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Sony – What Does Taking May Off Portend? May 9, 2011

Posted by Wilhelm Arcturus in entertainment, Sony Online Entertainment.
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Sony has come out and said that they may not have the PlayStation Network up and going until May 31st.

If they make that date, and who knows what is optimism and what is pessimism these days, that would put them off line for 41 days.

There is no news about SOE specifically, but there is no reason to think that they will be up any time sooner.

May 31st would put SOE games like EverQuest, EverQuest II, Vanguard, and Star Wars Galaxies down for 28 days, including 4 critical weekends.

So in addition to the people who won’t be back because they feel Sony has broken their trust, it seems likely that a segment of the player base that is less than fully invested in SOE games may wander off and find something else to do with their time.

The potential for one weekend down seems easily survivable for SOE.  Things could go back to business as usual.

But four weekends down?  The loss of essentially a month of billing and Station Cash revenues plus another month of billing to be given out as an inducement to get people to return is going to be a big hit.  Q2 2011 is going to be a financial disaster for SOE, a company that just had to shed nearly a third of their staff.

You cut like that when you are in a hole.  Now, rather than climbing out of the hole, the bottom has dropped out and the hole has gotten deeper.  How do you counter that?  You boost revenues (unlikely) or cut costs (even more).

My prime concern is that this will invite SOE’s PlayStation lords and masters into the picture even further.  And when you have a hardware group who only cares about software that runs on the PlayStation 3 getting further involved with decisions and planning, visions of the future start to look grim.

What will SOE look like a year from now?  A small group supporting DC Universe Online, FreeRealms, and EverQuest II Extended?

And with the way DCUO seems to be headed, will that even be in the picture?

Comments»

1. Yarr - May 9, 2011

This is also hitting at the worst time of year it could happen for MMORPGs, summer. The only SOE game I really play is FR, so I’m curious to see what this will do to a game with such a young player base, probably at least 80% aren’t adults? Not good. If the devs are smart they’ll be working on new content for all their games while the network people get things fixed, so they can use that to bring people back. Assuming there are any devs left after the recent firings at SOE.

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2. dsj - May 9, 2011

This is the kind of worst case scenario that actually could destroy the company … the deep pockets of the parent company will sustain them for awhile but at what point does an exec call for selling off the assets (like EQ?) to stem the bleeding? Make no mistake … the playstation wins the competition if a hard choice has to be made. Everything SOE does is in decline now, the playstation generates the real revenues.

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3. bhagpuss - May 9, 2011

This could go a number of ways.

The worst case scenario would be Sony deciding to take this opportunity to close the whole division and shut down all the games. Seems unlikely, since that would mean withdrawing entirely from an entire market segment in which they had once been dominant. Very bad for the corporate image.

Perhaps more likely would be Sony taking the time out to re-assess the viability and profitability of SoE’s portfolio and rationalize it. I wonder, though, if any of the MMOs other than Vanguard are actually unprofitable? If it’s making money and you aren’t leaving the business altogether, why cancel a product line?

I’d guess the most likely outcome is that all the MMOs reopen. I think there’d be some degree of corporate pride in making sure that happens, even if the hiatus has created medium-term plans to clear some of the deadwood.

If so, then we wait to find out how many return. I’d bet that a lot of regular players will be back. I know I will. Plenty of people are used to taking breaks of weeks or months from MMOs, but they return over and over.

It’s even a potential opportunity to attract new players. SoE needs to re-open with a big marketing push and capitalize on the publicity and curiosity. Unfortunately, SoE’s marketing department is probably incapable of selling bottled water in a heatwave so I don’t hold out much hope there.

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4. Wilhelm Arcturus - May 9, 2011

@Bhagpuss – I have seen any number of products that make money get cancelled or shut down in the past.

Being profitable is certainly the acid test measurement. But is a product profitable enough to warrant investing time and resources into it? Even a big company like Sony can only do so much, so they want to focus on the product lines that will deliver more to the bottom line.

When SOE fell under Sony pictures, there really wasn’t anything else SOE could be doing that would be better for the bottom line. But now that they report to the PlayStation people that has changed.

I am sure the team in Foster City could think of any number of things that San Diego should work on that would be more profitable (in their opinion) than, say, another EQ expansion. SOE failing to make numbers, even with events going the way they are, gives Foster City an excuse to shift resources towards the center of their universe: PlayStation.

And I am pretty sure that we, as MMO players, over-estimate the importance of being in that market. EverQuest, as a brand, probably ranks a somewhere ahead of Betamax in importance to Sony, but probably not as much as we think. And having lost dominance, and having little chance to regain it at this point, does not improve things.

We will see how SOE marketing handles this, but even that costs. Somebody will have to decide which games are worth an investment. They might become the Facebook division at Sony.

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5. SynCaine - May 9, 2011

I doubt any MMOs will close directly after this, it would be a sign that the hacker ‘won’.

Now, 3-6 months down the road, if only X% of your former customers come back? That might be different. I doubt the really niche stuff will take a hit though, I mean, if you are playing Vanguard, it’s not like you are going to hop over to that Vanguard clone across the street and go with that. If anything, the more generic stuff like EQ2 could take the biggest hit.

