Here’s a debut freelance post by Austin game writer N. Evan Van Zelfden, who writes about video game and technology businesses for numerous magazines and web sites, including the Reuters news agency and The Economist.
By N. Evan Van Zelfden
Austin — Electronic Arts once bet heavily on online multiplayer games. Now it’s betting heavily again on massively multiplayer online games (MMOs) under the leadership of EA chief executive John Riccitiello.
One of the people that Riccitiello will depend upon is online game pioneer Rich Vogel, who co-directs the game studio that EA owns in Austin, Texas, under the BioWare-Austin name. Vogel spoke during a panel at the start of the Austin Game Developers Conference and offered choice tips on running MMOs. He has worked on games for 15 years and has produced MMOs for more than a decade. Among his projects: “Meridian 59,” “Ultima Online,” and “Star Wars Galaxies.”
Vogel’s studio is at work on another MMO — at least that is what game industry followers have figured out. When EA spent $860 million to acquire super-developer BioWare-Pandemic from Elevation Partners last October, some analysts said it was because BioWare’s Austin, Texas studio was hard at work on a secret MMO that just might be able to compete with World of Warcraft, run by rival Activision-Blizzard. At E3 this year, Riccitiello confirmed that the studio was working on an MMO version of “Knights of the Old Republic” – a highly lucrative Star Wars license.
Vogel described the business behind online games as a kind of “funnel.” Acquiring new players comes first, and is the largest part of the funnel. Then conversion of those players to subscribers and retention of them on monthly subscriptions follow. If you’re losing players from the start, something is going wrong, Vogel said.
Even with talk of alternative business models for online games, Vogel stresses that paying customers are the most important. And it’s much more expensive to acquire new players than it is to retain old ones.
Online games can have ghastly production costs – World of Warcraft was rumored to have cost Vivendi’s Blizzard Entertainment division (now part of Activision Blizzard) some $80 million $200 million to develop and maintain since 2004. Vogel says that the launch of the game sets the brand’s value. If you don’t think about the brand in the long term, he says, “you will pay for it in the future.” (It’s worth nothing that the launch of “Tabula Rasa” last fall was a disappointment, after six years of development, and it will now be tough for NCSoft to pull that game into the black).
“The first true social networks online were online games,” said Vogel, adding that a continuous flow of new content is the key for retaining users. If players ever get the inclination that they’ve completed the content, they’ll head for greener pastures.
Examples he cites are previously successful online games with longevity. EA’s “Ultima Online” is nearly twelve years old, Sony’s EverQuest is ten, and Blizzard’s WoW is now four years old. It’s quite possible that an MMO could operate profitably for 20 years, he said, as long as the content stays fresh.
While these games are huge, the details of the games make a big difference in the outcome. Vogel said that 300,000 subscribers over the course of ten years can generate $300 million in revenue. Even if it seems like a game development decision will only affect 1,000 customers, “that’s a million dollar decision,” John Dondham, a former vice president at Sony Online Entertainment and now working at a start-up run by online game producer Raph Koster.
“Communities are portable,” says Vogel. Players will try competing titles. Usage numbers are your best forward indicator of subscriptions. When in doubt, try to get people to play more.
In order for an online game to be massive, it always comes back to the user base. BioWare’s Vogel concludes, “The older you are, the bigger you are: the bigger your funnel is.”