It is what it is people

[Longshot7]

Admittedly taken from the short discussion in DDOCast #89 but took that and expanded.
There are a lot of approximations, assumptions and guesses made with this analysis but the overall theme is;
It is what it is.

If you go to http://mmogdata.voig.com/ you will find subscription numbers
DDO = 20,000
So their incoming revenue for DDO is (20,000 X 14.99 X 12) = $3,597,600 a year

Now take a look at the outgoing costs

Employees – Salary + Bonus + Benefits (Salary.com for Westwood, MA)
Software Developer I – 90k yr
Software Developer II – 113k yr
Software Developer III – 140k yr
Public Relations Specialist – 71k yr
Customer Service I – 52k yr
Customer Service II – 61k yr
Customer Service III – 66k yr
Executive Producer – 225k yr
Producer – 77k yr
Sr Producer – 170k yr
Technical Producer III – 137k yr
Of course not know how many employees they have in each position make it difficult. But let’s just throw a number out. If you take all those salaries and add them together you get $1,202,000 so let’s double that to account for other employees and you get $2,404,000

Now take that and subtract the hardware maintenance fees, the power, the ISP and everything else and that number becomes smaller and smaller

Maintenance Contracts
PC Leasing – Average of $500 a year per PC
Server Support (Vendor Warranty) – Average of $1500 a year per Server
Networking Support (Vendor Warranty) – Average of $1000 a year per networking device
HVAC – Not sure, but cost associated
Software licensing – depends on the software they use but I know they aren’t cheap.

Facility (Approximate based on a datacenter)
Power – 13.45 per Kilowatt Hour for Massachusetts
ISP – Another cost
Phone service – Yet another cost

Now sure some of those costs are offset by Turbine also running Lord of the Rings with 300,000 subscriptions. But a majority of them are associated to DDO directly.
Incoming Revenue = $3,597,600
Outgoing Cost (Employees) = $2,404,000
Outgoing Cost (PC Leasing estimate based on 100 PCs) = $50,000
Outgoing Cost (Server Warranty estimate 20 Servers) = $30,000
Outgoing Cost (Network Warranty estimate 40 Devices) = $40,000

So just based on those “somewhat” known costs Turbine is left with $1,073,600. Now take out all the other unknown expenses; other contracts, licensing, power, ISP, phone service, office costs, travel, etc. There are a lot of expenses to running a company. All in all, are they making a profit? Yes. Are they making a big enough profit to expand? Probably not.

Now I realize there will be flamers stating, you forgot this for income, or what about this cost, and I admit, these are not exact numbers but like what was brought up in the DDOCast, it’s just to put things into perspective. Sure I would like to see new content all the time. But I also understand from a business perspective, they can and will do only what is cost effective. It doesn’t make sense to throw more developers to appease the players if it will cause a deficit for the department.

So enough already with flaming Turbine. The DDO Department is doing the best they can with what they have.

[moorewr]

Actually, for discussion of how they are not using their resources efficiently, see my thread here --> http://forums.ddo.com/showthread.php?t=161530

[Ringos]

The OP has a large number of assumptions to begin with. I don't really understand how any of the 'data' that you provided quenches the customer's thirst for more content either. Please elaborate.

[Freeman]

The true "cost" of an employee is typically around twice what you actually pay him. You have to take into account benefits, taxes, G&A, overhead, etc. Then you would also have to factor in that some costs may be shared with other games, such as Community Relations, Network Techs, office overhead, equipment, etc. Basically, there's no way to make any reasonable estimations without far more facts than anyone outside of Turbine's admin staff will ever have.

[moorewr]

The true "cost" of an employee is typically around twice what you actually pay him. You have to take into account benefits, taxes, G&A, overhead, etc. Then you would also have to factor in that some costs may be shared with other games, such as Community Relations, Network Techs, office overhead, equipment, etc. Basically, there's no way to make any reasonable estimations without far more facts than anyone outside of Turbine's admin staff will ever have.

I wasn't even going to engage the numbers since it is all fantasy baseball. Not one of them is a published confirmed number from Turbine. We just do not know their balance sheet, nor do we know what costs are shared across their products.

Now, if they went public.. would YOU buy their stock?

[Longshot7]

The OP has a large number of assumptions to begin with. I don't really understand how any of the 'data' that you provided quenches the customer's thirst for more content either. Please elaborate.

