Announcement

**Flehmen** · 07-31-2005, 11:10 PM

This is corporate america.. (or Canada, or wherever). It would never occur to them that they could just move the date of the price increase back a month. and announce a "freebie" for the loyal sucke...errr. .. players.

They did tell ya in advance at least.....

**Itek** · 08-02-2005, 09:09 AM

*sigh*

Ok folks let's relax a second.

First the price went up. Deal. Have you purchased GAS lately? Perhaps, and it could just be me, but perhaps the cost of doing business went up. I presume you see that EQ costs roughly the same per month as two movies. Since I hope you get more than 4 or 5 hours of entertainment out of EQ each month I'd say -bargain- is the word you are looking for. You probably pay a substantial amount of your electric bill due to the cost of running your computer and monitor for the time you play EQ. 350 Watts per hour for 100 hours is 35 KWH which... comes to (at 15 cents per KWH) $5.25. Gosh you spend 1/3 of your EQ bill just keeping the hampster inside the case alive. Maybe SOE has the same problem. Then we go and price bandwidth... Enough said on the price of EQ.

Second they made a mistake. Wow, that's never happened to a large business before. Alert the media.

Third you either didn't notice the $2 difference, so it won't kill you. OR you did notice and thought "wow, they forgot to charge me the extra $2, I should e-mail them right away to correct their mistake." Right? Surely, because otherwise you thought "hehe, -fasten- SOE for the $2, they'll never miss it." And that would be wrong.

Fourth, they could have simply eaten the loss for one month. You KNOW precisely how forgiving corporate Sony will be. I'm sure their audit accountants will simply say "gosh, we lost thousands in revenue, but we know how hard our subscribers work, so we'll neglect our duty to our shareholders and write the loss off." If you truly think that's how the world of business works my condolences. No friends, they don't simply EAT their mistakes. They will take their lumps (I'll explain later) but they aren't a charity.

Fifth, YOUR $2 difference might seem trivial. But all those acconts they billed wrong add up FAST. Let's do a bit of quick math.

240,000 subscribers.
120,000 on monthly
60,000 on quarterly
30,000 on twice yearly
15,000 on yearly
15,000 on "anniversary package"

120,000 * 2 = 240,000
60,000 / 3 * 5 = 100,000
30,000 / 6 * 10 = 50,000
15,000 / 12 * 15 = 18,750
(anniversary packages didn't increase in price)

$408,750 as a rough estimate of how much it cost them to mis-bill for a single month. That's usually the difference between a good year, a great year and an "out of business" sign. Half a million bucks is REAL MONEY folks.

Finally let's look at their problem and solution. They lost 400 grand in revenue. They REALLY want that money. For some reason the electric company wants to get PAID. On time. Every month. (As pointed out above the increase in cost is less then their electric bill, which we all realize goes UP every year right?) So they have two choices.

1) Absorb the costs and roll them over into next year.

2) Bill for the missing amount.

Both have their pros and cons.

1) Bill more next year.
Pro: We don't look so bad.
Cons: We have to increase prices EVEN MORE next year. Since we WILL have fewer subscribers next year THEIR increases will be MUCH more. Which will drive more people away, which becomes a death spiral. Plus we have lower profits for this year which drives our owners to attempt to squeeze the last money out of a dying revenue stream. Which tightens the death spiral. Hmm, this is sounding like a BAD IDEA.

2) Bill for the missing amount.
Pros: We don't go out of business nearly so fast.
Cons: We look stupid. And we pay a LOT more in fees to Visa/MasterCard/etc.

See folks the BANK charges you for your credit/debit card. But the BANK (or Visa, which amounts to the same thing, don't ask) also charges the merchant (SOE here) for the privilege of using their service.

See when you pay $20 to SOE on your card SOE doesn't get the whole $20 no, no, no. They get roughly $18 and VISA gets the $2 as a "transaction fee" or "discount rate" or whatever they choose to call it this month. And Visa (and the rest) charge the same fee, roughly, for a $15 charge as for a $1.50 charge.

SOE will not actually recover all their missing money by making the second charge. But even if they recover 300 grand instead of 400 grand it's probably worth it.

This is why you see "minimum credit/debit charge $5.00" signs in smaller businesses. Because they've done the math and found that letting people charge less than $5 actually COSTS them money. (Yes, it's true. For certain small volume, transactions and total funds, merchants the per transaction and discount rates double up and eat you alive at the low end.)

So just laugh it off and think "Gosh, they billed me $1.95 but they got billed $.75 by VISA. Isn't that silly."

**Britneyy** · 08-02-2005, 10:22 AM

I never thought about transaction fees where did you get your numbers? Most companys usually only charge around $.25 + 2% of total, mostly what bugged me is that I would have canceld some accounts if i had realized it.

Also you pay $.15 kwh? thats crazy expensive ;p

**Buns** · 08-02-2005, 11:49 AM

You got far too much time on your hands Itek, get yourself a job, a wife, couple of kids and a nice big mortgage, then your'll be on 2 liners like the rest of us.

**Twistagain** · 08-02-2005, 12:17 PM

Originally posted by Britneyy

Also you pay $.15 kwh? thats crazy expensive ;p

Was thinking the same thing, but then I thought about California's energy situation...where mine is under $.06, I can see their costs being much higher.

**Kitathia** · 08-02-2005, 06:02 PM

You got far too much time on your hands Itek, get yourself a job, a wife, couple of kids and a nice big mortgage, then your'll be on 2 liners like the rest of us.
__________________
Buns Pincher of Povar

OMG! That was what I was thinking.. even if I agree with Itek

**Lothay** · 08-02-2005, 06:54 PM

Originally posted by Buns

You got far too much time on your hands Itek, get yourself a job, a wife, couple of kids and a nice big mortgage, then your'll be on 2 liners like the rest of us.

