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    Contents Copyright 2009-2010 Arnold Hendrick

Archive for the ‘Production’ Category

Why MMOs Are Complicated

Posted by Arnold Hendrick on March 9, 2011

MMOs are notorious for exceeding schedules and budgets, then stagger through launch with missing features and fatal flaws. Many say making MMOs is complicated, but why? It’s been 12-14 years since Ultima Online (1997) and EverQuest (1999) launched. In my current MMO project, our operations chief has launched six different MMOs in his career. Most of the studio has worked on MMOs before. Yet we have difficulties, last-minute delays and surprises.

Why are MMOs still difficult to create?

 

The Gamer’s View

A gamer’s view of an MMO is simple and straightforward. The player installs the game (client) on his or her PC, then connects via the internet to a game server, as shown below.

Gamers understand that extra technology is needed to “split” the game between client and server. Nevertheless, why is it so hard to build and release MMOs?

 

The Developer’s View

MMO developers are generally aware of additional complexities.

Game server(s) must do a great  many things. Player-characters and their data must be tracked by the server. NPC enemies (mobs) are created and managed by the server, including their “arAI. This AI manages NPC movement, shooting and melee across the 3D terrain. Developers also know that databases are usually the weak link. The constant “writing” of new character status and possessions is exactly what is slowest in traditional relational databases. Better solutions require either costly hardware and software, or require exceptionally rare programming knowledge. Servers themselves are usually a group of specialized server boxes clustered to create one “conceptual” server or shard. The many different technical approaches to shard organization could inspire a series of different articles.

Game developers understand that the game needs an online presence to operate. This includes a website, login systems, authentication systems, downloaders and updaters. The game also needs good community management and customer service. Unhappy customers will soon migrate to a competitor. Finally, an MMO needs an operations team to install and maintain server hardware and software.

 

 

The Daunting Reality

A fully functional MMO has many more “moving parts” around the game than most developers imagine. This infrastructure for a MMO is its “platform.” A more realistic portrayal of this ugly underbelly in MMO development looks like this:

Notice that game and accounting web functions are separate. The “game” website needs constant updating of marketing and promotional information, while user account creation and management must be rock-solid to prevent hacking and fraud. In fact, the account system supports creating, renewing and cancelling both accounts and subscriptions. Most modern MMOs also include a microtransaction (MTX) system for purchasing add-ons, from character transfers to in-game virtual currency. Finally, the account needs to link or “hand off” to the game during login without allowing hacks or cheats.

Customer service systems aren’t any easier. Customer Service Representatives (CSRs) need to examine everything from player financial transactions to in-game databases and chat. They not only need tools to email customers, but also tools to “action” players inside the game. These “actions” range from compensation (“Here’s 50 platinum because our update destroyed everything in your in-game bank) to chat messages (“Cool it or you’ll be banned) to player removals (“You’re banned for the next 7 days). The CSR system needs internal checks and balances. More than one MMO has been hurt badly by CSRs doing everything from favoring certain players to accepting bribes from gold farmers.

Another platform function is game metrics. Game executives want to know many people are playing, when and how much money they’re spending. It is not humanly possible to play sufficiently on each server. Metrics are provide vital information about the game’s operation. Are the servers are crowded or empty? Are subscriptions are rising or falling? What microtransaction items don’t sell? In additional, the operations team needs a host of technical readouts related to server hardware and software health. If the server software crashes its hardware suffers a failure, the operations staff needs to respond immediately.

In recent years, game metrics have expanded to measure gameplay. Which quests do people abandon most? Which dungeons go unplayed? At what level are people most likely to quit the game? Does this vary by age? By gender? By in-game friends? By guild membership? Recording this level of information is potentially dangerous. The very act of doing it within the server cluster can slow down processing, fill up memory, and overwhelm databases. Metrics systems must be carefully crafted.

The bottom of the diagram has a subtle pink box, showing where the game development studio connects into the game’s operating structure. To insure smooth server operation, development studio engineers never program directly on the production servers. Instead, they write and test code on an in-house server cluster, then “promote” a version to various test clusters. Promotion to the “live” servers is the last step in a chain of activities lasting days to weeks. Managing this process, and deciding when exceptions are allowed, is yet another complicated process.

 

Underestimation & Solutions

Game developers frequently underestimate the effort and complexity of MMO platforms. In the early, dreamy concept days development teams say, “Hey, it’s just a website. A million games and companies have them. It’ll be quick and easy.” In my most recent project, the platform team of four to six engineers with two managers needed over a half year to build a platform. All were highly competent veterans. They used a variety of external systems vendors for major subcomponents, such as customer service, financial transactions, and game metrics analysis. Platforms are never easy.

The ideal solution would be a platform services company that provides a platform game developers could customize and “skin.” Unfortunately, I don’t know of any firms offering a well-tested solution currently used by larger-scale MMO operators. If someone does, please let me know!

Lacking the ideal, a first alternative is working with an established online game operator. This means the game will be presented within the operator’s platform. For example, Pirates of the Burning Sea (PotBS) arranged for Sony Online Entertainment (SOE) to be their operator. Today PotBS is so strongly associated with Sony that relatively few people remember the small, scrappy, independent studio that created it. Players must go through multiple Sony-branded website and software to reach the game.

In addition to losing “customer mindshare,” the game developer often needs to rewrite and rework server functionality to meet platform requirements. Successful operators do not rewrite their platform for each new game! The earlier in the project a developer can make a deal with an operator, the less rework is needed to integrate the game to the platform.

The second alternative is a developer making their own platform. Some difficulty can be avoided by using established companies to provide platform components. These companies do exist, such as Aria for subscription services, PlaySpan for microtransactions, Parature for customer service software, etc. However, these components are a far cry from a full platform A platform team is still needed to build the website and create the “back end” glue between systems. Platform development also means serious database work.

Ultimately, the only sure-fire way to minimize platform development effort is an agile approach. Only build the minimum necessary platform for successful operation. The surest way to incur extra cost and schedule delay is adding features because “it would be really nice if…” or because “our next game might need…” Accept that the platform, like the game, constantly evolves and improves throughout its lifecycle.

Posted in Production | 5 Comments »

Selling MMOs

Posted by Arnold Hendrick on September 18, 2009

Outline

This is a long article on a complex topic. An outline may help you skip to the “good parts.”

  • Big Launch Fever – Why boxed game marketing is inappropriate for download MMOs.
  • Product & Pricing Strategy – The F2P model and its essential components.
  • Customer Management – The centerpiece of MMO marketing, and how it starts with CRM.
  • Customer Acquisition – Customer segments and targeting, promotional approaches, social network strategies and continual acquisition.
  • Customer Development – Understanding customer types, meeting their needs, promoting community, eliminating community-breakers and professionalism.
  • Churn Analysis – The importance of analyzing customer departures.
  • Retrospective – Additional thoughts and references.

 

            Big Launch Fever

I recently spent a few days with a startup online studio working toward their first product. The president, who had no prior experience in MMOs, arranged for a consultant who marketed some famous console hits. The consultant discussed planning for launch, how to promote launch, meshing the game schedule with print media timetables, etc. They even described a strategy for maximizing launch volume for a weak game. Great stuff if your company is trying to sell a boxed game. However, this startup’s game would be distributed by download (no box) and monetized via F2P (free to play), freemium or subscription. Furthermore, time and budget constrained the product to modest launch features, after which online revenues would fund additional growth.

What is wrong with using a big launch? Industry veterans will immediately recognize the problems. Spending most of the marketing budget on a big launch means the game will get a burst of initial customers with little or no continuing acquisition effort. A single big launch allows no “feedback loop” for tuning the marketing message, no ability to experiment with alternate messages or audiences. A big launch strategy also requires a large investment in download and login infrastructure to support the new-user activity on launch day and launch week. A month later that capacity will be collecting dust and burning money. Most of all, the plan failed to understand that MMO customer acquisition is not a one-time event. Actually, MMO customer acquisition is continual, and but one aspect of a customer management strategy.

