What's more expensive for Turbine, the fix or lost revenue from players leaving?

From WSJ, Feb 2, 2015

Firms Power Up Networks for Online Players
Companies Spend Millions of Dollars to Attract Web Gamers
 
 
 
Videogame companies are spending millions of dollars to build faster networks for online games that attract tens of millions of players apiece. Gameplay slowdowns—often called lag or latency—can result in the early death of characters, a frustration that causes some players to lash out at fellow gamers, bad-mouth games on public message boards or simply quit playing.
 
“Lag is the bane of Internet gaming,” said Ron Williams, vice president of security and operations at Riot Games Inc., which makes the online game “League of Legends.”
 
Online gaming, particularly massive multiplayer games like “League,” is exploding in popularity. More than 72% of U.S. gamers said in 2013 that they played some form of online game, according to market researcher NPD Group. The amount of time they spent was up 6% from a year earlier. More than 67 million people play “League” each month, Riot said last year.
 
Lag happens when some players’ data takes too long to reach game servers, putting them out of sync with other gamers and potentially causing them to lose. To level the playing field, game companies are tapping infrastructure providers that typically cater to big media and Wall Street firms.
 
The companies generally don’t say how much they spend beefing up their networks for online games. Electronic Arts Inc., for example, says its spending on lag is in the same bucket as its investment in analytics and security. Estimates put the cost in the single-digit to low tens of millions of dollars. But as game companies create more hit games and gain more players, the costs can grow.
 
 
Riot is piecing together its own network backbone, in part by leasing space on fiber-optic cable from telecommunications providers including Level 3 Communications Inc. and Zayo Group Holdings Inc. Riot said it expects to finish the bulk of its U.S. and Canada network at the end of March. The company said it is also talking to Internet service providers such as Comcast Corp. to ensure gamers’ data is routed through its new network instead of slogging each step of the way through the pipes that make up the Internet.
 
A private backbone is just one avenue for game companies. Another involves plunking down servers closer to where large groups of gamers live.
 
Because most games are installed on PCs or consoles, their large graphics and video files aren’t traveling to and from servers. But instructions, such as telling a character to move here or shoot there, are. If that happens at different speeds for different players, because one player lives too far from the server or because of Internet congestion, trouble ensues.
 
Gamers measure their connections by “pinging” servers with data requests. The players with more robust connections usually have much lower ping and the best chance of winning, earning the ire of opponents. That was a bigger problem before game companies started investing in their own improvements. “They’d call you a low-ping bastard,” said Jim Poole, a vice president for global service providers at Equinix Inc., which rents space where networks can link up to the Internet.
 
 
With a private backbone—the kind used by financial-services firms and social networks—a game company can better sync players’ actions, smoothing out discrepancies in players’ ping times by making everything faster. For Riot, the need for speed was severe enough that last autumn it leased capacity from Spread Networks LLC, which runs a beeline from New York to Chicago that was originally built to give derivatives traders an edge over rivals.
 
It isn’t always possible to meet the demand. Activision Blizzard Inc. said it already has a private Internet backbone similar to the one Riot is building, and it’s just part of the company’s years-old investment to beef up its network. Still, Activision had to race to address customer complaints in November after its blockbuster “Call of Duty: Advanced Warfare,” starring the actor Kevin Spacey, struggled with severe lag.
 
Valve Corp. acknowledged in a November blog post that its popular “Dota 2” game suffered from “significant network issues across multiple regions,” in some cases disconnecting players from game servers. Valve, which has a private Internet backbone, blamed the problem in part on distributed denial-of-service attacks like the ones that brought down the online networks of Sony Corp. ’s PlayStation and Microsoft Corp. ’s Xbox Live over Christmas.
 
Building an international network backbone can cost the smallest developers millions of dollars a year, Perseus Telecom Chief Executive Jock Percy said, which is typically 10 times more than running a basic service over the public Internet.
 
But the costs are likely worth it if they mean players will stick around. “Riot is not just a games company but an e-sports company,” said Steve Bailey, a senior analyst at market researcher IHS Technology. “Competition in this segment is intensifying.”
 
 
Activision, Valve and Riot declined to say how much they are spending to beef up their networks. Analysts at SuperData Research estimate that Riot, which was bought by China’s Tencent Holdings Ltd. in 2011, will spend between $10 million and $20 million building out its infrastructure in 2015.
 
Annual maintenance costs could rise to $4 million a year. Still, that’s a small sum considering that “League”—Riot’s only game to date—generated about $1.3 billion in revenue in 2014, SuperData estimates. Riot declined to comment on its finances.
 
Perseus traditionally serves high-frequency traders, but it said game developers started approaching it toward the end of 2013. Some engineers knew the company through earlier stints in finance, the firm said. While game companies currently account for less than 10% of Perseus’s revenue, that business is growing more than 50% a year, Mr. Percy said.