Well, this is not a good thing for game development in general, and especially for those of us who committed to Lifetime subscriptions to TSW and have been waiting for the content expansions such as Tokyo as the current game content ends at a cliffhanger.
That said, I have to wonder WTF Funcom expected, or what most MMO companies expect. They all keep making the same basic mistakes in launching games without much in the way of endgame content (which is what keeps people subscribed), and what's more insist on financing them on the relative cheap, yes they cost tens or hundreds of millions of dollars, but given how established the market is, it takes more than that. You keep tossing out these relatively modest MMOs justified by "well, many MMOs have launched with less" it's not surprising the titans like WoW that have gained far more content keep slapping them down. People keep telling MMO companies that content is king, all the newest technology and such is nice, but hardly nessicary, a consistant art style is more important than say fully voiced cinematics, as WoW demonstrated in how long it's lasted.
I honestly get tired of all of these companies throwing tantrums, firing/laying off employees, and changing what kinds of games are developed due to their own screw ups, it's going to quickly get to the point where there won't be any decent games I want to play anymore, because of an industry that is unwilling to take responsibility for it's actions. In a case like this, the big issue is that where TSW failed was the same place pretty much every other major MMO project has failed. If people keep doing the same bloody things, it's no wonder they keep failing.
To put things into perspective, what has killed pretty much every MMO in the last half a dozen years or so? The endgame. Tons of effort is put into the game and advancement process but then once people max out their characters there is little left keeping them there until more content is created. The usual defense is that "well, WoW (who they are imitating) didn't have much endgame content when it launched" the issue of course being that when WoW launched it wasn't up against anyone that had decent endgame content except maybe Everquest and that was kind of debatable in the quality department. The end result is that when people play through any game in a couple of months tops, there is nothing left keeping them there, so the subscriptions drop off. This is especially pronounced in games with limited amounts of content, truthfully there is a lot to be said for a "quality over quantity" approach but it to be honest it doesn't work all that well for an MMO, basically the less content you have the faster people hit your endgame and if it's lacking they are going to leave. Like many other games TSW tried to scimp on the endgame by basically having their version just be harder versions of the normal 5 man instances, which is something that hasn't worked for other games that have tried the same thing. Heroics in WoW didn't come along until further along in the game's evolution as an addition to what was already a fairly robust endgame.
I'll also say that when it comes to an endgame it's pretty transparent at this point that a big part of what does the damage is the desire to make the games approachable. The thing is that the more approachable things are at the end, the quicker people will complete them, and then move on. Approachability has less to do with difficulty (one thing TSW did try was to ramp the difficulty up) but the amount of time it takes. Even very tricky fights are something that goes quickly once you've mastered the tricks involved. Rather what you need to see is a return of those huge raids of yesterday that not only required figuring out the fights, but also involved getting a LOT Of people together for a prolonged period of time. While people will QQ about it, the bottom line is that if you set it up, people who get to endgame WILL do it, and will invest the time. A single instance like say "Molten Core" or what Everquest was doing with their planar expansion can last a community a LOT longer than a bunch of 5-10 man instances with some gimmicks involved, but which can be completed in a couple hours tops (and honestly in most games now an instance can be done in like 30 minutes, which means people are going to max out the progression quickly). The point here being that the model everyone is imitating "small groups, fast runs" might get a lot of people involved in the content, but it also means all those people are going to be done in a month or so and then you've got noone interested in re-upping subscriptions until more content comes out, and even then it will probably only be until they finish it at the same pace if that's what you continue to cater to.
With all of the same mistakes being made again and again, I feel that companies like Funcom (who is not alone in this, it's just who we're talking about here) are acting like Petulant children in deciding that they are going to radically alter their business plans, joining the legions of developers claiming a perfectly valid type of game is no longer sustainable, when the failures are entirely on them rather than the audience or the genere.
Of course unreasonable expectations for profits enter into it as well, especially for niche games. I think half the problem is that the industry increasingly expects to be wallowing in cash instantly, and wants an MMO to basically be a money printing machine, which is a problem in of itself that goes beyond this. Simply put those in the industry should expect to do a lot of work for a fair profit, like pretty much anyone else, but again that's another issue.
