CES: Daglow, Buttler Talk Virtual Worlds And The MMO Explosion

Author: by Stephen Jacobs, Leigh Alexander

At the 2008 Consumer Electronics Show in Las Vegas, a panel titled "Virtual Worlds and the Massively Multiplayer Gaming Explosion" reviewed one of the year's largest and most burgeoning trends, examining issues from competition with console gaming to socialization, in-game ads and monetization. Is the shrink-wrapped box dead? What's left after WoW? Where will future innovation come from? Trion World Network CEO Dr. Lars Buttler; Bob Ferrari, executive director of business development and sales for Turbine; AMD senior product manager Ian McNaughton; Stormfront Studios president and CEO Don Daglow; Flagship Studios' business development director and general counsel Steve Goldstein; Akamai product line director Kris Alexander and business development and international operations VP David Christensen of Sony Online Entertainment all participated in the panel, which was moderated by Michael Rowe, manager of the 3D Internet and Intraverse Department at IBM's Research Group. Evolving Industry, New Responsibilities Rowe began the discussion by raising the distinction between "virtualization" and online gaming and traditional console gaming. Said Christensen, "I think that distinction is going away, but the big difference is play balance and controller versus keyboard and mouse." "It's not just a port," Ferrari agreed. Added Buttler, "Also, the difference between virtual worlds and games. It's much easier to monetize a theme park than a park. The virtual worlds don't have a good way to monetize today." Said Daglow, "Sometimes people are first drawn in by the game, and then they stay for the people they meet there. In Neverwinter Nights, we got a letter from a woman who was abused by her husband and was a virtual prisoner in her own home. Her player friends who she opened up to encouraged her to get out, and she made it to a shelter, and then sent us a letter about how the game and her friends hand changed her life. The social power is the real power beyond what we create as designers even though we might like to think differently." Bernstein believes the evolving industry has new ramifications for a game company's commitment. "In a box product, your commitment ends at purchase. Don's story indicates the power and responsibility you have in an on-line title. I'm pretty sure at least three of us here have policies for suicide threats and our operators." The Ad Question Rowe asked the panelists about how in-game advertising is playing out in the online space. Buttler doesn't think it's a big factor today. "It's more like product placement than advertising today," he clarified. "In the future, you can have brand advertising as part of two-way exchanges in a game." "Look at Lord of the Rings Online," said Ferrari. "We can't put a Nike logo into it. But we could put advertising up before you get into the game." Suggested Bernstein, "It's really more 'out-of-game advertising' in some ways. Hellgate London is set in 2038, and much of the interaction is in the tube station. Anyone whose been in one knows thats a natural placement. Myth is a free-to-play game, and we cant put ads into a sword-and-sorcery environment -- we'd get pilloried by our users. But because it's free to play, we can do advertising before they get into the game." Going Global Rowe asked the panelists about how to build an online game's global relevance. Said Christensen, "WoW has done a great job of localization, but in some ways they're almost thought of as an Asian company because of their long history of success in Korea. We're working Asian and Indian companies and developers to help us localize our development." "We've had to learn that too," Ferrari agreed. "They're completely different business models, retail models, governmental regulations. Now you have to put technology in our games for the Asian markets to time players out after a certain amount of time." Alexander says Akamai has also had the same challenge. "How are you going to implement the provision of the game and follow the rules and regulations in the local environment?" He posited. "Europe is the next market," Buttler asserted. "There are 400 million people who are rich and at peace and looking to play." Said Goldstein, "We have 6 publishers for our game. 2 for us and Europe, and 4 for Asia. It is'nt just about languages, but about unique content. We have 2 SKUs and 8 languages in Europe. We have 30 builds and 30 SKUs for Asia. It's an incredible amount of work, and you need to be extremely careful picking your partners." Added Ferrari, "And all the different builds add more production time and affect your release schedules and planning." Commented McNaughton, "One thing we have to consider at AMD is we always want to make sure we want to bring as much power as we can to the most affordable level. So for us, we need to look at each geography very differently, because the sales of PCs are very different in different markets. How do we bring the tech down affordably and raise the bar?" Christiansen pointed out that there are moral and cultural issues, too. "If you want to be successful in a different country, you need to bring in a local partner." Noted Ferrari, "Localization also means looking at the technology in the country." "Not all media works in all markets," cautioned Buttler. "You can pick and choose, and decide that you want the biggest and best out there and build something else for the other markets." Goldstein opined that there's no such thing as a "global launch. "Global to me means one product you release all at once all over the world. That would be Nirvana," he said. Stated Ferrari, "We build our games for North American players first. For Lord of the Rings Online, we do as much business in Europe. Germany is huge for us." Added Daglow, "Historically, you'll see that with things like Starcraft -- the Asian market just loved the game, and later the company built specialized versions for those markets. So sometimes it's serendipity versus planning." Virtual Goods And Secondary Markets Next, Rowe asked the panel about secondary markets and economy. "I love secondary markets," Goldstein enthused. "I think it's the coolest thing. We built it into the game. Sony's also doing it, providing a legitimate way to interact." Christiansen had a different view. "I think this is the beginning of the end of the secondary market. I think you'll see more of this happening in game. The exchange will still occur." He continued, "I worked for [virtual item sales service] IGE, and I saw the problems it created for publishers, especially in customer support. So Sony announced Exchange just before I joined them. Going forward, you have to build this in, or they're consumeable or purely fashion items." Agreed Alexander, "As soon as you have something of value, there will be markets created around them, and it's better for everyone to have those be official and supported, to give the end users security in using them." Cannibalizing Traditional Markets Asked an audience member, "How do you handle cannibalization of products? Is there a threshold of two or three games that someone can play?" Replied Daglow, "If WoW takes half the air out of the room, what other games can take the rest of the market?" Agreed Buttler, "Even WoW is a media property, and media properties age, and WoW will someday look old. But to any video game, you can build it to add content and experiences all the time." Said Ferrari, "If you look at it, it's about, 'how much time and money do they have?' If you've got a group that's been playing for a long time, individual members may go out and find new games, but keep the old one for the community. And in the long run, we want to cannibalize our markets, and bring players from the old game to the new one." Noted Goldstein, "Runsescape is at 17 million players, so we shouldn't refer to shrink-wrapped as the bigger market against free-to-play. It's the smallest. I think you're going to see microtransactions that people will be adopting, especially from Asian developers coming into the market." Added Christiansen, "We're seeing that with microtransactions, the revenue often far exceeds the subscription basis. We generally see that "free-to-play" players are spending north of $20 a month on items. They're also easy to play. You can download RuneScape or MapleStory and be playing in 10 minutes." Said Alexander, "Cannibalization right now is the game industry cannibalizing the traditional entertainment markets, and this is why you see those markets moving to games." In Conclusion Mused Christiansen, "I think you might see a future ability to play more games as they might be getting smaller. One reason I don't play some of these games is I don't want to spend that hour in a tutorial." Added Goldstein, "As we spend the next three or four days talking about margins and monetizing, we shouldn't lose sight of the miraculous industry we're in, where people are selling imaginary gold and building real relationships across the world." Concluded Daglow, "The battleship game is saturated. The smaller games are where you'll see the innovation in the future."