The Success of F2P: Today the world of download-and-play MMOs is dominated by F2P (Free to Play) games supported by microtransactions. True, boxed titles with subscription plans still exist (for example Champions Online, Aion and Fallen Earth, all launching this fall). However, in the download-to-play world the F2P is so common that alternatives can’t get traction. “The Chronicles of Spellborn” is a salutary example. This highly original MMO launched in spring 2009 using Runscape’s “freemium” business model (low level play areas are free, a subscription is needed to access higher level play). Player response was so under whelming that the development group went bankrupt and the North American publisher hopes to change the business model to F2P (see “Chronicles of Spellborn redeveloped as F2P”). Even mainstream operators are using F2P to revitalize flagging products. Turbine just converted its 2006 release of DDO (Dungeons & Dragons Online) to F2P.

What better ways exist to sell MMOs? Companies like Aeria, K2, Acclaim, Frogster and Gala-Net clearly have a formula that they tweak and reuse for game after game. What are these strategies, and how can they incorporate the best from new communication platforms such as Facebook and MySpace?

A Marketing Plan for No-box MMOs: Any marketing professional will tell you that each marketing plan is different, depending on variables like corporate strategic goals, situational and SWOT analysis, and the specific product to be marketed. For the sake of argument, assume a small startup has a single MMO well into development. The plan for financial success envisions a download-only product with no boxed product on brick-and-mortar store shelves. What are the salient ingredients of a marketing plan for this product?

 

Product & Pricing Strategy

I believe a diligent marketing situational analysis covering the last half decade of download-only MMOs will demonstrate that F2P is the correct approach in most situations. The F2P model can be enhanced by a subscription offering for high-end customers. I suggested this in “Subscriptions vs Microtransactions.” Coincidentally three months later Turbine’s F2P program for DDO included a subscription-style VIP level almost exactly matching what I theorized.

Given a F2P approach, the next step is a product and pricing strategy. The tried and proven technique is to build a system that allows paying customers to (a) advance faster, (b) shortcut tedious gameplay, (c) have a wider selection of appearance and equipment, and (d) have faster access to the best game items. In general, successful games avoid giving any obvious advantages to paying customers. A good F2P game design incorporates item sales opportunities throughout the game. Below are common examples of item sales.

(1) Faster advancement: A player could buy an item that increases their experience point gain for the next day, week or month. A 1.5x or 2.0x multiplier is common. This means the player levels-up 50% or 100% faster during the time period.

(2) Tedium shortcuts: A player could buy “instant resurrection” items to avoid the normal death penalty, or a “fast transport” ability that moves them quickly between “base camp” towns and an adventuring spot.

(3) Appearance Selection: When a player gains an in-game reward (from a quest, defeating a boss, etc.), let them select not only the specific award, but also its appearance. Simple systems offer “vanity clothing” or the ability to adjust clothing colors.  A more advanced systems exists in “Runes of Magic.” Here players can  “transfer” stats of a newly acquired weapon or armor into any other weapon or armor. For example, if a player’s bikini-clad elf acquires +99 Plate Armor, the player can move the +99 armor stat onto the bikini, giving them the benefits of the new item while allowing them to continue dancing around in a skimpy bikini.

(4) Item Access: In many games the very best equipment is acquired in stages, first by advancing to a high level, then by acquiring the armor or weapon, and finally by getting various objects that upgrade the item to its “ultimate” status. In many F2P games the objects for this ultimate upgrade are available only through purchase. In other cases upgrade objects can be acquired via game play, but only through long and very tedious activities.

The difficult part of pricing is computing play time and purchase scenarios against disposable income of the expected player base. Some F2P games use low price points and try to maximize volume (such as Joymax’s “Silk Road Online”), but most select higher price points to maximize gains from the minority of players able to spend somewhat larger sums. Larger list prices also set the stage for monthly “special offers” and “bargain discounts.”

Virtual Currency Systems: Most F2P MMOs, as well as Social Network RPGs, use a second “virtual currency” (VC) of “game points” (actual names vary).  The playermust spend real-world money (typically through a credit card transaction) to acquire VC, whose sole purpose is to purchase monetized items. This allows the game operator to sell a wide variety of items, some at very low prices, without suffering exorbitant per-item transaction fees.

Virtual currencies are entirely separate from in-game currency. Most games also have an in-game currency, which players earn through gameplay and spend on non-monetized game items. Only a few games (such as EVE) support using real-world money to purchase in-game currency. Obvioiusly games that do support purchase of in-game currency have no need for virtual currency.

To my knowledge no MMOs* support redeemable VC, and few permit VC transfers. In other words, players cannot sell back VC to the game operator for real-world cash, nor can they transfer their VC to another player. These limitations are deliberate: they give game operations greater control and flexibility over the issue and use virtual currency.  (*Note: Virtual worlds often do support redeemable and transferable currencies, such as Second Life, Entropia Universe, etc. Some consider this a distinguishing feature between virtual worlds and MMO games.)

An additional benefit of a virtual currency is that the game operator can reward players with this currency for third party transactions and in special promotions. Companies like Offerpal Media and Playspan can provide links to companies who pay for qualified web referrals. To see an example of this, start up the Facebook game “Mafia Wars” and click on “Godfather.” That page demonstrates how a player can get in-game “reward points” for everything from signing up for the Netflix service to answering an online survey about which Pepsi they prefer.

 

            Customer Management

A traditional marketing plan has a “promotion strategy” that deals with advertising reach, frequency, flights, themes and media, publicity, PR, media visibility, etc. Online products are slightly different: marketing isn’t just promoting the product to customers, it’s about managing the entire customer lifecycle. This lifecycle starts with acquisition, continues with customer development, and concludes with customer churn analysis. This is because the longer a customer remains involved with a game, the more that game can earn. Once a player leaves a game, enticing them back for a second try is extremely difficult. With so many new MMOs arriving each year, it’s very easy for a disaffected customer to experiment in dozens of potentially greener pastures.

CRM

The software system used by MMOs to support this effort is generically known as CRM (customer relationship management). An MMO CRM has four central characteristics.

(1) Front Office: This is the website supporting customer activities. This allows customers to see information about the product, download the client software, create an account, sign in for play, spend money for the virtual currency, and see what that currency will buy (and sometimes buy the item on the website, rather than within the game). Access is often provided to outside-of-game community features, often including forums and occasionally a wiki.

(2) Back Office: This billing and operations system maintains customer accounts, including game login, “second currency” holdings, game character data, in-game customer status, and customer financial status. Financial status is helps support fraud detection and prevention. This is vital because fraudulent credit card use is a major threat to online commerce, including MMOs. Maintaining customer status data is also important to proper management of the game community (see “Eliminating Community Breaks” below).

(3) Customer Analysis: Customer analysis tools track numbers of new accounts, active accounts, paying accounts, etc. Cross-referencing this data with in-game status reveals things like number of active accounts at each level, percentage of paying accounts at each level, purchase amount distribution over player history, perhaps annotated by level, etc. This builds a picture of who spends money, when, and in what amounts. Daniel James offers some useful advice about building or buying CRM analytics for games in “Metrics for a Brave New Whirled.”

(4) Business-to-Business Support: A good CRM system interacts with other companies for additional income and business relationships. Turnkey systems like Offerpal Media and Playspan provide a package of such relationships and the software infrastructure to monetize it via the game’s virtual currency.

