There are several reasons why players raid but I want to focus on a few:
Except for the hardcore guilds, none of us can say with a straight face we raid for the challenge. You know why I know we (the majority of casual guilds) don't? Because if we did we wouldn't bail on unfinished existing instances and run to the new ones. Why not continue to work on Yogg or Alganon when Icehowl awaits? Is Icehowl more of a challenge than Yogg? No, but better, shinier loot awaits.
Loot. It's why we raid. I don't care what anyone says, everyone raids because of loot. Even guilds able to be realm first and worldwide first, complain when the loot isn't as great as what they expected. For a long time people on the forum qq'd about being able to do smaller raids because "We just want to see the content!!!!" How long was it after 10-mans were introduced did they same people start qq'ing "Why is our gear inferior??? Why can't we get legendaries???" Loot.
If loot is more important than challenge, I'm just guessing it is. If 10- and 25- man are supposed to be at the same level of challenge (doubtful) and you can take your best players out of a 25-man and form a 10-man squad while getting the same loot why would you bother with doing a 25?
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