@papermario: I'm not saying you have to make an MMO pay to win to make it profitable. I actually don't know how you came to that conclusion.
Here's the thing. History has shown those MMOs that focus on a hard grind are no longer popular. We do know that back in the "hayday" of MMOs, the audience was much smaller and games could be supported by much fewer players. This means you could build a more "hardcore" experience and still be successful. As game development and maintenance costs increased, MMOs needed to maintain a larger player base to stay profitable. Remember, nobody is in this business to break even.
MMOs have almost always been niche. World of Warcraft broke that mold, but that's pretty much the only one that has. You'll find that many of the players of Final Fantasy 14 A Realm Reborn and Guild Wars 2 (the #2 and #3 MMOs behind WoW) are made up of a lot of former WoW players. Generally if you like MMOs, you stick to MMOs. The audience for them is large enough to sustain some big ones, but not large enough to sustain a lot of little smaller MMOs with a more niche focus.
As for where they make their money, a lot of F2P MMOs with cash shops start out with a boom then trickle to nothing shortly after launch. Most game studios don't collected all of their revenue and save it for when they aren't making money. They are owned by larger companies who take the initial profit to pay off the R&D costs they invested into the game and then profit beyond that. A successful F2P game needs to have a more consistent revenue stream to stay active and get new content developed. Traditional subscription based MMOs just need to keep the subscriber count high enough to make more money than it costs to run the game with the initial purchase of the game going to the R&D costs of the game's development.
That's just how it works out. As to why people don't play MMOs for long after launch varies from game to game. Guild Wars 2 was able to retain an audience, but most MMOs are unable to sway people to quit their existing MMO to play it. World of Warcraft and FF14 AAR have the market cornered for the more traditional "theme park" MMOs. It's really hard to drag people away from those games for long enough time to establish a community in a new MMO. New games have to somehow stand out from them while still appealing to the same audience. It's difficult and so far only Final Fantasy 14 has managed to do that, partly because Square Enix kept reinvesting into it rather than letting it die. Most MMOs don't have the fortune of a parent company willing to reinvest into a failed product.
It it true that most new MMOs that come out lack the appeal for MMO gamers. This is usually because creating the content that caters to the MMO gamers also requires a lot of development time. Developers take months and years to develop content that experienced gamers blow through in a few weeks at most. This leaves them going back to much larger MMOs like WoW and FF14. It's hard to compete.
This is why I'm saying the traditional MMO is basically dead. If you liked WoW or WoW-like MMOs, then WoW is still around and getting routine content updates. You also have Final Fantasy 14. Trying to directly compete against these games is pointless. They are better polished, have established communities, and have far more content than your new MMO is going to have. Trying to make a deeper, more "hardcore" experience that appeals to a small subset of the already small-ish MMO community is not going to net you enough sales or consistent revenue to keep the game going for long. No publisher bothers to invest in those kind of MMOs because there is just no money to be made there.
We're seeing some crowdfunded MMOs try to bring back the more "sandbox" and PvP focused MMOs with games like Camelot Unchained and Crowfall. These games stand apart from WoW and Final Fantasy because they take a completely new direction.
However, most of the fun of an MMO comes from persistent character development, loot, and smaller scale co-op. Games like The Division and Destiny have been able to achieve a level of these kind of features without the traditional MMO interface. I predict we'll see more co-op focused RPGs in the future that provide the same level of persistent character development, loot, and co-op encounters that a traditional MMO does all while avoiding the pitfalls of traditional MMO game design.
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