It doesn't quench the player's thirst. It just shows the aprox cost of what the DDO Department has to deal with. To provide more content, they need more developers, to have more developers they need more equipment, if they need more equipment then they have to pay for the costs to run that equipment.
What my post was about was if they want to expend the game and provide more frequent new content then it takes money. Their operating margin is not wide enough to be able to make those investments. Their subscriptions have been level for about 13 months (Chart only goes to Apr 08). So they may lose some players and they may gain some players but overall it's a wash. The game isn't going to grow at a rate that the players would like. Deal with it.

[moorewr]

It doesn't quench the player's thirst. It just shows the aprox cost of what the DDO Department has to deal with. To provide more content, they need more developers, to have more developers they need more equipment, if they need more equipment then they have to pay for the costs to run that equipment.
What my post was about was if they want to expend the game and provide more frequent new content then it takes money. Their operating margin is not wide enough to be able to make those investments. Their subscriptions have been level for about 13 months (Chart only goes to Apr 08). So they may lose some players and they may gain some players but overall it's a wash. The game isn't going to grow at a rate that the players would like. Deal with it.

No, seriously, they have choices; go read my thread.

[liamfrancais]

You state that LOTRO has 300K subscriptions, wow that is many more then DDO, it strikes me as funny actually. I mean here is game based on basically three books and you know how it ends. Don't get me wrong if people enjoy playing it that is great, I have never played it so I can't really say first hand what the game is like but oh well it just struck me as odd.

[Ringos]

It doesn't quench the player's thirst. It just shows the aprox cost of what the DDO Department has to deal with. To provide more content, they need more developers, to have more developers they need more equipment, if they need more equipment then they have to pay for the costs to run that equipment.
What my post was about was if they want to expend the game and provide more frequent new content then it takes money. Their operating margin is not wide enough to be able to make those investments. Their subscriptions have been level for about 13 months (Chart only goes to Apr 08). So they may lose some players and they may gain some players but overall it's a wash. The game isn't going to grow at a rate that the players would like. Deal with it.

Thanks for the free business education.

'Deal with it'? Nice.

[Alcides]

This isn't turbine's soul source of revenue. You have to take into account all sources of income before you can call their entire operation profitable or not. As long as they are gaining a reasonable amount of revenue from the game, they won't drop it. They might reallocate resources to another game/project if the game revenue becomes a deficit. As long as this game is making Turbine some money, I would highly bring into question their business ethics if they dropped the game. It might not necessarily be a lot of cash, but at least it's keeping people employed and helping out the American economy.

[Angelus_dead]

Employees – Salary + Bonus + Benefits (Salary.com for Westwood, MA)
Software Developer I – 90k yr
Software Developer II – 113k yr
Software Developer III – 140k yr

FYI, game developers get paid a lot less than other corporate software engineers of similar skill in the same region.

Apparently they accept lower wages because the subject matter is more fun... or something. In addition, the kinds of programming skill needed to add or adjust classes, monsters, and quests in a functioning game is a lot less than what it takes for the graphics and network engines of a new game. Chances are that the higher-level programmers are done with DDO and moved onto new projects.

[KoboldKiller]

Of course this is all assuming the actual subscription numbers are accurate.

[frugal_gourmet]

Expansion I don't care greatly about. If they maintain the same approximate level of development I'm fine.

[frugal_gourmet]

FYI, game developers get paid a lot less than other corporate software engineers of similar skill in the same region.

Apparently they accept lower wages because the subject matter is more fun... or something. In addition, the kinds of programming skill needed to add or adjust classes, monsters, and quests in a functioning game is a lot less than what it takes for the graphics and network engines of a new game. Chances are that the higher-level programmers are done with DDO and moved onto new projects.

You are correct. I am a video game (graphics) developer who until a few years ago did these types of projects. The wages presented are quite high for the industry. Plus, most of the people would not be in this category. A lot of designers, artists, tool developers, etc. are low paid.

And your second assessment is spot on as well. The high money is paid to the engineers who designed the engine. Which hasn't changed that often and is shared by all their games. The content creation element is significantly cheaper.

And let me warn anyone interested in this industry. It isn't as much fun as you think and either be single or kiss your family good bye.

[Bubbahotepp]

If they maintain the same approximate level of development I'm fine.

I really, really hope it's you in the minority on this and not me.

[moorewr]

Of course this is all assuming the actual subscription numbers are accurate.

Like I said, it's all fantasy baseball. Not one of those numbers has provenance.