Wednesday, September 19, 2012

GuildWars2 .. at least 2 good games

I've been playing GuildWars2 for a few days now and my impression is that its a good game.  In fact. its at least two good games.  And this could be an issue....

What I mean by that is that I've started two characters.  One is a Human guardian and the other is an Asura engineer, and the experiences seem totally different.  The first big difference  is art style.  My human is done in a fairly realistic if idealized art style.  Its not Age of Conan realistic, but its not that far off.  She moves like I expect a human to move and her environment while again a bit idealized is fairly realistic.  The challenges she faces are the typical fantasy bandits and monsters and evil plotting politicians.

On the other hand my Asura is in that cartoony style WoW made popular.  He moves with floppy exaggerated cartoon motions and gestures and his environment looks and feels like a 3D version of your typical platform game.  The challenges he's faced so far also more over the top and feel much more like a cartoon or plat former.  A simon-ish puzzle.  An experimental golem gone berserk, and so on,.

Now, both of these are reasonable artistic choices, what I am not sure about is the decision to put both in the same game.  Im dubious these two styles really mix in an immersive, roleplayed way.  Time will tell if I'm right or not.

Other then that, GW2 really is a tour de force of non-subscription game making.  If you had any inkling of the technology at play, The primarily P2P internals of the original GW really showed in its structures and limits.  It was pretty clearly chat room arenas connected by small group quests.  It was also hacked to hell, because thats the inherent weakness of a P2P game.  Any game play controlled by the client can be hacked by the user.

On the other hand GW2 does a good job of feeling like an open world game.  Even when you are forced into over-flow instances, that's only obvious because it tells you so.  Whether or not its more secure, again time will tell.

This is not to say the game is not having its teething issues.  They reserved social clothes to the cash store.  An annoying roleplayer tax but one that can be lived with if you aren't otherwise paying monthly fees.  However, right now that store contains a few silly costumes and thats it.  if they want that to drive sales they are going to need to provide much wider selections.  Secret World right now has a much greater selection then that, and it still feels quite limited.

Its also unclear right now if there are adequate mechanisms for encouraging group play and, quite frankly, Ive soloed so far.  My only group play being world-events where other happen to be joining in. And that sort of grouping is of minimal interest to a roleplay oriented player.

So, my ballot is still open on GW2.  Its engaging me reasonably in early play while I am figuring the mechanics out. We will see if it lasts after that.

Wednesday, September 12, 2012

Why microtransactions aren't razorblades

When you give something away so you can sell the customer something else, that give-away is called a "loss-leader."  When  discussing loss-leaders what is mentioned most often is razors and razor blades.  Razors are effectively given away so the razor blade company can sell you the blades.  More recently, we've seen the same model in ink-jet printers where the printer is sold near cost or even potentially at a loss to lock you into buying the same company's ink cartridges.

This has been so successful in razor blades and ink cartridges, you might think its an argument for the micro-transaction model in games.  But its not.

The thing about a razor is that it is worthless unless you keep buying razor blades at regular intervals.  Furthermore, those blades are quite expensive compared to their manufacturing costs.  There is a lot of pure profit in the razor blade price and you pay it because, basically, you have to.

The same thing is true of that printer.  Anyone who has gone out to buy new ink for one knows that it isn't cheap.  And the printer company tries its best to force you to buy new cartridges, these days a significant part of the technology of such a printer is dedicated to making cartridges "burn out" when they are empty so you can't refill them.  Refills hurt the sales of expensive new cartridges and would drive the price down if it was a common occurrence.

Another example of a loss-leader today is the cell-phone.  It is sold to you at a loss to drive subscription to high profit margin phone services.  Thats why they lock you in for two years of service-- that ensures their profit.  If you try to cancel early, you have to pay back the part of the phone cost that was subsidized.  if you want another phone, you have to wait til the expected profit was made on this one.

The big thing to notice in all of these is that they all are lock-ins.  If you don't spend the money on the renewables, you lose the value of the freebie.  They are also all regular periodic sales.  In effect, they are disguised service subscriptions.  You pay for your shaving service by buying new blades.  You pay for your printer service by buying new cartridges.  (The phone deal is actually not disguised, but you get the idea.)  And that service is not cheap.

