The Korea Times : Gamers Flip Through Online Games
I’ve talked before about how all forms of media are heading from commodity towards utility at various rates — music being the most obvious example, what with services now offering “all you can listen to for a flat monthly fee plus some extras for additional cost” business plans very much like a utility bill.
I didn’t quite expect, however, for games to get there this quickly. But as usual, Korea is a harbinger.
I’ve known for a while that there was a large contingent of folks who “beta surfed.” They move from free game to free game, because for a variety of reasons they don’t want to pay. There’s a cottage industry that has sprung up just to rate and track these. It is from this pool of users that Runescape has drawn its users.
Runescape, like Habbo Hotel, is one of those games that flies under the radar here. And yet, check out where it ranks on the buzz meter: bigger than WoW, bigger than Pokemon. It’s at around 800,000 paying subscribers last I heard, and has millions of users playing for free. The guys who created it are now among the richest people in the UK. The typical response here among anyone older than age 14 is “it’s fugly.” Which, true, it is. Habbo is hardly at the cutting edge of graphics either, as commenters noted in my post about it.
The whole market here in the US is heavily tilted towards retail, but that’s changing. In Korea, where the whole market is driven by free trials of new games, and where the market is incredibly crowded, you can easily live off beta after beta after beta. In the article I linked, the comment is made by a user that
“I don’t want to spend money on games. There are always similar ones coming out soon with upgraded features,” Lim said.
Is there any statement more likely to drive a cold dagger of fear into the hearts of publishers spending tens of millions on a AAA title?
Needless to say, this causes concern in Korea. A Nexon rep commented, “as the local game industry doesn’t have a long history, it’s still hard to make a prediction which kinds of games can strongly appeal to them.” The bad news for this Nexon rep is that even with a long history, it’ll still be hard, always hard. The Hollywood mantra “nobody knows anything” applies in this regard.
It’s not sustainable to keep making big games that demand big revenue. It’s not sustainable to make even small games with no revenue.
What happens when games become utility-level commodities? The business models definitely start to change; more games driven by ads seems like one obvious example — if end users won’t pay, get someone else to. Encouragement of game-hopping within a given provider or framework also becomes a clear business move: driving loyalty to the site, rather than to the individual product. Not just aggregation, but interwoven aggregation, where the games somehow reflect on one another or on a metalevel, in the manner achievements do in XBox Live.
And critically, branding — there has to be some other reason to haunt a given game site rather than a different other game site. A fandom is one of the reasons to do so.
Many of these individual ingredients are in place in different services today, but I don’t think we have yet seen the online games portal fully adapted to the free-play market for anything beyond casual games. Greg’s Manifesto Games seems to be trying to tap the fandom angle; it’ll be interesting to see how that works out.
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Raph’s Website » The Korea Times : Gamers Flip Through Online Games TVersity Website Home media streaming. Odd Job Jack: all components available under CC license Going one step further than most, this animation is releasing all its base components for non-commercial mashup use. Sodding marvellous.
Raph’s Website » The Korea Times : Gamers Flip Through Online Games TVersity Website Home media streaming. Odd Job Jack: all components available under CC license Going one step further than most, this animation is releasing all its base components for non-commercial mashup use. Sodding marvellous.
Super Mario Bros.: A Literary Criticism Via Raph. What it says.Raph’s Website » The Korea Times : Gamers Flip Through Online GamesTVersity Website Home media streaming.Odd Job Jack: all components available under CC license Going one step further than most, this animation is releasing all its base components for non-commercial mashup use. Sodding marvellous.
I will gladly pay you tuesday for some pwnage today…
Random thoughts:
– Differentiation, differentiation, differantiation. (And not just changing eye candy, monster names, and adding another type of experience point.)
– How much does the culture of the “beta-tester hoarde” affect games that are (theoretically) targeted at paying customers?
– When aluminum was first discovered/refined, it was very expensive, so it was valuable and used in jewelry. It’s now very cheap, so the users of aluminum change their behavior; it’s no longer jewelry, but used in disposable aluminum cans. How does the lower-cost of virtual worlds affect how players use them? And what kind of players are attracted?
