You may have already seen this: NCSoft Austin is being down-sized because Tabula Rasa has not lived up to expectations. These were pretty unrealistic expectations anyway, but that doesn’t make the people who lose their jobs feel any better. Good luck to everyone who finds themselves out of a job because of this!

The article says that they expect to make $16m in 2008. Doing some quick math, that gives us an estimated population of about 88k users. ($15 a month for 12 months is $180 per user, and 180 into 16 mil is 88k.) That’s a totally hand-wavy number, but it feels about right. It’s what I would expect from an ultra-niche game like this.

The problem is not that it’s an ultra-niche game. The problem is that Tabula Rasa apparently went through three complete redesigns. COMPLETE redesigns. (I liked version #1, the space-opera with magical guitars.) The total development time was six years, and it cost over $100 million, largely because of how long it took to make the game.

I hate to say this, but three redesigns is an abject failure. If you have to redo your entire game after it’s left pre-production, you’ve lost your chance at the big bucks. The best you can hope for is to break even. If you have to redo your entire game a SECOND time before you launch, you’re screwed. The best you can do is hope your company doesn’t go under.

I don’t mean to rag on anybody at NCSoft Austin — I doubt there were more than a few people who were involved in the decision-making process for all six years. (And if you’re in the know, I’d love to hear how the decisions came about.) But the fact remains that after $106 million has been spent, the result was a game that generates only $16 million a year.

Just as a comparison, the now-dead MMO Asheron’s Call 2 cost less than $20 million. It had even fewer players than Tabula Rasa, but since it cost a lot less to make, AC2 could break even after a few years. Tabula Rasa, on the other hand, will need to keep all of its 88,000 players for almost seven years before it breaks even.

Let’s look at it another way – they could have created three mediocre games with that same amount of money, and they’d have 264,000 players (88,000 * 3) right now. Then they’d be able to recoup their money in only a couple years, and eventually they’d be in the black. Probably even successful.

Tabula Rasa tried to be innovative, but it was not a particularly good innovation. I’m sure that a lot of people will assume this is why it’s a monetary failure. But I want to be clear here: Tabula Rasa failed because it took six years to make. That and only that. If it had been made in three years for $20 million, it could have been profitable in its lifetime. But now, because it took so long to make, it can never be a success.

I’ve been reading quite a bit lately about how subscription MMO games are on their way out, soon to be replaced entirely by free-to-play MMO games with upsell or micropayment features.

I was also reading a post by Seth Godin recently that included the advice “Whenever possible, sell subscriptions.” In particular, he made the comment that:

Few businesses can successfully sell subscriptions (magazines being the very best example), but when you can, the whole world changes. HBO, for example, is able to spend its money making shows for its viewers rather than working to find viewers for every show.

And this lead me to wonder: We know that a game which embraces microtransactions will need to be designed differently from the ground up. But what does that actually mean? What does a micro-transaction game look like?

One big difference is that we’re no longer talking about a democratic society where every player is an equal. (That’s one of the big reasons that players in the US react negatively to micropayments — both Americans in general and RPG players in particular are very attached to the idea that effort leads directly to reward and that money is a dirty shortcut.) But it just doesn’t make sense for a game developer to lavish the same resources on everybody equally when only a few people are actually paying the bills.

Let’s extend the HBO example. HBO is a subscription service; it is most concerned with adding and retaining subscribers. It does this by producing quality shows that appeal to its audience. In theory, HBO needs to provide just enough content each month so that any given subscriber feels that their subscription cost is justified. Once a subscriber is satisfied that the subscription is worth the cost, spending additional resources on that particular subscriber is a waste — it’s better to move on to satisfiying another customer. This is fairly similar to a game like EQ2 in which expansions and regular game updates provide a broad variety of new content, with just enough depth in each area for different types of players to feel justified in continuing their subscriptions.

In contrast, we can look at the Home Shopping Network as an example of a microtransaction model. HSN provides free content to everyone who tunes in, and profits only when viewers make a purchase. The majority of their income derives from a small fraction of viewers who each spend quite a large amount of money. A slightly larger fraction of viewers spends just a bit of money each, and the vast majority spend almost no money at all. In this environment, the most efficient profit strategy focuses all your resources on the big spenders first and foremost. HSN programs are very carefully tailored to appeal to the big spenders, the people who give them the most money. So long as the big spenders still have money to spend, the best strategy is to target them narrowly.

