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For some reason, we keep getting threads on reddit or on the forums why the monetization model Intrepid Studios has chosen for Ashes of Creation isn’t enough. People keep thinking that a $15 monthly subscription is enough to pay for the game. They do some simple numbers and they see something like 500,000 people * 15 a month equals $7,500,000 a month and that should be enough to run the company. The sad thing is most of these people don’t understand business, or owning their own business, so they don’t understand how quickly $7,500,000 monthly or $90,000,000 annually gets eaten up. Payroll, benefits, studio rent, taxes, these things all have to be taken into account. By the time you do that, you’d be surprised how much of the money gets eaten up.
The threads from reddit this references are
Why is 15$ month not enough?
https://www.reddit.com/r/AshesofCreation/comments/o8ub6q/why_is_15_month_not_enough/
would it be possible to make monetization without “heavy skins” shop?
https://www.reddit.com/r/AshesofCreation/comments/o8pqc9/would_it_be_possible_to_make_monetization_without/
So yes, this one is going to be a bit boring, since we have to put a lot of numbers on the chalkboard, but I think this one is worth the watch. It should also serve as evergreen content. Whenever anyone brings up corporate greed and Intrepid, just point them towards this video.
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If you want to learn more about Ashes of Creation, I suggest you swing by https://www.ashes101.com/
if you like things in an educational format or https://ashesofcreation.wiki/ if you like just the facts lined up for you. Also, I recommend https://ashespost.com/ for your transcription needs.
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00:00 – Video Starts
00:16 – Reddit Post “Why is $15 month not enough?”
02:22 – Validating Income at 500,000 Users
03:04 – Epic Royalties
03:23 – Payroll Costs
05:33 – Studio Costs
07:46 – Online Games are a Service not a Game
08:42 – AWS Costs
09:26 – Other Costs (Legal, Accounting, Conventions, etc)
10:40 – Taxes
11:28 – 4 Months to pay off $45,000,000
source
"No amount of evidence will ever persuade an idiot."
As someone who’s grown up in business since I was a child but, is a sweaty grimey gamer hanging out with my grimey gaming friends and constantly hearing them and other randos on the internet say some of the dumbest stuff when it comes to business and money.
(which I don’t blame them for. In simple terms, People just have 0 idea how much money it takes for a business to just keep the doors open) I just want to say, this video made me quite….satisfied I suppose lol.
Also, without knowing the inside baseball I must say you’ve done quite well for a blind estimate of costs and expenditures and stayed fairly conservative with your numbers.
You have my stamp of approval lol
came here not knowing what to expect and i got a lesson about business expenses that i have never thought about, very interesting video.
Given Steven has said 45 mil invested and your figures and earliest release 2023 , I don’t see how the numbers ad up, the next couple of years would cost at least 40 mil
One ought to also factor in the huge uncertainties here, on how many people will sign up and how long they will stay. 500K sounds wonderful, but what if it's 50k? Suddenly things look pretty bad! We should be glad there are people who have the financial depth and confidence to take risks like this. I could not put a big chunk of my retirement savings onto a scheme that had a 10% chance of losing everything, even if the 90% case looked terrific.
Jahlon keeping it real and grounded as always. Great vid!
Going straight for him with the username and everything lol. I think this is a really good video format for growth on your channel. Keep the response content coming. May be offensive to some but its a good balance.
Skol! "raises beer"
Just oof .
I would rather pay a higher subscription fee and not have a cash shop. But I also understand that a higher subscription fee would alienate a lot of players.
I really like how direct this video is! No distractions or tangents. You have one point and you break down the numbers very effectively. If this conversation comes up elsewhere I'll be sure to send them here.
Great now i worry for Steven´s Health^^
I like the breakdown in the video. Shows that running a game studio business is more than just pumping out art and code
I'm noticing that credit card or other payment processing fees weren't taken off the top at the start… They get their cut before it ever touches Intrepids hands. That would likely take close to $1 off the top per transaction, for most users.
came for the love of mmos and get to see a commenting turd get an economics lesson. the internet is a beautiful thing sometimes.
👏🏻👏🏻👏🏻👏🏻👏🏻👏🏻👏🏻👏🏻 so many people forget the amount it take to run a company! All that and the company won’t technically be making any profit for probably safe to say at least 6 years after launch since it has to like you said keep cash on hand and then pay back what Steven put in.
How the heck did you come up with Server costs of 36 Million Dollar a year !? If you have 500k people for your game you don't buy AWS capacity for all of them to use the service at the same time. With 500k people you have maybe 30 or 40k users being online at the same time I would guess.
If I'd be Amazon themselves and they told me it costs them 36 Million a year for their servers for one of their amazon portals I'd believe them. And they have several million users a day on their site.
Honestly, I appreciate this video. Someone has to show idiots the basics however I'm sure it still fell of deaf ears.
If someone can say Steven will recoup his investment in 4 months has absolutely no idea of the costs to run a business. Not to mention you didn't even include international taxation and legal costs!
Your proof is spot on and to keep it within the US for simplicity is understandable. This just covers the OBVIOUS costs of running a business. There is so much more so to the guy who said Steven is being greedy, stick to counting marbles and crayons.
Good vid.
I'm not sure but I don't know if you included a promotion for which they will also have to pay.
Final Fantasy XIV and WOW own their own Data Centers and developed their own engine. They need cash shops in order to keep their live service game expanding.
let the downvotes roll
I'll pay 25$ a month 🙏
But most of those numbers you listed are already included in the amount Steven said the game costs (45M?). So not much use of speculating here, becaus Steven should know it better anyway.
The ones which could be missing are Epic royalties, server costs and income taxes.
Regarding those three numbers:
Epic Royalties: Nothing to argue here, this is the correct calculation.
Income Tax: I don't know how the tax system in the US works, but where I live the company pays only income tax on the NET income (earnings before taxes), not on revenue. Losses in earlier years can also be removed from the income in later years. This means if Intrepid made almost no profit in the end, then they would also have to end up paying almost no taxes. But maybe this works significantly differently in the US.
Server Cost: I have no idea how your number is calculated, but I can tell you with certainty that this number is way too high. A modern 96 HW thread AWS instance with 384 GiB of RAM costs $4 per hour. That should be PLENTY of performance for a server with 10k concurrent players, unless their server code is extremely inefficient. We used to run WoW servers with thousands of concurrent players on a 8 core machine and it worked fine. At this rate it would 35k per year per server. You can double this number to take into account some download, login and storage servers, to be on the safe side. With a reasonable calculation, you will not get over $1M per year for server costs.
Lol I said $10M for all the miscellaneous items before you did. But yeah, I'd say you put him on the grill.
Great video!
And marketing cost. companies like this usually spend hundreds of thousand if not millions
Wait it costs money to run a business?
Off topic, 100k average for the employees?? I might wanna join their team 😀 damn
Forgot to mention in a time of skyrocketing stock markets Steven took a huge loss by investing in a studio rather than investing, as his talent is, in stocks. In order to repay Steven they would need to pay back his opportunity costs. He could be vacationing on a tropical island but instead he is here having people degrade his reputation.
I'd gladly pay 50 to 100 a month to support a good games sustained future.
9:31that woman on the left is nightmare fuel