I think that publishers will have to set up “amusement parks” of sorts, where the rides (or at least the “signature” rides) are a handful of different MMOs. There will be a front gate (with a hefty admission price), and your experience will be fully controlled by the park designers.
Sure, it will be fun to become a character in Mr. Toad’s Wild Ride, but once your off the ride you will be spending your money on concessions and souvenirs and whatever other impulsive items you might purchase upon the adrenaline-filled exit from the last ride you were on.
Oh, and you can come back tomorrow for half-price if you buy your ticket while still in the park today!
Maybe game publishers could adopt the same strategy that the game console makers use. Rather than selling a game with hours of gameplay for $50-$60, they could give away or sell the engine at a loss, and make it up by selling shorter levels that are a half-hour or so in length. The economics could probably work out well, especially if the games were based on existing engines. I’d be more likely to drop $5 on ten game “episodes”, possibly not all from the same series, than I am to spend $50 on a whole game that might or might not be good. I don’t do that often; when I do buy games, I’m a bargain bin shopper.
Remember when you could get internet service for free? Korea is at a totally different place in the evolution of the business of online games, a place the US/European market may never get. After a major gold rush, the market is glutted with games, many of which are desperate to get any kind of mindshare, any way they can.
The US/European market is nowhere near saturated, if Korea is any guide they’re a long way from it. We’ve got a long time to step into things that Korea has rushed into.
–Dave
I think that we’re rapidly approaching the point where the runescape subscription model is going to be more viable than the traditional subscription model. There’s going to be so many games to choose from, particularly in the fantasy/swords & sorcery setting, that publishers are going to have to allow people to play the basic game for free and then sell a set of upgraded features as a subscription. The free play parts of the game are the hook.
SOE hit on a great idea with EQ2’s adventure packs as well. It’s a way to get a little more out of your customers in return for a value-add without having to go through making a full expansion. It will be interesting to see how well those hold up for the next few years.
Depending on the game, micropayments might be a viable system as well, especially when you’re talking about cosmetic stuff like artwork. Tired of all the WoW cloak designs? Now you can download cloak packs II for just $2. It helps cover the cost of the time invested in creating more alt without unfairly penalizing (in my view) the people who don’t choose to get it. Micropayments can be overused though, so I think it’s still important for games to offer free additions from time to time as well.
Even events. There were a few events in the original EQ and UO (unless I’m remembering wrong) that, in hindsight, I think I would actually be willing to pay extra for, they were that much fun. I think the focus on content in live should be less about “stuff” and more about experience. And I don’t so much mean new areas, bosses, epic quests, etc. as I mean just plain events. Things to do. Some of the most fun experiences I had in certain MMOs had nothing to do with getting stuff or advancing.
Use stories more. It doesn’t always have to be about letting the player write their own tale. They do live in YOUR world, after all. Yes, in the real world, MY story is happening, but there are countless other stories that are happening regardless. There are stories in which I participate and others in which I do not. Those that I do participate in become a part of my story, and sometimes my story becomes a part of the story in which I’m participating (which, if you could pull that off in an MMO, would be a huge incentive – players get to make an indelible mark on the world).
Are gamers who want games for free going to pay even the front charge for some group? I don’t think so, unless it’s something they would otherwise pay for out of need, and I can’t think of anything like that either.
Business’ wants to make money, and any MMO worth more than free play is going to want to charge for it. The Korean thing is temporary and out of need and desperation, isn’t it? And it’s not working, is it? Aren’t these games in question not doing so well?
My point is that money has to be made by some means. So this brings us to RMT by producers. Can it work? Maybe, but only with players who really don’t care about a consistent game world and their earned place in it. I’m sure it can work even in the US and Europe, but as MikeRozak points out, “And what kind of players are attracted?” These are not the kind of players I enjoy playing with. Their in it for other reasons that don’t coincide with mine. I’m absolutely sure I’m not alone in this.
