The cost of an MMORPG Server - A mental exercise

Note that the following costs listed below are guesses by the blog writer. They should not be construed to be accurate in any way

Many players think it's cheap to set up their own server.

I remember one of the comments that I heard on the Ragnaboards way back in 2003:

"Oi, di ba yung RO tumatakbo lang sa 3pcs Pentium III tapos naka 256kbps na PLDT DSL?"

Nothing could be further from the truth.

Ragnarok Online needs 15 servers for all the maps, plus an account server, a character DB server and a billing server... so that's 18 servers.

And they can't be just any servers. They have to be high quality heavy duty servers. Servers so high spec that they can't just be bought anywhere.

My guess is that each server costs around 350-500k EACH.

So 350k x 18 = PHP 6,300,000 for servers alone.

Then what else... oh an internet connection. Let's say you spend PHP 50,000 a month for hosting.

But that's not enough. The servers won't run themselves. You'll need to hire some people to run the servers for you.

You'll need a DB Admin, A systems engineer and an applications development guy to run the whole thing. So let's say you pay them 28k a month, so that's 84,000k monthly... Oh! And you need 3 guys to watch the server 24/7 in shifts... pay them 20k per month... so that's 60,000 monthly additional for a total of 144,000 pesos in salaries.

but wait! You need to take care of the community! You need maybe 10 Customer Support agents at 16,000 pesos each, and 2 managers, so you pay the manager maybe 24,000. Also you need maybe 6 GMs to do patrols and stuff all on one server, so let's pay the GMs 18,000 pesos each... and you need a GM Manager (like me!) so let's pay the GM Manager 25,000 pesos a month.

So your customer care costs are: 341,000 pesos for adequate customer care. That should get you enough field patrols and hacks...

Hmm... but you also need sales people to go around to the internet cafes to promote your game. Let's hire 30 area representatives... at 16,000 pesos each plus 10000 pesos in travel allowances and communications allowances (since they go out to the provinces) plus 6 area managers (24,000 + 10,000 allowances) and a Sales Director (40,000 pesos - he/she has to be good)

So sales would be: 1,034,000 pesos a month.

And hmm... what else... you need a marketing manager (26,000 pesos) to run your PR engine and get your game into the mainstream.

With over 50 people, you'll need a senior manager or COO to run things (give him 45000 pesos).

So let's total everything up.... for ONE server:

Servers: 6,300,000 (fixed cost)
Support PCs and Hardware: 300 PCs at 28,000 pesos per PC: 8,400,000

Monthly costs:
Information Technology: 144,000 pesos
Customer Support and Game Master Team: 341,000 pesos
Sales Salaries and Travel: 1,034,000 pesos
Marketing Manager and COO: 70,000 pesos
Office Rental: 60,000 pesos
Electricity and Water: 15,000 pesos

Fixed Cost Grand Total: 14,700,000
Variable Cost Monthly: 1,664,000

Now some more food for thought.

In the first year of operations with only RO, Level Up made 500,000,000 pesos (USD 10M) that's with 8 servers... so each server could theoretically get you: 62.5m per year... or 5.2 million pesos a month. If your variable cost was only 1.6m a month... you could easily make 3.6 million a month and break even your fixed cost in about 4 months. After that it's all profit....

No wonder there's big money in MMORPGs....

Davao and Partnership

It's the aftermath of Level Up Elevation: Davao. Level Up's "big waves" launch for the updates to the existing pack of seven plus the three incoming games.

The theme of the night was partnership. Level Up and the internet cafe business. The company really heavily relies on the internet cafes out there. Most of the metrics on which the company makes its decisions, such as screen-share, penetration and installed base is taken from internet cafes.

You can really tell that Level Up focuses a lot on the internet cafe gamer. The home gamer is, from my view kinda seen as a secondary market... I don't see any events targeting home gamers specifically... it's all internet cafe players or all players.

But then I'm not in marketing so I wouldn't know what the strategy really is.

So in line with this focus it comes as no surprise that Level Up would throw such a huge party for it's "frontline" partners... the internet cafe owners.

Sometime this year I'm going to go see what kind of gaming culture the internet cafe people have... because it seems to be the predominant kind of culture and shapes ALL of the Philippines online games.

And off topic: If you're going to Davao and want reliable wifi internet service for your DO NOT use the wifi at the Crown Regency Residences, where I am. For 75 pesos an hour they give you a proxy server connection to the internet which only allows you to browse the web... and NO online games! Plus you can't access the internet from your room. You have to go to a mosquito ridden airconless cafe with really loud karaoke singers blaring behind you. If you need a quick and CHEAP internet from the hotel, book yourselves in the Regency Inn Davao... you can use the wireless in their lobby for FREE... and can even play games on it.