These are both perfectly viable business strategies, by the way. HBO uses its large subscriber base to focus on high-quality content for all the subscribers. HSN can make tons of cash from only a tiny portion of its audience, so it doesn’t need as many dedicated viewers as HBO in order to be profitable.

So an MMO based on micropayments would focus heavily on the big spenders. An MMO like this is unlikely to provide regular content updates: it’s just not an efficient use of resources to provide too much extra content for players who aren’t paying. And for the players who are paying it’s more effective to give them something new to purchase once a week or so (to encourage repeated small purchases) than to dump a whole bunch of items on them all at once. In fact, it’s likely that a micropayment MMO would largely forego expansions (free or paid, boxed or downloadable) as well, for the same reason. Instead, their development model will likely embrace constant small paid additions (which is going to be a real pain to QA, let me tell you!).

More than that, however, these MMOs will be trying to reach each individual player in an entirely different way than we do now. For instance, if enough heavy spenders would really like a particular niche item — say a giant Cat-in-the-Hat style hat — then it might make economic sense to create that item and sell it. And depending on the cost of resources and the purchase price of the hat, ‘enough’ spenders might be only a few hundred! In a subscription MMO, on the other hand, it is much harder to make the case for niche items like that because all the content needs to appeal to a much larger audience — it needs to help justify a broad swath of subscriptions. So one effect of the coming revenue model revolution may be that our games give up some of their vast breadth in favor of highly targeted depth.

Of course, there are plenty of business models for MMO games that blur the lines between subscriptions and micropayments. But in any case it will be fascinating to see what happens to our assumptions about development as we develop into a more diverse ecology of online games.

Apparently Grimwell tagged Sandra to do industry predictions for 2008. But she said she was just going to turn around and immediately tag me to do more, so instead we sat down to write a list together. Here are our predictions for the MMO industry in 2008:

• Hasbro launches their secret stealth project: the new Care Bears MMO. Sadly, it is quickly overrun with Real-Money Trading (RMT), which points out a serious imbalance in the dueling system. After a disastrous first six months, the remnants of the game are bought up by SOE.
• After seeing the WoW commercial starring William Shatner, Turbine hires Leonard Nemoy to promote LOTRO. His touching rendition of “The Ballad of Bilbo Baggins” is a huge success and LOTRO’s population finally grows enough to open their first new US world.
• Warhammer Online launches, but only 300 people manage to purchase boxes; everybody else is unable to distinguish it from World of Warcraft and buys the wrong game. After Warhammer fails it is bought by SOE, who muddies up the graphics, lowers the quest quality, and reopens the game as “EverQuest 3.”
• During beta, Age of Conan discovers that players aren’t quite shocked and disgusted enough by the rampant rape of female characters. In a desperate bid for the all-important adolescent crowd, Funcom adds first incest, then necrophilia, and finally bestiality to the game. This brings down the wrath of PETA, who firebomb their offices. The few survivors are quickly hired by SOE.
• Bioware finally announces their big secret, the one that industry insiders have known for years and players have been whispering about for months: Bioware has no MMO engine, has no idea how to make an MMO engine, and can’t buy one since there aren’t any working MMO engines for sale. Instead of trudging along making a doomed MMO, they make KOTOR 3 for the XBox 360, and everybody’s happy.
• Blizzard continues to ignore everyone everywhere and do whatever they please. They continue to have record-breaking sales and subscription numbers, and they are not bought up by SOE.

All in fun, guys! You know we love ya. :)

RMT (Real Money Trades) are a big topic in blogs again — as they are every few months, it seems — but I think most people miss the key problem with unregulated RMT.

Not too long ago, EverQuest 2 was overrun by gold spammers, and it was very annoying. Players started hypothesizing that SOE didn’t take extra steps to stop these spammers because it earned SOE money: the spammer buys an account, spams a while, gets banned, and then has to buy another account, which means SOE earns more money each time they ban a spammer. Except players forget that these spammers aren’t nice folks who legitimately buy accounts. In SOE’s case, the most egregious spammers bought all their accounts with stolen credit card information — info taken from people they made real-money trades with.

So here’s what happens: some random stupid player buys $30 worth of gold with his credit card, then one day logs in to find that his account had been banned. And then he gets his credit card bill and sees that all 40 of his accounts have been banned… except he only owned one account. He then calls his credit card company, the charges are reversed, and SOE doesn’t get a dime — in fact, they lose a good bit of money in transaction fees and wasted time spent dealing with the problem.

