers are given a chance to play the new character in the latest expansion pack (Legion) before the open-beta testing phase.

Our analysis:

Although many Chinese players have been expecting the addition of a monthly subscription for a number of years now, it's sparked great dissatisfaction among the WoW community due subscription replacing Game Time, rather than complementing it. This new payment is likely to affect the casual gamers, who play less time per month than other groups. And when World Of Warcraft is losing popularity in China, the group of casual gamers could easily find other games to flock to, rather than increasing their spend. Conversely, the change is beneficial for loyal users particularly in a time of new expansion pack.

 

Indeed, the dominance of Game Time for pay-to-play games was in line with the popularity of Internet Cafes. Players gathered together in such places to play for hours in bursts, and get discounted Game Time cards over the counter. But now with the high penetration of personal laptops, the Internet Cafes are losing audience. Also, we are not surprised by this move when NetEase is adding subscriptions to its in-house flagship titles, the Westward Journey series, where it has helped such games to boost their revenues.

We believe NetEase is expecting that it can maintain user loyalty via subscription, when the whole MMOG sector is suffering declaine, and facing significant challenges from session-based titles like League of Legends and Overwatch. When a long-serving title is struggled to attract new users, retaining existing users and growing spend from them becomes essential for the game's existence on the market.

Geography
China
Organization
NetEase
Research by Market
Media & Advertising
Category
Games
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