Let them have their games, I keep hoping someone, somewhere, is going to give me the kind of game I want. I’ll pay for it too.
One thing I can see changing, as it happens in some ways already, is the idea of a perpetual MMO. Yea, I know, bad memories of Dawn and all. But from a business perspective, making a game, offering it for free through some sort of leveraged microtransaction approach, and closing a game offers some opportunities not considered when people considered perma-death a form of profanity.
I consider the XBLA approach, and really, any game where people already dump analagous hours per week. There’s already permadeath. You don’t take your winnings with you from Snowblind. You can’t do anything but brag about how fast you beat a level in Geometry Wars. Yet the community behind these games, helped along by the persistent rewards gained from all these games, is no less “into” the games than a typical MMO community is.
So for an MMO, imagine a long series of one-off games, where each year (or whatever) a new addition comes out. Consider EQ2 Adventure Packs without the persistent-world adventure zones. Keep an e-commerce/community back end like an auction house and some chat channels (SOE’s infrastructure/service is particularly suited for this), create a game engine, get the first year folks to pay that off, and then offer ongoing content that resets each year.
And then every seven years, resurrect content from 7 years ago ala Disney 🙂
Erp, meant to say:
Will that appeal to the current crop of WoW raiders? No. But that’s a niche sub-group of the larger game, itself part of a genre that has already broadened way beyond traditional subscription fee and traditional grind-with-others approach. Sure most veterans skip over things like Neopets, Millsburry and Postopia. But those are for the people who are going to replace us as the major consumers of time. Very shortly too. With new players comes new business models 😉
Hmmm well this is actually much to ponder because it goes to economic modeling, real and theoretical. I like to think of economics in terms of food (its easier that way, plus I like to eat)
Lets assume games are a meal:
The korean game market is tantamount to fast food, cheap, filling, but lacking nutritional value. In this last I mean in income streams and in game content. The Korean “utility” game market is the McBurger or rather lets say McBurger Meal Deal, you get a game, (burger) content (fries) and an interface (Coke)
It would seem that the MMD (McBurger Meal Deal) is free, they are giving it away, and really who would pay for such a meal? Its fast food, not healthy no nutritional value, but it will sustain you. For some consumers this is fine, but they must be willing to watch 20 minutes of advertisements have the MMD packaging pasted with ad’s and watch TV ad’s while eating. In other words a price must be paid at some point, nobody rides for free, forever.
And what of this “utility” based community of gamers? DO people looking for sustinance form bonds and cohesion? Beyond thier penchant for a particular McBurgers “secret sauce” (Fandom) which really is not about changing the burger (in Korea it would seem the Burgers, and Coke’s are are all the same) but about changing the fries. People who are fans of (Free games, Free McBurger Meals) something free are fans only insofar as the item remains free. Well theyve been getting sustinance without cost before, “why should I have to pay now” is what theyll say when the McBurger hits the fan….and it will eventually.
As to Runescape and H Hotel, well theres some people who will pay for what is otherwise free (Super Size it!). Maybe they like the McBurger, AND the secret sauce, and they want more of it when they eat…..
And now we look at the US and European game markets. Well now, there are companies and studios spending 10’s of millions of dollars to produce a game. What kind of meal is this?
We’re eating at Mortons
I dont want to see ad’s for the price I’m paying
Im having a steak instead of a burger
A single malt scotch instead if a coke
And if someone bring me FRIES instead of a 2 pound Idaho baked potato I’m gonna be pissed….
Note: The marinade like the “secret sauce” only goes so far as the overall dining experiance makes me happy (ie having “fun”)
Man writing this made me hungry….
Reading that made me hungry! I’m totally going to go get at least a $20 steak tonight. Thanks…. 😉
Heres a good description of a meal (game) at Mortons….
http://www.youtube.com/watch?v=fWvAznIRVLA&mode=related&search=warhammer%20online
Dark Elves indeed 🙂
I think that the models you are talking about are already here. XBox live. RealArcade’s subscription model. Sony’s Station Pass.
