Set in a world, farbeyond our imagination
More people inWorld of Warcraft than Greece
Company BackgroundActivision Blizzard is one of the leadingcompanies in entertainment industry• Listed on NASDAQ is ATVI• ...
World of Warcraft• Activision-Blizzard’s• Released in 2004• Number 1 sales and subscription rate remainsundefeated for the...
SWOT AnalysisStrengths:• Immersive Experience• Achievement Oriented• Endless Game Content• 50 Character Slot• Dedicated Cu...
Current Pricing$19.991 Month Free Play 13.99 X 2 months14.99 per month12.99 X 3 months29.99 X 60 day1. Free to play until ...
Wrath of Lich King Expansion ($39.99)Level 68-70, new game area, new class,new professionCataclysm Expansion ($39.99)Level...
Psychological Pricing• Odd Endingso World of Warcraft players are offered a month-to-month subscription for $14.99, which ...
Psychological PricingWorld of Warcraft is free to play until level 20oAttract new players and allow them to establishemoti...
Break-Even Analysis
Iso-Profit Analysis• Monthly subscription– Rate $14.99– VC: $0– Contribution margin: $14.99• Volume discount of $2– Rate $...
Monopoly Pricing
Economic Value to ConsumersBenchmark Guild Wars $29.99+$19.99Better Customer Service +Out of the reported 400 million toma...
• average experience: 2 years• excluding the software price: $60• subscription rate from EVC:$20.00/month + unquantifiable...
Subscription VS Free-to-play$15 per monthV.S.
• Make money mainly through:o Boxed sales (software)o Micro-transactions (purchase in-game items w/real money)Cosmetics vs...
We see World of Warcraft do a bit of both…• Subscription Model ($15/month)+• Micro-transaction– Blizzard Pet Store: Buy pr...
Celestial Steed $25
• extract additional profits from subscribers– Subscription + in-game items• Price discriminates– between those are willin...
Recommendations• Must devise strategy thatoCreates strong customer retentionoAttract new playersoJustify its premium price...
Recommendations• Release the fourth expansion earlier• Need to provide more content• 2 years gap is the perfect wait time•...
Recommendations• Provide game updates more often• Keep the game fresh• Creates retention• Additional justification for WoW...
Recommendations• Increase free level cap from 20 to 30• More time for the trial players to explore• Enhance endowment effect
Recommendations• Continue with its subscription based model• Extract revenues from other channels• Expansion sales• Micro-...
Thank you for your time
Pricing Audit World of Warcraft
Pricing Audit World of Warcraft
Pricing Audit World of Warcraft
Pricing Audit World of Warcraft
Pricing Audit World of Warcraft
Pricing Audit World of Warcraft
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Pricing Audit World of Warcraft

Student Project on World of Warcraft Pricing Model. We do not own any of the Blizzard World of Warcraft images used in the presentation. It was used for school project purposes. If there are any issues with the image use, please advise and we can remove the material immediately.
Published on: Mar 4, 2016
Published in: Business      Entertainment & Humor      
Source: www.slideshare.net