The inventors of the Microtransaction model missed this very important point.  The micro-transaction model for games gives away value in the hopes that people will want to buy "accessories" but it does not lock them into buying those accessories.  Furthermore, those accessories, since they arent necessary for the core experience, actually have to be priced very low in order to sell any at all.

And this is why Zynga is tanking and Schick has been in business for almost 100 years.

Sunday, September 9, 2012

Stop the Madness

This is an appeal to an industry. An industry I love.  And an industry that I think is marching itself to destruction.

I am going to make a statement and then explain why I believe it is true:

"Free to play" is the worst thing that has happened to online games in its short history.

Why is this true?  It is true because there is a well known psychological factor in sales.  No one really knows what anything should cost.  Therefor their perception of value is built by outside factors.

 Every direct sales pitch you have probably ever seen somewhere has the line similar to this: "You would pay xxx if you payed full price..."  In sales this is called "anchoring."   Its establishing the value in the mind of the customer.

When we take a project that cost tens of millions of dollars to create and say, "its FREE!" we are doing the same thing, but in the wrong direction. We are establishing that the value is zero.  And spending tens of millions of dollars developing an artifact with a street value of zero is not very good business.

Once you have established that the value of something is zero in the minds of your customers, you can never go back. People will accept reduced prices easily, but increases create great customer dissatisfaction.  Microsoft fell prey to this mistake.  You might not be old enough to remember this, but there was a time when we paid for internet play.  In fact, there was a time when we payed by the hour  and it wasn't cheap.  Microsoft invented the idea of "free online play" a decade ago when they introduced Direct Play and encouraged game developers to give away internet play for free.   But it wasn't until Blizzard shipped Diablo with free internet play that it became a reality.

Microsoft and Blizzard made it impossible to charge for internet play of traditional packaged games because they had taught PC players it was worth nothing.  Ironically, Microsoft themselves were hoist by their own petard a decade later when they tried to get people to pay $50.00 a year for PC Live.  It was the same service as XBox Live, which people gladly pay for. The difference is that no one had set the expectation on game consoles that internet play was free.  Same service, different history, different valuation by the customer.

The flood of "f2p" conversions of high development cost MMORPGs right now is doing the same thing. It is teaching customers that the only thing that has value is being an early adopter, and many of them don't see enough value in that alone to do it.  On the release of a new MMORPG now, the most commonly heard meme is "I'll wait til it goes f2p."

And this is robbing the industry of the income necessary to create such games.  If it doesn't change, the entire segment is likely to go the way of the dodo, replaced with content made so cheaply that they can actually make a profit of some kind this way. (* cough cough zynga games cough cough*).  To understand why the economics don't work its necessary to go deeper into what f2p is and isn't.

"f2p" is actually an empty market buzzword, so I would like to take a moment to draw a distinction.  There are free trials ("freemium") and there are micro-transaction based income models. Free trials have always been a part of the industry.   It goes back to the shareware days.   You got a limited sample of your content distributed to lost of people in the hope that some of them would buy the full package.  This act of becoming a paying customer  is called "conversion" in the industry.

In order for this to pay however, you need to keep what the non-converted cost to you low.  The cheaper your distribution costs, the more this made sense,   Shareware counted on our users and bulletin boards to distribute the free trial for us.  In this day of rampant broadband, we can do the same thing direct to our user.  But, again, I stress, the key is to keep what the unbuying users cost you near zero, because thats a loss on your balance sheet.

If a user is going to hang around burning systems resources forever then they become a significant loss over time  And if you need to keep a team of developers feeding them content in the hopes that they might convert that ups the loss.  This is the inherent fallacy in any "f2p" model on a  game with a  significant server back-end.  Its not like shareware because non-paying customers aren't free to the game developer.  The only way to make freemium really work in a connected model is to drive away those customers that aren't going to convert so they don't cost you ongoing resources.

Microtransactions are based  on the idea that, rather then getting all the money upfront, you bring the customer in and extract in drips and drabs.  The problem with this is really pretty simple, it doesn't work. Not at the same level.  Again going back to sales psychology, salesmen know that the hardest part of any sale is getting the customer past the buying decision.  We instinctively shy away from it.  Its the only irrevocable decision in the transaction and, as long as we haven't made it yet, we sill have options.