An MMO operator need not build their own CRM system from scratch. I do not know of a one-stop provider of all CRM needs for MMOs (with the limited exception of Metaplace), but many key needs are available through service companies. Billing providers can handle the payment part of the front office and back office (Aria Systems and Vindicia are leading game-oriented services). Providers that offer virtual item management include FatFoogoo, PlaySpan, Offerpal Media, Live Gamer, and Aria’s Velocity system. These systems include some very useful pieces of customer support and analysis, typically related to customer financial activity and monetized items rather than game activity. For details about the economic side of CRM operations, I highly recommend a stroll through the thoughts of Jamy Nigri.

 

            Customer Acquisition

The first step in running an MMO business is acquiring customers. Customer acquisition starts by recognizing the desired goal: customers visit the game website, create an account, download the client and begin play. Therefore, it is critical that the website inform and invite players into the game quickly and easily, with minimum fuss and confusion. Client download and installation must be quick, easy and painless. This is why new MMO developers are trying to turn away from big multi-gigabyte downloads to seamless web launchers (as in SOE’s Free Realms), or as software completely within the browser (as in Jagex’s Runescape).

Customer Segments: How to get customers to the game’s website? Traditional marketing thinks in terms of age, gender and socio-economic demographics. Those were the dividing lines for offline media advertising such as print, radio and TV. Unfortunately, MMO gamers have peculiar age distributions that make age-based promotion difficult (see “Gender and Age Distribution“). The only “traditional” categorization that really matters is gender. About 80% of MMO gamers are male, and fully 2/3rds of the females are there because they followed a partner into the game (see “Playing With Someone“). This is the reason why male-oriented sexual imagery is used to sell online games (see Sanya Weather’s “Booby Prize”). Although I don’t have data to confirm it, I believe that more and more females have sufficient MMO experience that they select games for reasons other than being with a partner. The “Booby Prize” era in marketing may be waning.

Targeting Gamers: The most relevant customer segment to approach is existing online gamers. Is the game similar to previous games? If so, promote the game to players of those games. Is the game generally similar to a certain category or style of MMO? If so, promote the game to that category. Most games are about a specific topic: fantasy, science fiction, military, horror, etc. Promote the game to players of that topic. What are the hardware requirements for the game, especially the graphical requirements? Titles with older graphics can be advertised to gamers whose systems can’t handle the latest high-end whiz-bang products.

These examples illustrate that promoting to people who already play games has more many possibilities. The least productive audience is people who have never played online games. Even if a new game is the first on the planet to truly inspire a non-gamer’s interest, their lack of experience will make product comprehension, downloading, installing and learning to play large obstacles. Inevitably a larger percentage of customers will be lost during this process.

Once the game begins beta or “early live” (see “Customer Development Strategy”), current customers become an excellent source of information. The next round of acquisition can target similar potential customers.

Promotion Isn’t Just Ads: Promotion itself can take many forms. Web ads on targeted sites, or site categories, is just the start. A good public relations consultant or firm can suggest a variety of additional campaigns. Supporting one or more professional fansites (such as Ten Ton Hammer) can be very helpful. Even more helpful is a viral marketing campaign that encourages players bring in friends as players. Promotion to guild leaders can encourage entire groups to try the game. These viral campaigns can be reinforced by giving participants in-game rewards and/or virtual currency.

Promotion via Social Networks: To date no MMO has fully exploited the power of social network sites likes Facebook or MySpace to promote their product. Building a simple “app” that displays a player’s current character name(s), stats, server(s), and currency status is not difficult. Next enable players to display one or more of their characters and/or accomplishments on their “wall.”  This is just the start of a good social network viral campaign. A friend referral system can be set up. Virtual currency purchases and related offers can occur at the social networking site.

Continual Acquisition: Customer acquisition is not a one-time event. It is a continual process that adapts to the customer landscape and the game’s position within the competitive landscape. The overall lifespan of an online game depends on customer acquisition, customer lifespan and earning power. When customers churn out faster than they can be cost-effectively acquired, the game is headed toward a sunset.

 

            Customer Development

This is the art of converting a newly acquired customer into a devoted player, a proportion of which are spending money to enhance their enjoyment. Obviously great gameplay really helps. However, even a modest “B” title translated from Korean or Chinese into English can be a solid money-earner, a fact proven by multiple MMO operators in North America.

The first step is to analyze the players, in aggregate, to determine who is providing the majority of a game’s income. The CRM’s analysis tools are critical to discovering the patterns in player spending. Here are some potential patterns to look for:

  1. King-of-the-Hillers: These players push to reach max level as quickly as possible, then acquire the very best gear to be “king of the hill.” A strong PvP component encourages these players. They expect their top-level, top-gear status will advantage them in fights with other players. It is important to compare, at various instants in time, the number “king of the hill” players to the number of players churning out. It may be that existing king-of-the-hillers are discouraging future king-of-the-hillers, who drop out rather than make the increasingly large investments to reach “king of the hill” themselves. 
  2. Status Seekers: These players want to be seen as successful within the game’s community. They happily spend to have the latest outfits, gear and other signs of successes. They are easily distinguished by their high level and consistently high spending. They are every game operator’s dream because they willingly spend large sums to maintain their status within the community. Many of these players also have non-monetized status positions within the community, such as being a guild leader or officer.
  3. Casual Players: These customers advance more slowly through the game. As they play, they make minor purchases that cost-effectively support their gameplay. Individually they spend less than the above categories, but collectively they may provide a significant source of income.

Matching Customer Development to the Customers: Any vibrant MMO continually offers new deals, play opportunities, and game-related events to engage its players. Game expansions are costly and infrequent. Game item additions are much easier, as they are just appearance and/or data variations on existing items. Game events can recognize player accomplishments, individually or in aggregate. The exact nature of new offerings, item additions, and special events are tailored first to existing customers. A more daring marketing strategy may include attempting to acquire different types of paying customers with offers catering to their needs.

For example, if the game is dominated by “king-of-the-hill” players, a steady stream of new “top gear” items gives them something to acquire every few weeks. If fewer and fewer king-of-the-hillers are entering the game, the website needs to prominently display links to advancement guides that make it easier for new players to reach top level status. “Leader boards” of top players and guilds are very important.

If the game has numerous “status seeker” players, then “vanity item” outfits in new colors or appearance, new pets, etc., can be offered to encourage them. Players can be encouraged to send in screenshots, the “best” of which are displayed on the website to give the senders additional status.

If the game receives significant income from “casual players,”  events and items can be offered that reward players who level-up. This encourages general advancement regardless of a player’s ultimate goal. Guilds can be rewarded for adding new players, or having low-level players steadily advancing upward. Community managers are especially aware that policies which support “casual players” may be considered unfair by “king-of-the-hillers,” and vice versa.

Promoting A Positive Community: A significant proportion of MMO players like to share their knowledge, experience and opinions with other players. A game’s forums are the mainstay of this activity. Vibrant forums allow players to advise and help each other, and incidentally reduce customer service costs. Forums can be mined for player insights into the game (but see “Churn Analysis” below for important caveats).

Game operator posts on the read-only “official pronouncement” forum thread are the primary “official” communication channel to players. Each new update, item release, pricing change, or game event must have an accompanying official post, explaining the action in detail. Maintaining a policy of “prompt, full information” is extremely difficult. Nevertheless, no update or patch, no matter how small, should go live until an approved announcement is ready for simultaneous posting.

Eliminating Community-Breakers: Every game has trouble-makers. What constitutes “trouble” varies with the nature of the paying audience. For example, PvP bullies who make life difficult for lower level players can badly hurt a game supported by “casual players.” However, in a game supported by “king of the hillers” they become part of the gameplay. Conversely, software hacks will enrage and drive away “king of the hillers” rapidly, but have far less impact on “casual players.” Finally, all MMOs that permit free chat must deal with hate-mongering, sexual stalking and similar egregious behaviors.

