Business Models

I gave an interview to Wagner James Au over at gigaOM about my new gig which has gotten a lot of press (and flack via the press) in the past couple of weeks. Specifically, two paragraphs where I discussed the problems with standard MMO production (huge budgets, inability to manage projects) were boiled down into:

Why The MMORPG Subscription-Based Business Model Is Broken

To be fair, this isn’t the title I would have chosen (I probably would have used something involving obscure 1980′s alternative music lyrics), and I also wouldn’t have painted myself as some sort of latter-day Martin Scorsese moving into Youtube serials. But, hey, to be fair I did move from problems to solutions with the words: “So, in short, it’s broken.”

Now, when other places, especially those with a readership more composed of Warcraft players than dot-com venture capitalists picked up on the interview, the reaction was… well… mixed.

I think what he’s really saying is that the business model that he is no longer in is no good and the one he is now working with is totally awesome.

But hey, if Jennings wants to milk pocket money from kids and pestered parents, then that’s what he should say. There’s always a market for low quality shovelware with strings attached.

He made the leap? Wasn’t he pushed?

Since when was Lum the Knob an ‘Industry Heavyweight’ ?? Obviously the author of this piece is enraptured with Jennings, a low level code monkey and craptastic MMO player.

 

He got given the arse at one job, so now that industry sucks and is dieing, yet his new low level code monkey job is in the fast paced and exciting world of ..what was it again…..Web Browser Wars?

Obviously 2008 is the year that publishers and studios finally learn what a false religion The Cult of the Big-Name Designer is.

The takeaway from this is clear:

I Am A Big-Name Designer/Cult Leader

Rock! Also:

Never Ever Even Imply You Will Take World of Warcraft Away From People

Something I’m sure Richard Bartle would give me pointers on, if his email client has recovered yet.

OK – More seriously:

People Enjoy Playing Subscription MMOs

and the somewhat related

You Can Make A Lot Of Money From Subscription MMOs

Obviously, given the 11 million customer behemoth, this is a fairly obvious point. Blizzard makes money hand over fist. And rather more importantly, as Ben Zeigler points out in a well-written piece, NCsoft makes money hand over fist – and more last year from City of Heroes than Guild Wars. It’s a point well taken – both products are fairly old in Internet years, and Guild Wars has several orders of magnitude more people playing; yet City of Heroes makes more money, mainly because everyone is paying. (And also that NCsoft is still struggling with trying to monetize Guild Wars players over the long term – a struggle with any free-to-play game.)

So, when I say “this be broken, y0″, it’s more to the point of addressing this part of what I originally said, which many folks have skipped over:

The classic engineering dilemma is expressed as a joke: “Fast, Cheap, Good: pick two”. In game development, we *wish* we could pick two. We either crank out licensed console games on a one year cycle that literally burns through developers. Or we spend tens of millions just to keep up with the status quo. Or we have tiny budgets, which result in development that is neither fast nor good, and most of the time, consequently tiny results.

That is broken.  There is little room for creativity and advancing the state of the art in any of those scenarios – either you are working too fast, have too little budget for your scope, or you don’t have the flexibility because you are responsible for a blockbuster-sized budget.

That’s not to say that innovation can’t occur using the standard model – look at public quests in Warhammer Online. Of course, then note that that is, most likely, literally the only innovative feature of Warhammer Online. Given those big budgets, it’s simply not responsible to get all crazy with the innovation. Counter example: Star Wars Galaxies, a big budget title which had innovation out the wazoo, and was unable to deliver much of it until well beyond release.

Of course, you can quite easily crank out a game that follows 80-90% of the World of Warcraft road map, charge $15 a month and be quite successful. Both Age of Conan and Warhammer Online look to have done so, as did Lord of the Rings Online. All of these games are going to keep their studios going well into the future. That’s hard to argue with.

