What's wrong with long instances? Well first off, they take a lot of time. This means more chance of failure partway in and a smaller pool of players who have the time to run it. The reward for the time spent may be lower, though this isn't always the case; an instance can be long because it has tons of bosses.
Then there's the time required to run the instance which isn't actually part of running the instance. There's the time to find people and to get to the instance. A gambling person can run to the instance first, thereby making double use of their time. But this can be a false savings, stopping their questing for a reward which may not pan out, since if the group doesn't form, the travel time will be entirely wasted unless it's a first run there grabbing FPs.
It's this second time which often kills groups. I have often planned out my time as, more or less: I have an hour until I have to go, the instance takes 45 minutes, if I get a group in 15 minutes I can go. And so I go forth with the expectation of spending 1/4 of my free time to find a group. If by chance we take 20 minutes to form and get there, I may still go depending on how bad it is to be late. But imagine if it took 25 minutes. Suddenly you really can't afford to go.
In short, we could run the instance, we just couldn't get the group needed.
Cross-server LFG helps with that. The larger pool of players means that even an unpopular instance is more likely to have people looking to run it. A minority can become enough if you get a big enough total population. This means finding groups is faster.
Teleporting to the instance also saves time. And it saves annoyance. How many people are discouraged from instances by the travel time? I'd guess quite a few. I remember how difficult it would be to get a Horde raid to UBRS when it involved running to a zeppelin, taking a FP halfway up the continent, and then running over there. On a PvP server this meant a fair bit of dying. This made Horde groups harder to form and harder to get there. In contrast the Alliance was easy to form groups with since Ironforge is practically next door and SW isn't far either, especially considering the tram.
Teleporting will get more people running instances. That means a larger pool of potential players and faster queue times.
These all add up to more people available and faster queues. As a tank, I get any group about instantly, depending on lag and my clicking speed. Healers are a bit slower. But I've heard that even DPS are sped up a bit. Cutting out a lot of the LFG time and all of the travel time means more time for the instance itself. That hour can be used more for the instance.
Does this mean the return of long instances? Can we have an hour-long five-man? I don't believe it will be as popular as the shorter ones. But could it be popular enough? With the better LFG tools, I believe so. Maybe someday we'll see the vanilla-style super-long instances return: BRD, LBRS, and Maraudon. Maybe those are already being run again. Sadly, my alts are past the level for them.
Could this also mean a revitalization of the near-cap instances? The level 57 and 67 instances are so often ignored, barely worth the time as we race to the fateful 8 and the next expansion. I think we'll see some of the instances run again. Perhaps not the 60 ones, but a bit before then.
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