As these expand and grow out I think we’ll see that while a lot changes, a lot stays the same. I think that branding will be very important (as you mention). I think that production value will also be very important. In other words, I don’t think budgets are going to decrease. Or rather, they may decrease in the short-term only to once more raise to the roof as competition becomes important and games need to prove that they are ahead of the pack. We are already seeing half million dollar budgets in the casual gaming industry, an increased interest in licensing IP, etc. A lot of the players don’t have a lot of time to research games. They will flock to the brands they know and shiny game specs.
So I guess I disagree with:
I think that this happens because it is an effective business strategy. Companies with control over a market have a vested interest in maintaining a high barrier to entry. Whatever new genres evolve, they will have their WoW’s, games made by companies who can afford to spend more money and do a more polished job than anyone else. WoW had a huge budget, sure. However, whatever its current “buzz rating” on Yahoo (that data seems suspect as it doesn’t seem to be corroborated by their data in the right column), it also pulls in almost as much revenue as the entire casual games industry.
Runescape exists in a certain window of opportunity. It can exist, now, in an undersaturated market with low production value. If that market is as viable as you think then it will soon be attacked by someone offering just slightly higher production quality to be followed by a whole slew of games offering better and better production quality until that market also has its WoW.
That’s what happens when new technology creates new markets. Someone who is ahead of the curve cashes in. Until everyone else catches up. At which point it becomes more about who can invest the most in marketing and development. A lot of the times the original adopters of the new technology are in position to be the leader, just because they made enough cash during the initial rush when they had their advantage on the market. Even if it’s them though, they’re going to be pushed to offer high budget goods by everyone else who tries to enter the market.
I also think that most of this doesn’t have much to do with MMO’s. I don’t think casual games are going to become casual MMO’s. I think that casual games will develop some greater persistence but very little “space”. Space will be delegated to other utilities. MySpace, for example. Why build a world to play casual games in when you can just let everyone post links to their MySpaces (where they will have nice flash plugins that show their points, what games they play most, high scores, avatar, etc.).
MMO’s can stay largely the same. With large MMO providers aggretating through Station Pass-like offerings. The most likely big change will be towards offering trials and foregoing revenue from box sales. But that may not be necessary. If companies like Blizzard can offer something substantially more polished than the free stuff then people will pay a lot for it and the predominant revenue model will be the one that works best for Blizzard.
It’s only an effective business strategy when costs are low enough to allow recouping on them. Right now, AAA retail gaming does not allow recouping, but neither is there an ongoing support cost to keeping the title live. The shorter the timeframes on the online games, the less they will permit recouping either — at which point they become an active money drain on the operator.
If people pop into the games with high production values only during the free beta, then bounce out, it’s will be the companies with the lowest costs who will burn through money the least. This is the syndrome that is affecting Korea and that the post was about.
High production values aren’t an answer in and of themselves. Lots of those Korean games have high production values.
You’re assuming that the only variables are price, production values, and brand power/marketing. What about actual *gameplay*? Take Eve Online: The depth of gameplay present in that game would be extremely difficult to match regardless of budget, because much of it is the result of player interactions and the rest a steady evolution of the codebase. Trying to compete with that isn’t just a matter of throwing money at the problem.
Oh, and Runescape’s WoW is…WoW.
–Dave
The answer lies in the different socialization structures. In the Korean games (and to a lesser extent Asia in general) the social networks are almost completely outside the game, predicated on real-life relationships. In US/European games, although the social structures can exist in different games than they were created in, or even in multiple games simulataneously, they are not so divorced from them as to quickly jump from game to game, leaving no-one behind.
–Dave
I’m not sure that’s true. Like I said, WoW is generating revenue in the US almost as large as the entire casual gaming industry. It is a hit-driven market where a lot of games don’t recoup but generally the hits more than make up for this.
I think that there will be other factors. But I think a lot of those will also be about high budgets as well. Brands, for example, are not cheap.
It’s just a natural trend for the market. Like I said about Runescape. It has its window of opportunity. But why would other companies leave that market alone? Eventually Runescape is going to see competition from other companies offering better graphics, etc., to that market. And it will escalate until the market finds an equilibrium.