At any rate, did TSW "fail" or simply not make the expected profits? I very much doubt it's losing money. What's more, how is it anyone's fault except for Funcom's when they followed what is obviously a losing strategy that has tanked every game following in WoW's shadow? All of these games that went FTP have one big thing in common: lack of endgame to sustain the player base.
I'll also admit that I'm unusually peeved here largely because I like the idea of the game, and was hoping they understood they were producing a niche product. With the way things sound it doesn't seem likely we're ever going to see the storyline end properly and might not even see expansion into Tokyo and beyond at a substantial level, never mind the monthly content updates we were lead to expect (August's "issue" has already been pushed back to next month). I committed to a lifetime subscription for this one, and to say that I'm irritated is an understatement, especially given Funcom's apparent expectations and response.
At any rate, the trend towards making "smaller, cheaper, games" and the like which everyone, not just Funcom, seems to be pursueing seems to be tantamount to them deciding to produce the kinds of products I generally consider to be crap. When someone mentions their next project is a liscenced lego minifigs game, it hardly has me going "oh boy, I can't wait to spend money on that". It's sort of like the various AAA developers who fail to learn from their mistakes turning towards apps and such... it's not the type of product, or the market that is a problem, it's the development and how they handle things. They decided to go down the wrong path and imitate a failing model. Pretty much no ones's "ultra approachable, small group based, highly cinematic, MMO" has succeeded, attempts to do that have been a graveyard, with the deathblow coming exactly the same way, following the same trends.
While it goes against what a lot of marketing geniuses will say, in trying to imitate the formula, consider the whole picture of that formula. Launch an MMO with 40 man raids at the endgame, 2 or 3 of them, much like WoW did, then see what happens. Sure plenty of people will say "I won't do that" but when it arrives, guess what... they will.
What's more I'll also say that there was a huge advantage to 40 man raids and such that people forget: it made players inherantly more valuable. If you were willing to raid and put the time in you could probably find a spot since people needed attendance. One side effect of small endgame groups, and tiny but gimmick filled instances, is that it's lead to elitism where nobody wants to bother with new players. TSW kind of took this to an extreme where simply put getting your foot in the door at "Nightmare" level is difficult even after a couple of months since nobody wants to bother with anyone who is less than perfect, or isn't already running NMs regularly. While there was some elitism in the days of Molten Core and Blackwing Lair (especially the latter) it was of a less extreme variety. You might drive off the ultra-casuals who aren't willing to put in the time, but those who ARE will continue to re-up their subscriptions. What's more if it can take months for 40 man groups to gear that means you have months to prepare content and spot trends as a developer, as opposed to people blitzing your 5 man content (or just quitting when nobody wants them for ultra-elite 5 man teams, giving up on the whole tier) and then going on to the next game.
Long and rambling, but this is what I think. To me it sounds like Funcom is throwing a tantrum to be honest. The odd thing is that TSW seems like it would be one of the easier games to salvage if they put the effort into it, but with them laying off so many employees it seems like they are definatly going to be slowing any further development or evolution of the game.
On a final note, Funcom seemed to be relying on their cash shop to help make money, selling cosmetic items. As people in beta were pointing out, the character models in TSW needed work to begin with, people were saying from the very beginning they would be unlikely to spend money playing dress up with those models. What's more while I received a decent pile of promotional points from my time in beta, so it hasn't been an issue for me, it occurs to me that asking $10 or so for a single character skin/outfit is a bit much, consider what you can buy with $10. This is a fairly typical price for cash shop MMOs I guess, but understand it also means that comparitively few people are going to pay those prices when it's purely cosmetic items. Unless you want to go "pay to win" by directly selling power (which is always a bad idea) you'd do better to rely on volume sales. Truthfully a lot of the games that seem to be doing rocky on the whole "cash shop" thing (there are plenty of them) seem to miss the needed balance, too many people jump on the top dollar value for what some games are making. Also what an established community will pay for something for someone to stand out, is a bit differant from a game that is just launching and trying to establish a community. Like it or not, there is a huge differance between buying the same kind of cosmetic add on in something that has been going on for years without them like WoW, and buying them for a game that launched a couple of months ago.