Transcripts - Pricing Audit World of Warcraft

  • 1. Set in a world, farbeyond our imagination
  • 2. More people inWorld of Warcraft than Greece
  • 3. Company BackgroundActivision Blizzard is one of the leadingcompanies in entertainment industry• Listed on NASDAQ is ATVI• Revenue: 4.47 billion
  • 4. World of Warcraft• Activision-Blizzard’s• Released in 2004• Number 1 sales and subscription rate remainsundefeated for the past 7 years.• 32.5 million subscribers world wide• 12 million active paid users• 3 expansion sets– The Burning Crusade (2006), Wrath of the Lich King (2008),and Cataclysm (2010).
  • 5. SWOT AnalysisStrengths:• Immersive Experience• Achievement Oriented• Endless Game Content• 50 Character Slot• Dedicated Customer Service• Characters are never deleted• Largest MMORPG in the WorldWeaknesses• Time commitment needed• Elitist culture of the game• High Retail Price, Barrier toEntry.• Old game engine developed in2004Opportunities• New games - cross sell• New Expansion Pack• Free to play model• Micro-transaction• Expand the current gamingchoicesThreats• Saturation of thesubscription population base• New Free-to-playcompetitors• Inflation Rates
  • 6. Current Pricing$19.991 Month Free Play 13.99 X 2 months14.99 per month12.99 X 3 months29.99 X 60 day1. Free to play until level 20
  • 7. Wrath of Lich King Expansion ($39.99)Level 68-70, new game area, new class,new professionCataclysm Expansion ($39.99)Level 80-85 game content, 2 new races,new professionBase Game + Burning Crusade ($19.99)Level 0-68, basic gameoptionaloptionalFastest Selling PCGames of all time
  • 8. Psychological Pricing• Odd Endingso World of Warcraft players are offered a month-to-month subscription for $14.99, which comparedto $15, seems cheaper• Endowment Effect
  • 9. Psychological PricingWorld of Warcraft is free to play until level 20oAttract new players and allow them to establishemotional investment into their character andimmersing relationships with the game andtheir characters.o1/3 of players are not willing to give up theiraccounts even for money, especially femaleplayers.endowment effect
  • 10. Break-Even Analysis
  • 11. Iso-Profit Analysis• Monthly subscription– Rate $14.99– VC: $0– Contribution margin: $14.99• Volume discount of $2– Rate $12.99– Contribution margin: $20– Sales increase needed: 0.15 units
  • 12. Monopoly Pricing
  • 13. Economic Value to ConsumersBenchmark Guild Wars $29.99+$19.99Better Customer Service +Out of the reported 400 million tomaintain World of Warcraft for 4 years, alarge chunk was quoted under customerservice.50 Character Slots v.s. 5 +Guild Wars offer 5 character slots andcharges $9.99 for every additionalcharacter. World of Warcraft players onaverage make 9 characters.9-5= 4 additional accounts$9.99*4= $40.00Never Delete Characters +More Game Content +Since Guild Wars cost $50.00 dollars toplay. $50/100 hours = $.50/hour. Worldof Warcraft has an additional 900 hours *.50 = $450Total: $29.99+$19.99+ $40+$450= $539.98 + Never Delete Characters +Customer Service
  • 14. • average experience: 2 years• excluding the software price: $60• subscription rate from EVC:$20.00/month + unquantifiable value• premium pricing is justifiedEconomic Value to Consumers
  • 15. Subscription VS Free-to-play$15 per monthV.S.
  • 16. • Make money mainly through:o Boxed sales (software)o Micro-transactions (purchase in-game items w/real money)Cosmetics vs Efficiency/Skill Related– Use money to buy time and skills– Which one is fair?Subscription VS Free-to-play
  • 17. We see World of Warcraft do a bit of both…• Subscription Model ($15/month)+• Micro-transaction– Blizzard Pet Store: Buy pretty horsefor $25 dollars• Free to play until level 20Subscription VS Free-to-play$10 CASHand take mehome
  • 18. Celestial Steed $25
  • 19. • extract additional profits from subscribers– Subscription + in-game items• Price discriminates– between those are willing to pay $25 for a shiny digital pony, and price sensitiveplayers who are not• Increased revenue without changingsubscription• Sold only cosmetic items, thus did not angerfansSubscription VS Free-to-play
  • 20. Recommendations• Must devise strategy thatoCreates strong customer retentionoAttract new playersoJustify its premium price bycommunicating its high utility
  • 21. Recommendations• Release the fourth expansion earlier• Need to provide more content• 2 years gap is the perfect wait time• Attract new players• Creates strong retention
  • 22. Recommendations• Provide game updates more often• Keep the game fresh• Creates retention• Additional justification for WoW’s premiumprice
  • 23. Recommendations• Increase free level cap from 20 to 30• More time for the trial players to explore• Enhance endowment effect
  • 24. Recommendations• Continue with its subscription based model• Extract revenues from other channels• Expansion sales• Micro-transaction• Differentiate itself from the competitors
  • 25. Thank you for your time

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