So the real discussion here is about economies of scale and efficiant business models.
Vevendi (or any company with the resources actually) can sustain high barriers to entry, as long as thier is competition from below it is in thier best interest to do such, rational choice etc. The problem is not so much in threshold barriers to entry being sustainable (however this opinion depends heavily on what flavor of economic ice cream you prefer, I like friedman/galbraith sherbert myself) but more dependant on maintaining economies of scale.
However, one must remember what goes up must come down, and thus until vevendi begins experiancing diseconomies of scale they shall remain the 900lb gorilla in the corner. The market equilibrium will be begin resurfacing once WOW begins its downward (subscriber base decline) slope/decline. I am no seer and I dont have a crystal ball, but I maintain they are peaking.
Markets (unless fixed, which mostly are inefficiant) work on pareto efficiancy, what is good for one economic actor harms another. Subcribers are resources, for definitional purposes. If one Gorilla is eating all the bananas, then the other Gorillas (companies), Chimps (studios), Monkeys (indies) and Lemurs (start-up game designers) must 1. steal the Gorillas banana’s (take wow subscribers) 2. figure out a way to get thier own bananas (pull gamers into thier games from elsewhere) 3. start eating something else (drop out of the market)
My point, no matter how big the gorilla is, if it keeps eating all the bananas, it will become lazy, lethargic, and aquiescent (diseconomies of scale). Further as long as there are other monkeys in the forest (this is why fixed markets and economies fail see. USSR for refferance) the gorrilla will be starving them to death. Now everyone knows organisims dont take kindly to starvation, and therefore they have thier three choices. But these invlove choices in designing games, of which I know nothing so I’ll stop here. But it would seem to me that choice 2 is the option for the rest of the market, unless they have 50-100m laying around for thier next title.
Futher one must realize the impact of economies of scale in technology. Specifically from my research it seems that the speed and costs of production related to the common technology tools used in game design are getting cheaper/easier/more widely available (and in many cases free?) for smaller economic actors in the market. This impacts directly the ability of other participants in the market to “steal your bananas”.
We are seeing the symtoms a maturing game market in Korea. It will be interesting to see how quickly the market matures in the US.
So the real discussion then leads to “the tipping point” for various markets.
While the trend in Korea leads to beta game flipping, it may not be the same for the US, Western Europe or Eastern Europe.
The trend in Korea, and in general Asia, is partially driven by the game room (internet cafe) distribution model as it becomes a primary mode of promoting new games. Game room owners happily promote new games as they attract more customers. Players are happy to play beta or trials for free as they do allocate time to try new things, but may decide to play only one or two game for the long term.
In the US and in general Western Europe, the distribution model and also the promotion model is driven by retail and magazines. In this framework, the focus is on selling retail boxes rather than time in the game room. With monthly subscriptions going at more than $10 a month, you essentially set a min. cost at a high level.
Which leads to ceding the market below the $10 a month threshold to games like Runescape. One thing good about the $5/month model is that:
1. Kids can get a “yes” from a parent for the cost. Most parents can’t tell the difference between WoW and Runescape. They can see that Runescape is cheaper than WoW (cost of 1 boxed game), don’t need a computer upgrade to play, and a lot of kids are already playing (herd/big gorilla effect).
2. I’ll happily pay $60/year for a game that I might only play under 5 hours a month, and will probably keep paying $60/year as an utility cost (as suggested by Raph). For example, I have been paying for a 2nd phone line for ages. My mental laziness hinders my logical financial analysis of the situation to cut my losses (which big biz are all to efficient at doing).
So what’s the “tipping point” for the US/Western Europe Model?