The “back office” CRM system must include a method for adding “trouble reports” to a player’s account. In addition to manual notes by customer service staff, better systems include an automated reporting mechanism tied to an in-game complaint system. Advanced trouble report systems weigh complaints based on complainer characteristics (such as how much they spend and/or how long they actively played) to give valuable customers a greater voice. Server-side “red flags” reveal signs of client hacking or excessive financial activity. Trouble resolution of problem player accounts is normally done manually, with senior customer service staff working through the complaint queue by dealing with the most serious cases first.

Professional Staff: Community management is a special skill somewhat different from game development. Sanya Weather’s column “MMO Underbelly” provides many useful perspectives. It is valuable to remember that her past experience was in subscription games that most maximize long-term play experience for the broadest possible customer group. Her comments about announcements (“The Evolution of a Patch Note”) and organizing customer service (“Inside the Pit”) are universally valuable.

 

            Churn Analysis

No game can expect all their players to play forever. In fact, all customers have a spending curve over time. After a certain point both play time and spending decline. For example, “king-the-hill” players may have a lifespan of three to six months. However, those months may be very profitable, as the player spends heavily to achieve and maintain top status. Trying to develop more game content, giving them another hill to climb, is a losing proposition. Even if development funds are unlimited, it takes 6-12 months to build a balanced expansion to any game. King-of-the-hillers will consume it in just a few weeks. Only an open-ended “sandbox” MMO like EVE might satisfy such customers.

Analyzing the departure patterns of players can be very instructive. Exactly what are players doing, and not doing, when they quit? Character data mining can provide some answers. However, probing deeper is valuable. An apparently logical decision can have unexpected consequences only visible when community management truly digs for the answer. Eric Ries’ IMVU only discovered a major blunder when “…we finally had one of our community managers start talking with real customers on the phone. Then the reality of our problem hit us.” (See “The cardinal sin of community management.”)

Churn Mitigation: After the reasons for player departure are understood, community managers and game operators can implement mitigation strategies targeted at specific causes. If players frequently churn out at specific levels, there probably exist gameplay obstacles that discourage them. Game-play changes or player aids can help mitigate this.

Secondary factors may also affect gameplay. For example, the game might force players to group at higher levels, but goldseller ads so deluge chat channels that player-to-player communication has all but stopped (as happened in “Rappelz” a couple years ago). Prohiting all but local chat to low-level characters, automatically blocking certain types of messages, and immediately banning higher-level chat spammers is a common mitigation strategy. An additional option is to make a profitable business deal with one preferred gold-seller (EA/Mythic almost certainly did this with Hugecheap.com). Another option is for the game operator to sell in-game currency (“gold”) themselves, as CCP does in EVE.

Sometimes causes of churn can be immediate. For example, a certain hacker tool might give some players unreasonable advantages. The game may hemorrhage valuable customers faster than a software fix can be implemented. Community management must deal with the problem immediately. Choices include working to identify and ban hack-users immediately (i.e., within 24 hours), transferring all detected hack-users to special “hacker servers,” and/or making the hack known to the entire player community along with the risks of using it (i.e., the potential of installing worms, keyloggers and other malware often found within the hacker tools).

Positive Experiences & Customer Longevity: The Eric Ries IMVU example (above) makes a larger point about community management. Gamers, just like IMVU’s virtual worlders, become personally involved in the product. They need to believe that the “game company” listens to their needs. It is the job of community management to listen and separate the chaff of typical complaints from the wheat of important issues. Community management then helps prioritize the response and communicate it to the community. This is not easy, as Sanya Weathers points out in “The Customer Is Not Always Right.” Nevertheless, when expert community management maximizes a positive game experience, customers remain involved for longer periods and the game often earns more money.

 

            Retrospective

One of the big questions regarding F2P MMOs is income expectations. Calculations are available for the casual end of the market. Jeremy Liew of Lightspeed suggests $1-$2/month/customer (see “Successful MMOGs can see$102 in monthly ARPU”). His analysis was based on Second Life, Club Penguin, Habbo Hotel and Runescape. Puzzle Pirates volunteered that its income was also in the $1-2 range.

Virality has been a hot topic and concept in marketing for the last year. Andrew Chen explains it well in “What’s your viral loop? Understanding the engine of adoption.” His Web 2.0 background also results in very interesting insights on web-based marketing (see “5 steps towards building a metrics-driven business”).

I am still looking for in-depth information from the leaders in the F2P MMOs, such as Aeria, Acclaim, K2, Gala-Net (Gpotato), IGG, Frogster and Perfect World International. A great many MMO products launching in the next year or two will use the F2P model. I look forward to hearing from MMO marketing professionals, especially those working with Freemium or F2P products.

Posted in Production | 6 Comments »

A Customer Development Strategy for Building Online Games

Posted by Arnold Hendrick on August 10, 2009

The MMO Waterfall to Failure

The traditional process is a sequential “waterfall:” concept > prototype > pre-production > production > beta > live.  In MMO development the full cycle typically takes three to four years. Gameplay assumptions and decisions made during concept and prototype aren’t “field tested” until years later in beta. Even the most gifted designer does not have an infallible crystal ball. Even if they did, limitations and compromises creep in during development. Occasionally everything aligns correctly to allow a great success like World of Warcraft. Far more commonly well-funded teams, led by industry veterans, end in resignations and layoffs. In just the last few years the roster of defeat is long: Vanguard, Tabula Rasa, Age of Conan, Warhammer Online. Each of these long, well-funded efforts failed to meet its financial goals. In each case purges swept aside everyone from famous leaders to the obedient rank-and-file.

I suggest the problem is not in the people but the process. MMO developers may be using better methods for executing their work, such as Scrum, but the overall strategy of game development remains firmly rooted in the 1990s. Below is a diagram of that traditional approach:

 1 Traditional Waterfall MMO Development

The  2-3 year time lag between concept and first customer exposure (beta) is the fatal flaw. Prior to beta the only player feedback comes from within the development team, perhaps some publisher representatives and possibly “friends and family.” Are these people the product’s target audience?

Even worse than the time lag, 80% to 90% of the game’s development budget is consumed before beta test data reaches the development team. The “waterfall” strategy insures that game development becomes a gigantic bet placed years in advance.

A half year ago Eric Ries penned a very insightful article titled “Achieving Failure.” He described how an all-star team achieved near-flawless execution of a product intended to surpass major competitors. The team spent years of time and millions of dollars executing an extremely well-thought-out design. Unfortunately, the designers lacked perfect crystal balls. In addition the marketplace slowly changed during those years. Only at launch did the true scope of their failure manifest. The company madly scrambled to reorganize and exploit what little success it found. In the process the original plan was quietly forgotten and most of the staff laid off. That story parallels the many “waterfalls to failure” in the MMO industry.

 

Customer Development & Games

Finding a Better Way: This “waterfall to failure” pattern inspired Silicon Valley thinkers to ask “Why wait years to find out if something new will succeed?” From this was born the idea of  “Customer Development Engineering.” This philosophy meshed nicely with the evolving philosophy of continuous development (see “Continuous deployment and continuous learning).

Customer Development as a philosophy is simple. Put a minimally viable product into the customer’s hands as soon as possible.. Monitor customer reaction to determine what succeeds and fails. Adjust and expand the product based on that information. Obviously, an initial vision is needed for creating a “Minimum Viable Product.” Nevertheless, the emphasis is on learning from customers as soon as possible.

Today the Customer Development strategy has born fruit in one corner of the games industry. Companies like Zynga and Playdom use it when building social networking games. Of course that genre is ideal with its rapid development cycles and small teams.