But not impossible. You see, not every game is a success. Some games never make it out the door. (Not that I’d know anything about that – but more on that in a moment.) And if they do make it out the door, they might not be terribly successful. Maybe they took too many risks, or the wrong ones, or they somehow otherwise deviated from The One Holy and Apostolic WoW. It is very easy – ridiculously easy – to waste a LOT of money making MMOs. And the longer we cleave to the current production model, your chance of wasting money goes up, your amount of money you wasted goes up, and the chance you can ever make a game that isn’t a reskinned WoW goes down. (And eventually the market will tire of reskinned WoWs, really.)

Even beyond that, there’s some other key problems with subscription-based games, though:

They self-select the hard core. It is a struggle for the average online game to convince the average internet user to pony up a credit card number. In fact, that’s one of World of Warcraft’s biggest achievements – and one reason why even developers of MMOs that have been decimated by World of Warcraft’s release are somewhat philisophical about it. Hey, that’s 11 million people that entered in a credit card number. They might do it again! (Except that, well, a large proportion of those are playing in net cafes in China and paying by the hour. DETAILS.) But still – asking for billing information is a decision point. Decision points are where you are faced with the decision – do I keep investing my time, attention and money in this game or not? And the longer you can postpone that decision point, the better. Free to play games nail this, because they don’t have to ask you for money until you are well and truly invested in the game.

They leave money on the table and encourage bad actors to pick up the slack. By this I mean gold farming, primarily. No reputable subscription-based MMO will sell you gold because, well, you’re already paying them money. Charging for in-game money or items is double dipping, right? No one would stand for that. But clearly the market is there regardless. And as long as that market is not served internally by the game developers themselves, it will be served by people who not only do not act in the best interests of the game as a whole, but have a very real financial incentive to act contrary to the interests of the game as a whole – gold duping, hacking the client, farms of unattended macro bots, whatever. Whereas a game who has gold selling as a revenue model (and it can be done without making a Entropia Universe-esque ponzi scheme of gameplay – dual currency models being IMHO the best way of hitting this from the design standpoint) puts those bad actors elegantly out of business, because no matter how low salaries are in whatever sweatshop, a gold farmer will never be able to compete with a SQL query for the cost of doing business.

They encourage bad design. You gotta keep those people subscribed somehow. Hey, I know, let’s jack up the XP curve, no one will notice. Oh, they’re max level? Crap, put in some other time sink – hey, “reputations” sounds fun, let’s see if that works. Now, free to play games also suffer from all of these problems. Which is kind of funny, because in a free to play game, if you’re not part of the 5% or whatever of players that is monetized, you are costing the company money when you play. Ideally your play time should be minimized, not extended! But old habits are hard to break. Jonathan Blow (the Braid designer) put this best. When his comments on MMO design first came out I was quite pissed off at what he had to say – but in the main, he’s right. It’s probably why I was pissed.

“I think a lot of modern game design is actually unethical, especially massively multiplayer games like World of Warcraft, because they are predicated on player exploitation,” Mr Blow says.

 

He believes players will naturally avoid boring tasks but developers “override that by plugging into their pleasure centres and giving them scheduled rewards and we convince them to pay us money and waste their lives in front of our game in this exploitative fashion”.

It’s a vast oversimplification – but that doesn’t make it less correct an observation. And that is encouraged by the revenue stream of the slow and steady MMO gamer.

So, will free-to-play, or web-based, or any other trendy buzzword fix all this? Of course not. But we as developers have to start thinking differently. Or failing that, enjoy the few years or so of profitable WoW-cloning left to us. Either way.

A more personal note: referring to this comment?

I think what he’s really saying is that the business model that he is no longer in is no good and the one he is now working with is totally awesome.

While I can’t talk about what I was doing at NCsoft, I think it is a very safe assumption to make that the business and production model we were shooting for, and trying to introduce to a company not really used to it, was informed based on much of the above discussion. It wasn’t so much a case of “oh crap, they stopped paying me – go talk nice about the stuff these guys are doing!” as “oh crap, they don’t wanna do this any more – go find someone else who is!”  I mean, I’m mercenary, but I’m not craven.