I think that question has as many answers as there are people with opinions on the subject. But in any income stream model (the “tipping point”) one has to look at 6 things:
1. What models were effective previously (previous trend)
2. What model is effective now (current trend)
3. Were there previous externalities which effected 1 above
4. What are the externalities currently effecting the model
5. Are 3 & 4 likely to influence models going forward (control for things that dont change in the model (well that you can predict, well if you can predict them call yourself a “futurist” and write a book
post got cut off 6 was:
6. Control for changes in the cost of production
Advice was:
be open to new ways of thinkibng about 6
and be able to differentiate between where 1 ends and 2 begins
Your result is the answer to the “tipping point”
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[…] Diku-derivatives will take us to the same place that Korea has already gone. It’s a dead end, it can be refined but not evolved significantly. Sure, there’s money to be made in it, if you’ve got the $50M+ ante, but here’s the thing: It’s only the barest shadow of what the market will eventually become. Someday, sooner than you think, we’ll look at WoW’s 6M users much the way we look at UO’s 250K. And it won’t be Diku-based gameplay that delivers it. […]
Serious question: why is content so bloody expensive? What percentage of that cost is essential (creativity/people/time/money) and what percentage could be shaved off by building better tools?
I wonder if tools like 3DSMAX and Maya are as good as it gets. But at least those are COTS—much of the stuff that comes after them in the pipeline is cobbled together and just-good-enough. I don’t think this constantly-reinventing-the-engine cycle driven by changing technology is going to last forever. Even if the tools for making the building blocks of content are approaching maxima of sorts, the tools for planting those building blocks in your game world are always reinvented, aren’t they? I bet most of those tools could use some work. Does your quest-authoring tool allow you to do queries for quests with similar level, or similar rewards, or quest steps involving an NPC near the NPC for your quest steps?
I think content creators should have one primary content-creation tool for the game. It should be used to add all content, verify integrity of content and it should allow you to immediately start testing content you have added (in
Well, I’ve been looking at the content creator in Spore, and wondering if we will not see that as the next wave for other games as well. Something fluid where we can focus on the shape and the system would worry about the structure inside.
moo-
What you refferance is something I know not much about (although Im researching it as best I can) but its basically a process description. I wish I could get a live tour of a game design studio/company it would help immensly to see “how” things are done. Unfortunately there are no gaming companies/shops where I live (SF is the closest, but I dont know anyone working in the industry there.
These descriptions are really helpful though…
[…] Echoing the discussions on “game-hopping” in Korea that we had recently, here’s an article in which C|Net discusses the arc and lifespan of MMOs in China, with one analyst claiming that WoW is 1/3 through its viable lifespan there. Are the days of the enduring hit gone forever? I personally think that no, they aren’t — choice doesn’t always mean that people will not stick longer, but it does mean that hits become harder to come by, just as they are in TV. […]
[…] Competing in a Maturing Online Gaming Market In Korea and China, at least, the online games market is moving towards a “mature” stage. While there will continue to be break-out hits, players are bombarded with many games and are more likely to dabble in many than be dedicated to one. This has a serious impact on the design of mature market online games. One symtom has been the rise of virtual asset games. These games, typically with free-to-play, but pay-for-asset business models remove many of the barriers to entry that a subscription-based game poses. And games like Guild Wars have taken a complementary approach of buy but free-to-play model. More players will play, but they do need to be monetized. In this environment, game companies are going to really need to look at their game design and infrastructure strategies. Aggressively reducing costs will become paramount. A game that is free to play must drive every byte of flab out of its infrastructure. Server costs, bandwidth costs, and support costs will no longer be able to be buried in reliable subscription revenues. Re-use of infrastructure across games will be critical for companies large and small. This tide is irreversible, but it will bring a new challenge to the online game industry. The history of computer gaming has not been one of efficient, supportable engineering, but of focusing on the entertainment value of the product. Hoping for spectacular hits is rapidly becoming a strategy that is too risky. Game developers are going to need to build games that are profitable with fewer paying players for shorter time frames. Companies that do not recognize the change to this leaner reality are in for a lot of trouble. Raph Koster has also picked up this thread. Continue reading “Competing in a Maturing Online Gaming Market” Posted by SecurePlay in Game Industry, Game Design, Asian Online Games at 01:31 | Comments (0) | Trackbacks (0) […]