MMO companies don’t like to talk about how much credit card fraud occurs in the industry, as you can probably understand, but it’s a problem for everybody. Most big-time gold sellers are not in the US, and we don’t have a lot of ways to control them. These people have also shown a propensity to not play nicely. It’s in the game industry’s best interest to wipe out illegitimate gold sellers in every way they can.

For the record, I don’t much care one way or the other whether players can spend money to get gold. Most of the hand-wringing that game designers do about it ruining the challenge of the game is a big load of hooey. Sure, there are some dangers involved if RMT becomes extremely rampant, but a decent design team can keep everything working just fine. However, I have been against RMT in games I’ve been involved with, and for a very practical reason: a large and vocal portion of the player-base hasn’t liked it. And in general, if my players don’t like something, I don’t want it in my game.

But even if my target audience was okay with gold selling, I would still work to stamp out illegitimate gold sellers, and I hope every MMO does, too. Otherwise, MMO’s will earn a reputation as a pit of fraud and larceny.

Whatever your stance on real-money trading is, I hope we can all agree that unregulated RMT’s should be stamped out whenever possible.

I’m a bit late to the party here, but I just read the Eating Bees post about game companies that fail, and the people that cover for them. Her conclusion seems to be that it’s usually easy to find out who’s to blame, but I don’t think that’s true.

There are lots of times when games fail through no direct fault of any immediate employee. In MMO’s in particular, the blame game is infinitely more complex. A typical MMORPG is developed by a team of 50-100 people, many of whom then promptly leave the company. They are replaced by other folks who actually run the game from day to day. It’s these folks, the live team, who have to clean up the messes, take the blame for any poor designs, and work their butts off to keep the game running. Sometimes it is fair to say that the live team ruined the game, but that’s hardly the common case.

In an industry with high turnover rates like ours, it’s not usually very useful to blame individual employees for a games’ failure. There are exceptions, but it’s not the rule. Fortunately, most of the game industry understands this, and a failed game is not usually a mark against somebody. (Unless they have only a very long string of failures to their name.)

Even the cases we think we understand aren’t likely to be as obvious as they look. A very well-known MMO completely revamped its entire gameplay long after the game had shipped, and they’ve suffered fallout as a result. It would be easy to guess at the logic behind this, but if you go by just the visible facts, your guess would be completely wrong.

Of course, since money is involved in making games, the buck has to stop somewhere, and it stops with the company. At a very practical level, it’s the company’s mess. They’re the ones who took a risk on making the game, and their risk didn’t pan out for one reason or another, so the company may go bankrupt as a result. But that doesn’t tell us why a game failed, or whose fault it was. Without knowing all the details, we are very likely to reach the wrong conclusion.

I just received a poll from Turbine asking me what premium services I’d be willing to pay extra for. Would I pay $5 for an extra character slot? How about $20 for more pack space? And so on. Apparently the poll is being sent out randomly to players of DDO and LOTRO.

I’m happy to see a major MMO company investigating these kinds of upsell options because their research can often be applied directly to smaller games, too. But I don’t think Turbine has thought about the likely reaction to this poll. I predict several days of forum posters screaming, “YOU WANT ME TO PAY EXTRA FOR THINGS YOU SHOULD HAVE INCLUDED FOR FREE? ARE YOU $#%!$^%$#, TURD-BIN?” To be sure, Turbine was going to get some of that anyway, but with a bit of care they could have avoided a lot of it. The secret is arming your fanboys. When you ask a loaded question like this, you have to give enough background info for your fans to help defend you. It doesn’t take but an extra sentence or two — maybe a line about what the money would be used for, or a couple words about how the influx of cash would benefit players.

Anyway, while I was taking the poll, I had my own idea about how to scrape up some extra cash for an MMO. Call it “Gandalf’s Magic Beans.” (Okay, don’t really call it that! Especially if you aren’t LOTRO. Actually, not even if you are LOTRO.) You could buy these items on the game’s website. They’re impulse items or minor gifts. Are you having a bad day? Buy a bean. Did the raid’s healer do really well last night? Buy him a bean as a gift! Is your son impossible to birthday shop for? How about a dozen beans?

Beans might sell for $.99. Purchasing one from the website gives you an in-game “bean”, which you could then eat (or plant in the ground, or something), and poof, a random item appears. A lot of the beans give random housing decorations. Others give cool hats, special appearance “skins” that make your armor and weapons look different, and so on. All of the items should involve new art. An occasional rare bean might give you an extra-slot bag, a special-looking mount, or something else that is very cool but that doesn’t affect combat mechanics. Players could trade these items among all the characters on their account, but not across accounts.