He has all of those and is a student on top of that.

**Phantron** · 08-03-2005, 10:46 AM

For people saying they should've charged more next month to make up. First, some people could quit between now and the next month and they'd have lost the money they should have. Second, people who are outraged now will be outraged later anyway. Third, I just don't think it's a sound business practice if you screw up to just charge it elsewhere on an unrelated charge (this month and next month's bill really aren't related). If you go buy grocery and the store overcharged you by $5 and they tell you don't worry they'll take $5 off your next purchase and you're coming back anyway because you need food to live, would you really be okay with it?

**Moraganth** · 08-05-2005, 09:35 PM

Originally posted by Itek

*sigh*
Perhaps, and it could just be me, but perhaps the cost of doing business went up.

Considering they've shut down half their servers in the past several months with all the server merges (which also drops their vaunted electric bill considerably)... i'm thinking their cost of doing business has dropped a fair bit.

**KyrosKrane** · 08-06-2005, 12:06 AM

They haven't shut down the servers in the physical sense. Most of the hardware was reused to beef up the other world servers, with only the outdated stuff getting tossed. Hence, their electric bill will have dropped little, if at all. More to the point, the cost of electricity is much, much lower than other costs like, say, bandwidth or payroll.

**Moraganth** · 08-08-2005, 11:38 PM

I'd be rather suprised if they didn't shut down the servers. Ripping ram and better mb's out of what servers they could to upgrade what they're using leaves a bunch of half empty shells which would be kinda silly to leave plugged in (although if it's anything like where i work, it wouldn't suprise me).

With each server having only a couple zones (busy), and probably 4-6 (lesser used).. as a guess from what they've said before... and those that are up being able to take 2-3 times the population they had prior to the mergers... adding more servers to be even less efficient than before doesn't make sense. Plus, i didn't notice the multiple day downtime at any point to spread the data out more than it already is.

Payroll.. hard to say. It doesn't seem like anything ever gets done, unless it's pushing out another expansion (filled with bugs) to try to soak in more money. Obviously this is a place where more money should be spent.

Bandwidth... yeh, now there's a cost.

Overall, there was no reason to raise rates other than to try to soak in money.

**KyrosKrane** · 08-09-2005, 04:33 AM

What I meant by reused is that the whole server was put back into use. Using your example, the (old) server that hosted 2 busy zones and 4-6 lesser zones can now be split between the old machine and one that was freed up by the mergers; now, each machine only hosts 1 busy zone and 2-3 lesser ones, leading to increased performance in the busy zones.

Though of course, there's no reason not to scavenge bits off machines that are due to be scrapped. I'd guess that for an operation where the servers are as mission critical as EQ, they'd buy some sort of name-brand hardware with hefty vendor support policies. Once the warranty or support contract on the hardware runs out, the machine would be taken off the front lines and relegated to backup or development roles -- you simply cannot afford downtime without a vendor support warranty. Any salvaged bits from machines due to be scrapped would be used for non-critical machines (think desktops or non-critical servers) or as emergency spare parts.

At least, that's how I'd do it if my job were to guarantee uptime on a huge number of servers.

**Itek** · 08-09-2005, 01:47 PM

Um... Moraganth I guess you aren't in the business of running a server farm...

You don't turn them off. You don't cannibalize them for parts. You don't even attempt to repair/upgrade them. You run them till they die and in the meantime you've added a hundred more.

The electric bill is, one would hope, one of their smaller costs. But when it goes up it goes up. And one of two things suffers. The bottom line, or the price point. Take a guess which one they look at for the first one to suffer.

We -want- them to stay in business. And 2 bucks a month is still cheaper than any other form of entertainment.

**Moraganth** · 08-09-2005, 09:35 PM

Originally posted by Itek

Um... Moraganth I guess you aren't in the business of running a server farm...

You don't turn them off. You don't cannibalize them for parts. You don't even attempt to repair/upgrade them. You run them till they die and in the meantime you've added a hundred more.

The electric bill is, one would hope, one of their smaller costs. But when it goes up it goes up. And one of two things suffers. The bottom line, or the price point. Take a guess which one they look at for the first one to suffer.

We -want- them to stay in business. And 2 bucks a month is still cheaper than any other form of entertainment.

You're right, i don't... that's what our manager is for; i just do the inventory.

You do turn them off if you have nothing on them (a couple hundered servers turned off waiting for customers at least saves a bit of energy, and cooling).

You do cannibalize them instead of rma'ing an entire server. No sense sending full cases back with only one component bad, while having to buy more components for upgrading the rest.

You do attempt to repair them, because if you can put a server up with 10 minutes of work, it's better than 4+ weeks on the rma list... and, you never know when someone rma'd a server for really (and i do mean really) stupid reasons. FYI... not being able to ping a server is not a good reason to rma it /sigh. It's always more cost effective to drop in a new $85 hd instead of tossing out an $1200 2u.

Upgrades... guess that depends. Some might, some probably don't. Upgrading has it's own benefits/detriments given all the possible conflicts.

Running them till they die is more like running them till you can't rma anything in them... which is thousands of servers later (that depends on if the company is running an expansive or static farm).

I do understand what you're saying Kyros.. but, if the servers that are running drinal (for example) are at 1/3rd of the capacity, or less, that they can run at (before the merge), and they double that capacity... it's still only 2/3rds of what they can put on those machines. Going in and doubling the number of machines for that (game)server would be seriuosly inefficient.. considering they could save a bundle of money instead by cutting in half the number of servers overall they have to have up.. while not even reaching capacity on the ones remaining up.

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