 

Building an MMO Using Customer Development

How can Customer Development be applied to MMOs? Isn’t it impossible to apply small, quick, lean development to gigantic MMO projects? Actually it is possible, but the traditional multi-stage development process must be restructured into an iterative process with constant customer interaction. Here is a vision of the Customer Development MMO project:

2 Customer Development for MMO Games

Concentrating on the Core Game: The Customer Development game project gives a rudimentary working game to players quickly. Obviously a team must acquire a platform, engine, and/or tools. They also need to conceptualize system design and create some concept art. However, this is directed at one immediate goal: building an initial level of core gameplay. This “initial level” has just enough characters, enemies, terrain, and advancement to provide the minimal core game experience.

For example, a Customer Development style team making Warhammer Online would build an “initial level” for the first 8 levels of play. They would concentrate on one race, three basic character types (melee, ranged and healing), framework quests (title and objective, minimal prose) and the enemy “mobs” to go with them. A team making Age of Conan would build the newbie zone Tortage (levels 1-19) with a similar mix of character types, framework quests and enemies.

Early Live: The very next step brings the core gameplay to players. This is “Early Live.” The entire game infrastructure to support a few hundred to a few thousand players must function. Rudimentary customer support, community management, and financial transactions must exist. The game will actually charge money according to its business model (subscription, microtransaction, etc.).

The goal is real users paying and playing for the core game immediately. Nothing measures player behavior better than their spending. Free games don’t pay salaries or please stockholders. The amount charged in “Early Live” need not be “full freight.” A subscription game might have a “founders club introductory offer” of just $3/month instead of $15/month. A microtransaction store might regularly offer a 75% discount to “Alpha VIPs.” The existence of actual user spending, so later development work can measure comparative gains and losses. The absolute amount earned is secondary. Do not expect Early Live income to support the development team.

The length of time needed to reach Early Live varies. A startup studio with a new staff busy selecting an engine and tools could take a year. A veteran MMO team at a studio with solid tools and an operational infrastructure might need six months. What nobody needs is spending a half year on a 500-page design document with a 500-illustration “creative bible” of concept art and backstory. Instead the development team should focus on actually making the core game.

 

Development During Early Live

Adjusting the Initial Level: When gamers start playing the initial level, the development team evaluates what works and what falls flat. If the game under development is a cookie-cutter fantasy MMORPG, discovering that nobody wants to spend money on the initial level might be expected, but still must be addressed. Obviously something more is needed. The team might try making the game really easy to learn (like WoW), or have really challenging PvE team play (as Vanguard once promised), or be really violent and sexy (like the topless babes and beheadings in Conan).

Within a month or two a revised version goes to Early Live customers with a spiffy new feature. Player metrics are examined and dollar volumes observed. The customer support team supplements this with forum post summaries and in-game player observations. Metrics might show that players frequently purchase and use the sexy new outfits despite no stat benefits. The metrics might also show that the beheadings rarely occur. The team can investigate to see if game mechanics make beheadings too hard to achieve, or players are simply min-maxing their combat moves without regard for the “gore level” in the graphical results. Conversely, the team might discover that nobody bothers getting the sexy outfits but customers are clearly working hard to behead their opponents. Success depends on finding and fostering each game’s specific audience.

Building the End-Game: Once the initial level is deemed successful, the next step is to “bracket” the game by constructing an end-game level. What will players do once they reach the highest level, get all the skills and/or get the best weapons? How well can the game hold these players? This problem must be solved. If it is not, players will leave in droves once they reach the game’s level maximum. One solution might be stretching out leveling so that nobody will achieve max level, as in EVE Online. Another solution might be guild vs guild PvP territorial play (as in Lineage, Lineage II and the recently deceased Shadowbane). A third might be RvR play (as pioneered by Dark Age of Camelot).

Testing this endgame in Early Live is critical. Does it maintain player interest for an acceptable period? If not, the development team must experiment with changes or alternatives. Endgames are notoriously tricky to build in MMOs.

Building the “middle levels” must occur after the initial level and endgame are validated through customer testing. How can anyone create a player growth path until the start and end points are known? Furthermore, once you know the endpoints and have preliminary measurements of audience type, customer engagement and churn, the business types can use “return on investment” and “time to market” calculations to determine how much time and money is available for building those “middle levels.” Armed with this information, the development team can move forward with confidence.

Systems Lockdown: Early in the development of the additional “middle” levels a “systems lockdown” must occur. This is the point where key gameplay decisions, progression curves and data ranges become fixed. All future work must conform to the lockdown standard, or else invoke a formal “change control” process to judge the cost-benefit of a change. Lockdown facilitates speedy content creation by giving designers, artists and programmers a framework for future work.

Systems lockdown also allows the development group to address “technical debt.” After lockdown the team can reasonably estimate the benefits of refactoring code, documenting design data and algorithms, writing up pipeline procedures, settling on coding practices, etc.

Curiously, systems lockdown is not specifically identified in the traditional “waterfall” game development process. While it should occur by the end of pre-production, failure to lockdown is a common source of failure (see “An Intervention”).

Platform Improvements: Throughout development weakness emerge in the engine, tools, pipelines, build speed and processes. Instead of having a separate “tools team” trying to either catch up with development or guess in advance what development needs, let the development teams judge when a sidetrack into tools improvement pays off. For example, a level-building team learns from experience that current tools mean four weeks per region layout. The programmers on the team estimate that two weeks work improving the tool will save everyone one week of time per region. Therefore, if three or more regions are still needed, the sidetrack into tool improvement will save time.

 

The Benefits of Early Live

Early Live will be controversial. Publishers and development teams are used to making their own decisions about a game. Designers and producers have strong personal opinions about what customers really want, passionately held beliefs concerning what is “best.”  These beliefs are still valuable – they fuel the initial concept for any game. The mistake our industry makes is insufficient testing and refinement with actual gaming customers.

Train As You Fight: A generation ago the US Army adopted the slogan “Train As You Fight.” The goal was simple: all training should be applicable to real combat, and imitate combat conditions as much as possible. Soldiers should use the same equipment they would have in real battle, receive orders the same way, move as they would in combat, over terrain and in climates similar to real-world battlefields. Soldiers train for Iraq in the desert, for Afghanistan in the mountains. In recent wars the US Army learned once again that sending troops into combat without these benefits resulted in less successful missions and higher casualties.

An MMO’s Goal is Live: The goal of building an MMO is to run it “live,” just like the ultimate purpose of having an army is to fight a war. Early Live insures that all necessary functionality is present. It highlights what is still missing, and quickly demonstrates what is overkill.

Making a Functional Product: An MMO needs solid code that doesn’t regularly crash client or server software. It needs a comm infrastructure that routes data quickly and efficiently between players and servers. It needs a load-balancing system that prevents too many players from piling onto one server and a design that discourages players from clumping up in the same spot. It needs a regular deployment cycle with a rollback option for fatal bugs. It needs an offsite backup system to minimize data loss if a flood/hurricane/tornado/earthquake destroys the data center. It needs a metrics system that tracks what players are really doing in the game. It needs a customer service to deal with customer problems and community management to mediate between developers and gamers. The list goes on and on. It is just as easy to over-plan and over-support these requirements as to forget them or under-provide for them. The only way to achieve truly cost-efficient operation is through experience.

Find & Fix Early: An Early Live philosophy places high demands on code reliability. Subtle memory leaks and nasty bugs become painfully evident when a thousand players suffer client lockups and crashes. If the comm infrastructure cannot scale the team finds out immediately. If designers accidentally create a “nexus point” of excessive player concentrations, stalls and slowdowns reveal it. If artists overload the graphic engine everyone sees it.

In the past it was easy for members of a development team to ignore a problem. They could assume that “someone else” would fix it later… during beta, after launch, whenever. The Early Live philosophy prevents that. Now the development team is constantly balancing the need to fix problems with the need to push forward development. They constantly decides what’s important enough to fix now.

Integrating Development with CS & CM: Early Live brings customer service (CS) and community management (CM) into the process of development much sooner. Properly handling customer problems and building a positive customer community is essential to an MMO. A development team needs to work with the CS and CM groups to guide and prioritize future development, just as CS and CM rely on the development team for their product and tools.

