Jagex - Java Game Experts

Corporate Structure

Jagex is located in Cambridge. It has approximately 400 members of staff. The pie chart below shows the distribution of staff members (number of staff - percentage of total).

Jagex Staff Distribution Pie Chart

Jagex has got a low organisational hierarchy meaning that the chain of command is much shorter. This means that the company will have a more personal feel and staff will feel like a family. Having a short chain of command means that there are a lot less middle managers who would just be eating into Jagex's profits.

To see who Jagex values most in the company, I had a look at their past/current vacancies and the salaries using the Way Back Machine.

1. Chief Officers - £60,000 - £80,000
2. Managers - ~£40,000+
3. System Admins - £35,000+
4. Developers - £20,000 - £34,000+
5. Junior Developers - £18,000 - £22,000
6. Customer Support £17,000 (Over Time Excluded)

From my calculations, there are about 113 staff members (28.25%) that work in developing the Jagex merchandise earning an average of £26,000. This means that Jagex pay their developers about £2,900,000 per annum. There are about 175 staff members (43.75%) that work within the Customer Support team at Jagex. They earn about £17,000 each, totaling at £2,975,000 per annum. I chose to compare these to groups as they are the biggest teams that Jagex has.

You can see that the developers and customer support make up a total of 72% of the business meaning that only only are they hugely committed to making new games and developing new content for already existing games but also to support the customers who play their games (Free members and Pay to Play members). This means that they can easily take feedback from their audience and make games and content to suit their target audience. As Jagex has direct contact with their audience, there is no additional fees to hire a market research company to find out what their audience thinks of their games or what new games they want.

Comparing the wages, you can see that the difference between Managers and Chief Officers is very nominal. In most companies, you can expect this ration to be huge in comparison. However, Jagex is a private limited company meaning that the shares in the company are privately sold. As is stands, there are 5 share holders in the company all owning a different amount of shares. My guess is that the share holders (who are the Chief Officers) receive a huge dividend every year. In 2008 the share holders received over £9,000,000 in dividends (Truthscape, Jagex Financial Overview). Their salary in nominal compared to the amount they receive from dividends.

Just by looking at the above numbers, you can see that even though their developing team is smaller than the customer support team, collectively they earn more. This is not only because it is a more skilled job but more of an art. The developers need to be able to have very clean crisp code that makes downloading the client very small. They don't want a user to wait 50 minutes to download a 200Mb client file. They praise themselves on having a client that is only 1.2Mb (small enough to fit on a 3.5" Floppy Disk) meaning that people with slower internet connections will be able to play the game much sooner than other online games like World of Warcraft who have download of 1GB per update to the client. In the end, it opens up an audience that other online games can't reach, those with outdated computer hardware and slow internet connections.

Business Model

Jagex publish their own games and that is all done in house. About 16 members of staff (4%) are in the publishing team. As their games are browser based, there are no distribution costs. This makes Jagex self contained, they don't rely on any external sources for anything. They make their games in house, publish the games themselves, marketing is also done in house and their customer support is also in house. This means that Jagex can set their own time lines for projects.

There is another company called Valve that creates games (such as the Half-Life series) but they utilise their own Content Delivery System called Steam. The difference that Steam has is that it also offers its content delivery system to other game creators/publishers. For Valve, this means that they are able to get their games out to their audience without a massive physical distribution overhead, however, their games are huge compared to Jagex meaning that they need to maintain an infrastructure of servers all around they world that is capable of delivering the content to 20 million subscribers around the globe.

Blizzard Entertainment also distributes their games in a similar way Jagex. Having the client download files to their computer, but Blizzards game World of Warcraft is aimed at a an older audience (PEGI 12+ Rating) and also charge a lot more at £8.99 per month. Jagex charges £3.50 per month for Runescape. Other online games such as Age of Conan charge close to Blizzards figure at £10.43 per month. You can see how it will get the younger audience as parents will be more inclined to pay £3.50 than £8.99 as it is a very small amount in comparison.

Value of Jagex

Jagex is a Private Limited Company (Companies House) meaning that their shares are not for sale to the general public.
I went to see what intellectual property Jagex own (IPO) and saw that they have over 10 unique trademarks. Many of these are not yet available such as Mechscape but it could be suggested that they are heavily committed to the projects if they have got them trademarked.

Runescape is very popular with over a million subscribers (at £3.50) per month means that it brings in about £42,000,000 per year (fluctuates dependant on exchange rates)
Runescape game engine is probably worth over £10,000,000. Jagex have spent the last10 years developing it
FunOrb is fairly popular and has about 200,000 subscribers (at £2) per month means that it brings in about £4,800,000 per year (also fluctuates dependant on exchange rates)
FunOrb has 36 games that cost Jagex about £12,800 (Casual Gaming) to develop making their portfolio for FunOrb worth at least £468,000
Jagex also has a server infrastructure to make their games available in many countries £unknown

In total, I estimate Jagex to be worth £57,260,000

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