The benefits and drawbacks of new IP lie almost diametrically opposed to preexisting IP. There is no economic sure-thing when pitching a new game in a new setting. Yet there is hope here. New IP that catches the target audience's imagination is generally far more likely to achieve blockbuster appeal than a mere sequel. The problem is just getting there. MMOs are a new enough industry with only a few generations of game design so we haven't seen this phenomena in a profound way yet. The closest we get is EQ's success, though it initially only had one competitor. One of the appeals of RPGs in general and MMOs specifically, is the ability to explore a game's "sandbox." When dealing with old IP the only thrill is finding in the new game what has already existed in the old. New IP is on a completely different level because what lies beyond the far horizon is truly unknown. Even the past is often shrouded in mystery. Past and present are ready to be discovered while the future is an unwritten page (at least from a gamer's perspective, if not the developer's). This allows for an open ended world, the discovery of geography, history, politics, and culture. The world's story is only now being told. So in a purist sense, new IP is better. Yet what if the world designers have bad taste? What if the stories are stupid, the monsters uninteresting, and the politics dull? It's a risk. Hence the appeal of existing IP.
At this point, I should take a step back and clarify one major point about existing IP. My statements above do not mean to imply that creativity and originality are dead in games that use worlds that already exist. Some worlds are broad enough to have plenty of room for new things while other games are set in different time periods from what is already known. In fact, existing IP can be broken into two distinctive categories that have a major impact on the level of their originality. These two sides are what I would call Story IP vs. World IP. Story IP includes all of the qualities of World IP, but not vice versa. I shall explain. In the term World IP, I refer to the use of a preexisting world. Its geography, history, peoples, and culture are known. But within that world, there is no distinct singular plot. This is where Story IP differs. Story IP has its geography, history, peoples, and culture too, but all of them are fundamentally linked to a single overarching plot that gives that world its purpose. Middle Earth is Story IP while Forgotten Realms is World IP. An easy rule of thumb as to which category preexisting IP falls into is the nature of the source material. If it's a game, odds are you're looking at World IP whereas if it's drawn from a book or a movie it is almost always Story IP.
When Tolkien wrote the Lord of the Rings, he wasn't trying to create a broad world full of diverse kingdoms, concurrent events, and intermingling politics. Quite the contrary, everything that is encountered in the books leads toward one overarching purpose: the war of the Ring. There is no room for another epic plot. Sure there can be side stories of Boromir's travels or the Gaffer's potato growing troubles, but there is no place for another world-shaking plot to exist alongside the ring. (As a caveat, the Hobbit and Lord of the Rings were not initially part of Middle Earth whose true basis is told in Tolkien's opus, the Silmarillion. There is a little more room for other plots in the First and Second Ages, but the Third Age is all about the ring, though one could argue that the First Age is equally dominated by the Silmarils.) This is not to say that the Middle Earth doesn't have an incredibly rich history, it most certainly does. But the one war of the ring drives all of its momentum.
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