Financial Snapshots: Early Live provides financial data on actual operational costs, from bandwidth usage to operational staffing. It takes time to find the delicate balance between maximum earning power and maximum customer support. More than once A game development team “assumed” impossibly large amounts of customer support. Early Live reveals these assumptions and helps prevent “fatal financial flaws.”

Marketing Benefits: Early Live is a marketing department’s dream. Instead of guessing about potential audiences they can examine information about hundreds to thousands of players who are paying customers! Initial growth and churn rates can be extrapolated to better predict potential income levels. Early Live should prevent marketers from estimating a million subscribers with 5% monthly churn before launch, only to discover three months after launch that over half the purchasers dropped their subscriptions!

 

Yes But…

Questions arise about how applicable the Customer Development process is in certain situations. Here are some questions (Q) and answers (A).

Sidetracked by Live   Q:  What if a horde of players flood into Early Live, forcing the development team to concentrate on polishing the first level or two? Won’t that prevent forward progress? What if everything falls down in a heap because we don’t have enough hardware, the software isn’t robust, or the support staff is too small?

A: First, if operational resources are limited, you can meter players coming into Early Live via keys; as players churn out you release additional keys. Second, if your software and staff can’t even handle one server’s worth of players, you need to work on the operational side of your business. The longer you postpone making “massive” functional, the riskier the whole project becomes.

The Minimum Viable Product  Q:  Customer Development talks about a “minimum viable product” (MVP). Our MVP is a fantasy MMORPG with at least 20 races, 30 character types, 50 regions, 500 monsters, and must support PvE, PvP, guild vs guild and RvR. If we don’t have all this we’ll fail.

A: The Roman Empire wasn’t conquered in a day. It began small and grew, piece by piece. A successful MMO must do the same. Within that vast shopping list of features you need to identify the core gameplay that will attract and keep customers playing your game. You are being distracted by grandiose visions with lots of “chrome.” Chrome in games isn’t necessarily good. It can create complicated interfaces and confusing options that become obstacles to enjoyment. Blizzard’s greatest successes were simpler and easier than other games of their day. Diablo was easier to play than any previous fantasy RPG. WoW was easier to get into than any previous MMORPG. It is important to “find the fun” early and mitigate risks by constantly evaluating the ability of gamers to learn, play and enjoy your product.

Fear of Competition  Q:  If we reveal our product in Early Live, our competitors will steal the idea and benefit from our work. Even if they don’t, we’ll have competition far sooner than if we kept everything secret.

A: Customer Development brings the product to customers within 6-12 months. Even if your competitors follow in your footsteps with a process just as efficient, they’ll be a half year to a year behind. More importantly, you gain invaluable knowledge about who the customers are and how to sell to them. Use that advantage to build customer loyalty. Your would-be competitors are just imitating your success. You know the reasons for that success. Exploit your knowledge to insure competitors are left with crumbs from the table. Best of all, if your competitors aren’t using Customer Development they’ll spend years developing something that’s outdated the day it ships.

Licenses & Product Secrecy  Q:  Our game is linked to a movie (or TV or book) license that prohibits us from revealing characters or content in advance. We can’t go live early.

A: Yes you can, with stand-ins for the confidential material. Replace specific licensed names with generic equivalents. For example, replace “Enterprise Class Starship” with “Galactic Exploration Cruiser”, or rename “Mordor” as “The Dark Wastes.” Certain object may need alternate textures and/or concealing geometry during Early Live. You can still test all the play mechanics of the final game. Your development team is forced to pay attention to gameplay, which greatly improves the chance that your licensed title will be one of the rare few that’s actually fun to play.

Customer Exhaustion  Q:  Enticing players to come back to a game is much harder than acquiring new ones. Early Live will “poison the well” by giving a weak, incomplete game to our best customers.

A: If the potential customer pool is so small that one server’s worth of players represents your key audience, it might be wise to pick a different audience! However, if that audience is wealthy enough to support your product, invest heavily community management. Make them fell like well-informed, heavily-involved partners in the development process. When you reach “launch” you can promote the game as Version 2.0. Alternately you could make cosmetic changes and attach a new title for a “fresh” PR campaign.

 

Scrum and Customer Development

At its core Scrum is a day-to-day, week-to-week development methodology. Customer Development is a long-term strategic philosophy. Nevertheless, there are many parallels. Customer Development is “Scrum writ large.”

Scrum sprints (iterations) concentrate on delivering a shippable increment of functionality – customer development concentrates on delivering increments of a playable game.

Scrum requires review and process examination after each sprint – customer development uses customer metrics and buying patterns to guide future work. 

Scrum expects plans will be adjusted from sprint to sprint – customer development expects that both designs and gameplay will change as the team learns about player preferences throughout Early Live.

Given a choice, I would use Scrum exclusively in a Customer Development project. Scrum principles such as backlogs feeding multiple teams working in 2-4 week sprints is a perfect way to monitor and control game creation before and during Early Live. It allows you to balance the needs of live operation with the needs of new development through frequent reprioritization. Scrum “releases” match up perfectly with periodic updates to Early Live players. A philosophy of Customer Development ideally matches the Scrum process.

Posted in Production | 3 Comments »

Project Management for Game Development

Posted by Arnold Hendrick on June 15, 2009

Game developers often abhor project management when making games. The battle cry of “It shouldn’t ship until it’s ready” sounds great to gamers, but projects managers and businessmen cringe. How do you know if the changes, the extra features, will really generate enough extra income to compensate for the extra cost? Veterans from game publishing are especially gun-shy because they’ve heard it dozens of times about games that went on to weak sales despite the extra effort – if those games even finished at all (Duke Nukem Forever, anyone?)

 The sad tale of Tabula Rasa is a case in point. Despite a star-studded development team and deep-pocket backing from one of the strongest MMO publishers in the world at that time (NCsoft), six years of development yielded about one year of live operation before shut-down. Some reports suggest that translated into $106 mil in development for less than $20 mil in income (see “Tabula Rasa took Too Long”).

This is not a new problem. In the business world “projects” are business activities that have a clear start and end – like developing and running an MMO. There are well-established methods for organizing and running projects to keep them on schedule and on budget while achieving a certain level of quality and profitability. These methods are called “project management.”

The Project Lifecycle

According to the “bible” of project management (the PMBOK 4th Edition, published by PMI in 2008), projects have lifecycles. Here’s an overview of the major “Process Groups” in the project lifecycle:

 07i.Project Lifecycle v2

Initiating: Project startup, charter, initial scope, initial team formation, etc.

Planning: Defining work breakdown structure, determining resources, defining activities, scheduling, risk planning, communication planning, etc.

Executing: Resources perform the planned work, including QA.

Closing: Product acceptance, recording results, performance analysis and postmortems, release of resources.

Monitoring & Controlling: Oversees the other activities; typically concentrates on scope, cost, schedule, quality and risk issues; reports status to management and customer; insures proper business administration occurs.

As the diagram illustrates, “monitoring and controlling” occurs most heavily during “planning” and “executing” activities. In my experienc, “monitoring and controlling” is typically the most difficult activity, especially during “executing.” A well-understood development process helps, but a skilled producer who wisely manages development tradeoffs is invaluable. Sadly, the industry still has some producers who can’t monitor progress quantitatively. Without such tools informed tradeoffs are nearly impossible.

Notice that multiple planning-execution cycles are possible within a project. Methodologies such as scrum actually formalize this into 2-4 week sprints, with each team planning at the start of a sprint and then executing during the sprint. In fact, a miniature of that process occurs each day, with planning issues surfacing (hopefully) during the 15-minute daily status meetings.