Cosmetic changes should be the brunt of what players are getting, but beans should also give a little in-game boost too, to help make beans appeal to a larger portion of the player base. So perhaps every time you use a bean, you also get a half-hour buff — maybe your health recovers faster while you’re out of combat, or maybe you get 15% extra XP from killing monsters. Nothing huge, and nothing that directly enhances your combat ability, but something that makes you feel special for a while.

Note where we draw the line here, because it’s important: purchased items can mildly affect out-of-combat gameplay such as travel options, downtime, or even XP earned from monsters (if it’s not overdone), but unless you have a very unusual audience, these items shouldn’t meaningfully affect the outcome of battles. This is the line you shouldn’t cross with Western MMO audiences. Players think of their character’s ability to kill others as their character’s “true” power level — they compare classes and characters by what (and who) they can kill. If you sell players more “killing power,” you’re making them stronger on this crucial axis. It may seem like a meaningless distinction, but a lot of MMO players find the idea extremely upsetting.

Sure, some players will cry foul anyway. Even the slightest in-game advantage is enough to set some of your more vocal players off. But the whimsical nature and the very low price will keep a large percentage of players from being too upset. And when you launch the service, give everybody a few free magic beans. If the service is interrupted or bad things happen to the servers, give everybody a few more free beans. Beans make great gifts for all occasions!

Be ready to take your lumps for “nickel-and-diming” or “selling out” or whatever else players accuse you of. After all, you are in fact nickel-and-diming them. But as long as the rewards are fun and entertaining, the angry hate letters will drop off after a short while, and you’ll make the money you need. But you have to keep it whimsical and cheap. Selling pack space for $20 feels mercenary, but selling a funky new hat and a 30-minute buff for $1 seems less so.

PS: I have no idea what a good lore name would be for these items, and I am afraid to research it. My brain is still full of Star Trek trivia from my days on STO. Sometimes I’ll say things like, “Shaka, when the walls fell!” and receive only blank looks. I expect spouting Elvish would be even worse…

Recently, in my other life as a rabid consumer of MMO-related fansites and blogs, I’ve begun to notice the prevelance of ads for paid fan-written strategy guides. But I didn’t think much about the depths of this topic — or its potential impact for developers — until I stumbled across a fascinating article called “Learn2Play, the new Real Money Trading?“. In short, this article suggests that the secondary market in selling game knowledge deserves as much attention as the secondary market in game gold and goods.

Of course, companies like BradyGames and Prima Games have made it their business to print strategy guides for quite some time. But now some players are getting into the business as well, selling guides for their favorite game. Sometimes these are traditional bound guides, but more often they are strictly online — as e-books or websites — and they may even involve a subscription for ongoing, updated content. Many of these strategy guides are free (and about what you would expect for the price), but the best of them are surprisingly professional — and incredibly useful.

But what does this mean for developers? Well the first question you may ask is: Should we let our players get away with making money off our game this way? Don’t we do everything in our power to shut down gold and item selling? How is this different?

The biggest difference is that, while gold/item RMT arguably harm your players’ experience, stategy guides arguably enhance it. Keep in mind that we’re not talking about hacks and cheats here, but rather suggestions on the best place to level from 20-30 for different character types or an expanded explanation of how the crafting UI is supposed to work. You players benefit from being able to access this information if they want it, and if you are not able or willing to provide it yourself for whatever reason, then at least it’s still available to them.

(There are actually quite a few reasons you might not be interested in providing this information to your players directly, from the particular type of audience you are nurturing to the expense and difficulty involved. We’ll be discussing some of those topics later on.)

So no, you shouldn’t usually bother trying to shut down the sale of legit strategy guides. But here’s a much more interesting question: What’s stopping a developer from offering similar services? Asking players to spend extra money for a simple strategy guide is probably over the top — you’d run smack into player expectations on that one, I’m afraid — but what if you extend the idea? A small game with the right audience might find success selling roleplaying lessons, for instance, or a one-on-one in-game ‘Intro to Our World’ session. Or how about an interactive ‘Basics of Grouping’ course for a group of friends that wants to play together? I know one or two MMO teams that have considered this idea, although I don’t believe any of the big US games do this right now.

Well, it’s an idea anyway. *grin* And in the meantime, I’m very interested in seeing how the secondary market on strategy guides continues to develop.