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 Post subject: [Informer] Examining Jagex's 2018 Financials
PostPosted: October 25th, 2019, 2:23 am 
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The RuneScape community has a constant penchant for standing up against microtransactions. New RuneScape executive producer Mod Warden mentioned this specifically in his introductory newscast today. He stated that "[t]he truth is that membership alone is not sufficient to keep the game healthy and evolving." We can also see this from the 2018 financial reports which I want to have a look at today.

The 2018 financial report can be seen here by selecting "Group of companies' accounts made up to 31 December 2018. This years financial report carries on the same theme from previous years in that Jagex is bringing in record profits and revenues. And that on the whole the financial outlook for the company is strong in that revenue grew by 9.3% to £92.8m and before tax revenue grew by 3.8% to £46.8m. The company also added about 600,000 registered accounts in 2018 and grew the work force by 30.

Let's talk about what players want to know: the breakdown between subscription and microtransaction revenue. First and foremost the subscription revenue in 2018 grew to £67.6m from £55m. That's a 23% increase in revenue on subscription alone. Microtransaction revenue on the other hand dropped from £29.2m in 2017 to £24.6m in 2018 (page 23). This is a 16% drop due to "an intentional re-balance of micro-transactions offerings to boost product longevity and maintain good player sentiment." Players have been asking for Jagex to pull back on microtransactions and both the annual report and the financials back up a decision to do just that. This is a story that can't be told by the community managers, the developer team, or the CEO, as it would undermine the bottom line. Players asked, Jagex listened.

I want to now talk about the split in revenue between RuneScape 3 and Old School; then after that the split in RuneScape 3 between subscription and microtransaction revenue. RuneScape 3 brought in £47m in 2018, down from £52m (attributed to the pull back on microtransactions, page 2). Meanwhile Old School's revenue sat at £42m an increase from £32m the year prior. The growth in Old School is attributed to the launch of the mobile version of the game and "further innovation in community-driven game operations." At the end of the day both games are profitable and RuneScape 3 accounts for 53% of 2018 revenue. According to the misplaceditems.com player tracker the 2018 average RuneScape 3 player count was 24,755 while the average Old School amount was 61,103 (note: this doesn't factor in bots). This means that on average a RuneScape 3 player is worth £1,899 and an Old School player is worth £687. The purpose in this is is to say that growing RuneScape 3, producing positive game updates, and having a positive community environment will not only be good for the players but also great for the bottom line in that it's easier to make money with RuneScape 3.

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Let's face reality: without microtransaction revenue Jagex would still be profitable but RuneScape 3 would only be bringing in about £22m revenue give or take a few hundred thousand. The word 'about' is used because the financial report does not separate RuneScape 3 from Old School microtransaction revenue (Old School does have Bonds). Put simply if microtransactions were to go away some combination of increased membership prices or a scaling back of the development team would likely be needed. What's the alternative? A reformation of the microtransaction revenue model.

The changes made this week to the oddment store are evident of this. I personally believe that within 12 months Treasure Hunter will be no more and we'll be looking at microtransactions differently. Oddments factor into this by removing the gambling element and allowing players direct choice into what they purchase. We see rumblings of that this week with an oddment price structure change, and being notified that in the future there will be items that you can purchase a limited amount of. I delved more into this idea on RSBANDBUpdate! 748.

Overall, 2018 was a great year for Jagex's financials. 2019 will likely be similar. 2019 stands out after years of watching this community in that this is a year in which the community wants answers on microtransactions. I am hopeful that with Mod Warden as executive producer and the positive swing since RuneFest, progress can be made. I ask this one question to anyone reading this, what form of monetization would you like to see in-game aside from subscription costs?

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 Post subject: Register and login to get these in-post ads to disappear
PostPosted: October 25th, 2019, 2:23 am 
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