Game Development Lifecycle

Game developers frequently talk about “continuous development” and the need to iterate and refine for good gameplay. Merging this with the business needs of games resulted in a commonly accepted lifecycle for MMO game development. A version commonly used for MMOs is:

 07i.Game Lifecycles v3a

Prototype: Select, test and use engines, tools, software languages and build processes. Define design concept and art style; create initial design outline & first draft design doc; create initial concept art, gameplay prototypes and 3D art/animation prototypes.

Pre-Production: Build two to three fully playable zones (levels) including rewards and advancement. Build one zone using the same methods used in production – its the only way to accurately gauge production costs. Complete key concept art. Finish design doc. Complete production specifications (for programming, design, art, sound and QA).

Production: Build all other zones and gameplay so the game is code complete, including all data entry and scripting for AIs, quests, tables, art assets, sounds, etc. This typically involves additional resources (often via outsourcing) all working simultaneously on various tasks pre-production specifications. Create specifications and prototypes for billing, CS tools, and update systems.

Beta: Tweak the game for better gameplay, find and fix bugs, operational chokepoints, resulting final software stabilization (i.e., “no more fixes unless it’s a show-stopper crash bug”). Finish the billing, CS, update and other support systems. This beta does not end on the launch date, but when the day promotional “open beta” begins

Live: Game operates 24×7, typically starting with a promotional open beta. This is supported by at least two tiers of “live team.” The short-term tier handles day to day operational issues for the weekly patch. The long-term tier builds monthly updates and longer-term expansions.

            Mapping Project Processes to Game Lifecycles

First, avoid the “noob” error and listen to the wise old Jedi (PMBOK 4th edition), “Process Groups are not project phases.”  Do not equate the “Initiating” process group with prototyping, planning with pre-production, etc.

It is possible to map the project lifecycle against the game lifecycle, with Project Initiation at the start of Prototype and Project Closure at the end of the Live. This could work for small projects such as casual games. However, for traditional solo games (with or without multiplayer components) and almost all MMOs, the nature of the work in each phase is different. Furthermore, entering a new phase without finishing important bits of the previous phase becomes the road to disaster (see “An intervention”).

For example, scrum methodologies work extremely well for prototype and pre-production. Here scrum’s backlog priority system is ideal of tackling the mass of disparate possibilities, needs and goals. Scrum is wonderful for combining creativity and flexibility into tangible results.

The production phase is different. Now the development group must manufacture literally thousands, often tens of thousands of small items (art assets, quests, mob layouts, AI scripts, UI components, etc.). Each item has a multi-step process for construction, approval, QA and testing. Scrum struggles with vast numbers of small tasks. It really struggles if each is a multi-step activity. In large games the wise course is traditional tracking tools, from spreadsheets and databases to the oft-maligned MS Project. Similar issues can apply during beta if thousands of inputs and bugs must be prioritized and appropriately handled.

I advocate viewing each game phase as a separate project. In PMBOK-speak the game is a “multi-phase project.” This reinforces the need to finish one phase before starting the next, thus preventing the “intervention” situation described above by Eric Heimberg. Starting a new project for a new phase allows a clear, clean “change in how we work” for the development team. Finally, a clean exit for each phase improves the developer-publisher relationship.

The diagram below illustrates this mapping of  multiple projects with their process groups to game phases.

07i.Game Lifecycles with PM v3

The multiple project iterations during “Live” represents a series of game updates/expansions, each treated as a project.

The diagram also shows that initialization and planning for the next phase starts during the later part of the current phase. For example, during pre-production the producer might need to find and qualify an art outsource subcontractor to help handle the mass of art assets needed during production.

Irrespective of my preferences and the above examples, professional project management methods can coexist with almost any development process, be it scrum, agile, iterative, waterfall, with or without attention to CMMI “levels.” The important goal is how the general rubric of project management, applied intelligently, can prevent games and dev studios from experiencing another “crash and burn” event. 

Posted in Production | 3 Comments »

Web 2.0 and MMOs

Posted by Arnold Hendrick on June 7, 2009

The End of Extravaganzas

The era of big-budget WoW-beaters is coming to a close. Yes, I know there are a number of would-be contestants still out there. Some may be profitable even if they fall short of 5+ million international users or 2+ million North American at the end of their first year. Any game that reaches and stays above 1 million subs in North America, or the income equivalent in microtransactions (MT), will be the success Conan and Warhammer tried to achieve.

The recent unhappy experiences of those two games illustrate the incredible difficulty of sustaining 500k+ subs in the North American market. A microtransaction (MT) model won’t solve this. In fact MT often obscure success measurement because MT operators do not reveal dollar income per month. At best they report total unique users and peak concurrent users from which income might be guesstimated. It is extremely revealing that most Asian MT MMOs have less than a half dozen servers for their North American market.

Everyone who loves MMOs, from Executive Producers down to lowly assistant associate junior game designers, will happily offer The Great Idea that will Sell Millions and Beat WoW. Industry professionals can assemble great IPs, veteran teams and big bucks behind plausible business plans for their Great Ideas. Nevertheless, the unfortunate truth is that most of these products will not meet plan because there is no way to guarantee a successful game. Look at the landscape of broken-hearted publishers: Ubisoft expected more from Shadowbane, Sony hoped for more from EverQuest 2, Lucas demanded more from Star Wars Galaxies, NCsoft need much more from Tabula Rasa, EA wanted more from both Earth & Beyond and Warhammer, Funcom promised more from Age of Conan. Microsoft has cancelled every MMO since Asheron’s Call 2 because they couldn’t make the business models work. I’ve got three shelves full of MMO boxed games going back a decade. Only a handful achieved or exceeded their financial expectations.

The problem, of course, is that people dream big. The “sweet spot” of achievable success for North American MMOs is 100-200k paying customers for the first few years. Two million paying customers in the USA is not really achievable, nor is ten million worldwide. City of Heroes/Villains (CoH/CoV) is a classic example of success without “gold plated features.” The game launched with no PvP, no economic system, no crafting system and minimal guild support. It didn’t even introduce capes for superheroes until after launch! However, it handled an innovative topic extremely well, offered enjoyable core gameplay, looked nice and had a reasonably slow advancement path. Almost nobody hit max level in first two months. This was a perfect match for the audience, many of whom were either non-gamers or solo gamers. Who were these newcomers? Fans of the topic, of course. Players have fonder memories and greater loyalty to their first significant MMO experience than almost any subsequent MMO. As a result CoH/CoV did well for years.

Modding Web 2.0 for MMOs

Social networking / virtual world sites like IMVU didn’t spend vast amounts of time and money creating an elaborate product that saw a half year of beta testing before launch. They got core functionality online quickly, saw what people liked, and modified/expanded from there. Obviously this has its limits, since that first incarnation affects subsequent audience potential. An underwhelming offering may fail with customers who would play a more polished product.

I do not believe successful MMOs can be built like web 2.0 sites. Maintaining 24×7 server stability is more complicated. Competition from well-crafted competitors is much greater. However, I do believe you can Just Say No to $50+ million extravaganzas. There IS a happy medium somewhere in the $10-15mil range for MMOs. That amount will buy competitive assets and gameplay. That amount is small enough to focus development on core features. Hard decisions will be made about what to include and what to leave for upgrades. There is no budget for vast worlds, extra races, optional classes and alternate monsters. Forget spending a half million dollars on an animated intro and E3 trailer.

If such a game achieves an audience of 100k+ paying customers it generates a healthy ROI that easily justifies expansions, sequels and upgrades. If the game meanders along with 30-40k paying customers break-even and modest profit scenarios exist. Meanwhile the developer and publisher can try something new the next time.

MMO development on this scale allows up to a half dozen projects for the price of one WoW-killer. If the dev cycle can be kept to 30 months (6 months each for prototype, pre-production, production, beta, and reserve) winners will be on the market and new games in progress before that huge WoW-killer launches to underwhelming responses and fiscal disaster.