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6. Green Armadillo - May 9, 2011

I’m sad to see the sidebar downtime tracker retired. Isn’t there a WordPress plugin that does countdowns and could be set to count up from Hack Day? :)

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7. Wilhelm Arcturus - May 9, 2011

I could have kept the little daily graphics going for a week or so, but when Sony started pointing at the end of the month, I had to throw my hands up in a fit of apathy.

WordPress.com is pretty restrictive about their widgets, though for a good reason. If you want to go crazy with your side bar, you can host it yourself, but if you want them to host they want to keep things simple and stable.

I could actually just do it in HTML I suppose. I am always biased towards opening up PhotoShop and making a crappy looking static graphic.

[There, I did it. It doesn't look as nice, but I am not spending 20 minutes counting pixels to make sure the text is centered.]

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8. Stabs - May 10, 2011

Tobold once said something to the effect of WoW setting the standard for other MMOs, that after WoW games that could have flown before failed.

The problem for a launch of EQ3 or Planetside 2 now is not only that the market is saturated with good competition but that Sony for various reason (this, NGE, etc) has by far the worst reputation in the genre as a triple A MMO maker. Why buy EQ3 – it’s a Sony game – when you could buy This Secret World and know that even Funcom are more reliable? Let alone new products from Blizzard Trion and CCP.

I’m sure they’ll re-open EQ2 etc but the real damage has been done to future SOE products. Blizzard proved that company reputation matters when it comes to MMO success. Which means that the SOE brand will be a millstone around the neck of new launches.

If I were them I’d change the company name. Would it be bad taste to suggest the name “Hacked” has a nice mediaeval fantasy ring to it? Possibly with a tasteful gory axe logo.

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9. Green Armadillo - May 10, 2011

@Stabs: I believe some of the discount airlines have actually changed their names after finding themselves too closely associated with a crash, so maybe the name change has merit.

On a broader level, it occurs to me that SOE’s subscription players have a much better defined value per month than PSN players (who might never pay for anything on the network) or cash shop customers (who might spend a little or a lot). If SOE is down for two weeks (looking likely) and then gives out the promised 30 days + 1 day for each day of downtime, you’re looking at a two month window in which not a single subscription dollar is spent. Even assuming that every single player comes back, that’s $30 ($50 for Station Pass players) times however many players you think they have across all their games. Even an uncharitable view of SOE’s subscriber base gets you to $10 million in damages from subscriber come time alone, and that’s potentially just a small piece of the damage pie they’re looking at for this incident.

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10. What if SOE Can’t Recover? « The Meat Shield - May 10, 2011

[...] was thinking about this today and a post by Wilhelm over at TAGN is in a similar [...]

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11. Angry Gamer - May 10, 2011

“I doubt any MMOs will close directly after this, it would be a sign that the hacker ‘won’.”

The Group did win – well they pwned Sony

I have become very aware of the group that attacked Sony. Frankly, this is will go down as the WORST data center compromise in CNA history.

Sony is down for a month because they were root kitted AND they have no way to recover the data center short of complete re-install and restore procedures. (that’s reinstall ALL THEIR SERVERS)

Heck they might also be buying new hardware just to be sure.

Let me be clear here… Sony was exploited not in an ordinary “virus bot net” kind of way. They were exploited at a deep level that is persistent and pervasive. http://en.wikipedia.org/wiki/Rootkit

In fact I would not be surprised if Sony goes down as the proof of concept for future multi-vector attacks that not only compromised key systems. But also established ability to do persistent re-compromise across restores, reboots, reimages, and data recovery.

They hacked Rootkit.com itself… in Feb 2011

So after getting advanced rootkit technology they took it out for a test drive at Sony.

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12. SOE And PSN Downtime – What Are You Going To Do? | Stropp's World - May 10, 2011

[...] that means the Playstation Network will be offline for five to six weeks… at least. Wilhelm portends that it’s likely the SOE network will be down until then as well, meaning a four-ish week [...]

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13. wizardling - May 10, 2011

Well, to think I was concerned just last week my renewed interest in Eve Online (I trained a new ship class) had kept me from logging into EQ for the entire week before that. I didn’t want to waste the TLP server experience… but my failure to find a fun static group in EQ and the opposite in Eve was making EQ a boring grind, with little to look forward to socially.

I’m giving serious thought to not returning to EQ, at least until my other games go through a dull patch again. But by then I’ll be so far behind the TLP level curve I may not want to, anyway.

*sigh* Well, whatever I decide, this situation sucks. At least I had the option to play last week. Having no choice is somehow much worse.

On a related note – SOE had better credit players with the time lost, plus a bonus for putting up with this. Maybe double the time lost for free? That would seem the least they could do IMO.

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14. Lomax - May 10, 2011

They have already said that they will credit everyone with one months bonus time + 1 day per a day of downtime.

So who will not be playing after the game comes backup?

To me it depends how SOE (and Sony) handle things in future with this. The worst option would be to try to squeeze the lost money out of these games, the best option would be to write it off as a one off expense and then spend extra advertising to repair their reputation.

Hoping for the latter, EQ2 was in a good way before the hack ocurred, and from the population issues other games are suffering (WoW’s has dropped post Cata, Rift has serious issues with low populations) I think the EQ2 direction looked good.

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