Pitching this sensible grow-the-business approach is difficult to the venture capital “gang” on Sand Hill Road. They prefer elevator pitches for innovative technology that could be the next Google. Fortunately we are in an age of increasing fiscal conservatism where reduced risk has its own appeal.

Matching Topics To Philosophy

What kind of games are possible with a $10-15mil dev budget? Personally, I believe the best opportunities lie in games with new topics married to established game mechanics and gameplay. A new topic has design challenges, to which devs can apply existing MMO design concepts, art methods and software technology. It’s much harder to invent entirely new technology platforms, or make desperate dice-throws on untried game mechanics (“Let’s do an MMO without combat…”). If you concentrate your originality on the topic, designers can apply a their bag of tricks to the new environment, engineers can work with off-the-shelf engines, and artists will enjoy new challenges. Best of all time and budget restrictions give producers that invaluable mantra: “A cool idea, but beyond our scope.”

Another advantage of innovative topics is that you don’t necessary need a costly license. Again, CoH/CoV is a great example. They did a topic-defining superhero game without spending a dime on a license. In fact, as many designers know, licenses can be a burden (see Eric Heimberg’s “Designing For An IP”). All the project requires is translating what gamers love about the topic into an MMO.

The trick to picking good topics is to avoid the obscure ones. Sid Meier pointed out to me years ago, while we worked in the first Pirates game together, that popular culture informs player concepts of a game topic. For example, when making a pirate game, make sure it has fun ship battles and sword fighting, with plenty of loot to win. I could add all the historical accuracy I wanted about the Caribbean in the 17th Century, but without those prime ingredients the game would fail. If an MMO topic is so obscure that no pop culture conception exists, or gameplay doesn’t map to that conception, then a new topic must be found.

Finally, don’t be afraid to cancel the project if problem solutions exceed allocated reserves. Some projects simply will not be successful. The sooner failures are identified and eliminated, the more time and money is available for creating a success. However, one missed milestone is not a failure. Every development project should have a “reserve” for unanticipated problems. Finally, when a baby is stillborn, don’t shoot the parents (i.e., dump the developer). Good developers learn from their failures and often “rescue” useful bits for future projects. Remember, Blizzard built WoW from the wreckage of an earlier RPG project.

Posted in Production | 2 Comments »

Subscriptions vs Microtransactions

Posted by Arnold Hendrick on June 7, 2009

Wars of Religion, Redux

The argument between subscription and microtransaction (MT) proponents reminds me of the old PvE vs PvP debates years ago. Each side had passionate proponents. Each insisted their approach was better than the other side. However, business realities encouraged game developers to create titles that supported both PvP and PvE, although typically one must be emphasized (for example Warhammer emphasizes PvP while Conan emphasizes PvE).

Some people believe that MT is already the victor. However, cogent cases are still made for subscriptions. The always insightful Eric Heimburg has interesting arguments in Don’t Throw Out the Subscription Model. He argues that MT-based games require game operators to ignore the majority of players in favor of the minority who actually pay. However, looking under the hood at MMOs like Silk Road, Rappelz, Perfect World, or Runes of Magic reveals that the benefits of using MT-acquired items requires a deep understanding of the game’s systems. To land those wealthy MT-spending “whales”  the game casts a wide net of WoW-ish gameplay, hoping enough players stay long enough to learn the game well enough to buy things.

Another plus for subscriptions is their relative simplicity. Simply performing a microtransaction can be a gigantic headache. A player must alt-tab from the game to a website, there the player must jump through various credit-card or paypal hoops to buy “Diamonds” or “Silk” or “gpots” or “Zen”, only to find that can’t be used for anything obvious like a coveted +5 fire sword. Instead the player must alt-tab back in the game, figure out how to recover the recently purchased diamonds/silks/gpots/zens, take them to the auction house, sell them at a constantly floating rate for game gold, then exchange that gold at another constantly floating rate for the +5 sword. If it’s still there. So much for instant gratification, or even simple understanding.

On the other side. MT proponents justly point out that players are ready, willing and able to spent more than $15/month for a better gaming experience. Especially if this helps them look cooler, do better or advance faster. If the game operator isn’t ready to fulfill those desires, gold-sellers will happily take up the slack. The business logic is impossible to refute.

From a game development standpoint, it is much easier to design a game for MT at the start than to add it afterward. Retrofitting MT into a game designed for subscriptions is possible. Alas, getting a subscription-oriented design department to perform the necessary rework can be a hopeless endeavor, not to mention the potential for customer revolt. In fact, as any significant play of Asian MT MMOs will reveal, even a game designed for MT can have difficulties.

A New Peace of Westphalia

In 1648 after more than a century of religious persecution, bloodshed and depopulation, Europe ended constant Catholic-Protestant warfare at Westphalia. How? By setting up a system where both sides could peacefully coexist. In MMOs, it’s simply a matter of time before the business side forces designers to make subscriptions and MT coexist. There are hints of this in Free Realms. Like PvP and PvE, there is no reason why both can’t exist. The design tenants for such an accord are as simple as those at Westphalia. Of course, like Westphalia, there are a million nitty gritty details just as complicated as the various territorial realignments of 1648.

Personally, I am all for making MMOs as profitable as possible. Otherwise I might have no games to develop or play. Therefore I advocate a Westphalia for subscriptions and MT as soon as possible. Here’s my vision for it:

(A) Design games so that in-game gold can be purchased with real money without disrupting player advancement or core gameplay.

(B) Design a subscription plan that is a superset of the MT system.

(A) Design Adjustments

New game designs are already simplifying the MT purchasing system by eliminating intermediary limited-use currencies. Players can now buy the main game currency, the in-game gold. Better still, when the game operator sells gold they will eliminate black market gold farmers and sellers. This is because it costs the game operator nothing to “coin” more gold, while the gold-seller must pay farmers to “harvest” gold.

Of course, directly selling gold in-game does require design adjustments. Some items critical to advancement must be unbuyable. Acquiring gold can no longer be a factor in character advancement. But after all, shouldn’t XP, skills and levels be the proper “currency” of advancement? Didn’t WoW prove the value of limiting advanced equipment to characters of a higher level? Challenge the design team to create a game where a filthy-rich level 40 warrior (who spent the max on the best stuff) can enjoy grouping with a poverty-stricken level 40 priest (who spent extra time grinding or crafting to get equivalent equipment). Why even try to “balance” in-game economies that are inherently hyper-inflationary? Instead, make sure the fun and pleasure of the game don’t depend on how much wealth players have. The original design of City of Heroes and City of Villains is a great example of how to do this.

(B) Subscriptions in an MT World

Most MT systems have “package deals” where a player gets extra and/or bonus items for buying a higher dollar-value package. It’s simply good business sense to codify these “packages” into a “recurring monthly package deal” Of course, this “recurring monthly package deal” must be too sweet to ignore. Anyone who enjoys the game and has the spare cash available will want to get this deal. This makes MT a way station on the road to subscriptions.

How to make such a deal lavish without unbalancing the game? Does the game requires players to use ammo and/or heal pots (like Silk Road)? If so, offer players 30-day access to a special NPC with unlimited, free, non-transferable stacks of ammo. Character inventory limits still apply, so profligate shooters will need to return for their free reloads. Next throw in a non-transferable 2x experience multiplier potion that lasts 30 days. On top of that, give the players 500x their current level in gold pieces every 30 days. Oh, don’t forget to give players a few non-transferable pots of a unique clothing dye so they stand out from the crowd.

The actual deals included in a “recurring monthly package” will vary from game to game. Obviously it’s best if the game is designed around this possibility from the start. This maximizes the chances of players moving from F2P to MT purchases to recurring purchase (subscription). Even that isn’t the end. Remember to preserve a few reasons for subscribers to make MT purchases.

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