The theory behind microtransactions is that you eliminate the buying decision getting the customer in the door.  And indeed not charging a fee to get in does that.  The problem is that it replace that one big buying decision with many many small ones, and each one brings back the psychological barriers.  The result is that, to reach Zynga's level of success, requires a constant re-sellign to the customer.  This puts the focus of game development on selling, not entertainment and creates what I call "gamevertisements", not games.  (Even at that level Zynga has only managed to squeeze out a gross income of about $3.00 a year per person, net of $1.00.)  And remember, these users are still costing you resources whether they buy or not.

If we don't want this to be the only online industry we have, our only other option is to push back now, hopefully before its too late.  Resist the temptation to jump to f2p when a game doesn't hit huge right off the bat.  F2P may have a place, but only on the waning tail of the typical bell curve an online game goes through.  Cut-outs should be routinely discounted.  But if virtually new product is routinely discounted, that just becomes the new price.

I love the online space. I love multi=player games.  To me they have a lot more value then single player games.  Certainly they cost more to produce.  And a world where we still charge a reasonable amount for single player games, but people expect online multiplayer to be free, is a world that soon will not have  any online multiplayer.  The economics dictate that.

WoW spoiled us, and damaged us, by making us think that to be "successful" you need a ton of players.  In a bottom-line industry, Zynga/Facebook hype distracted us by focusing our attention on huge crowds of players, not the bottom line.  (As prooved by the revelation that Zynga grossed about $3.00 a year per person at its height, and the tumble both Zynga and Facebook took once they went public and had to actually reveal their bottom lines.)

If MMORPGs are going to continue to develop and deepen, rather then regressing to the cheapest possible content to produce conversions, we need to get away from that thinking.  We need to accept that a mature market splits into segments.  The good news is that tighter, more specialized segments are more willing to pay for content that addresses them specifically.  We can build Yugos, or we can build Volvos. But, if we continue to tell the market that Volvos are only worth  a Yugo price, our ability to sell Volvos will go away and all that will be left for anybody are the Yugos.


Saturday, September 8, 2012

Hail mary full of... whoops

In football a "hail mary play" is an act of desperation.  With no other options available, the carrier throws the ball as far as he can up into the air and down the field in the hopes and prayers that another team-mate will get underneath and catch it.  Its called a "hail mary" play because completing it is more or less an act of god.

I've said for a long time that "going f2p" on a game that was designed and executed based on a subscription model is the "hail mary" play of the MMORPG industry.  It is good to generate some momentary noise and excitement, but ultimately its a shot in the dark with a slim chance of being a game changer.  Its throwing away the ball you have in your hand because you know it wont save you in the hopes and prayers that someone down field will catch it and save the day.

A hail mary play on rare occasion saves the game, but usually its just a more spectacular way of losing. And this is just as true in the field of F2P conversions as it is in the field of football.

In particular, NCSoft totally failed to get a receiver under the ball for their game City of Heroes.
http://unsubject.wordpress.com/2012/05/19/city-of-heroes-villains-a-limited-bounce/

And now the game is over.

http://www.escapistmagazine.com/news/view/119398-NCsoft-Shuts-Down-City-of-Heroes

City of Children

So, NCSoft announced that they are shutting down City of Heroes at the end of the year, and the users are holding a mass tantrum right now in the Atlas Park zone.

http://kotaku.com/5941607/city-of-heroes-protest-takes-its-case-to-city-hall

I always knew that MMORPG players as a group reflected the bell curve, but i never quite realized how low on the emotional and intellectual development curve the hump really is.

NCSoft is a business, they are shutting down CoH for a very simple reason-- it costs more for them to run then it brings in in revenue.  This is not a hard concept. In business: profit good, loss bad.

Clearly the existing CoH community was not spending enough money to allow for a profit. If they want to spend their last time in game listening to each other whine, I'm sure NCsoft is happy to let them do it.  But nothing that doesn't drastically change the finances is going to change the outcome.

Here are a few ideas that COULD actually change things:

(1) Get all these "protestors" to commit to and live up to a dollar figure purchase every month between now and the end of the year  If the game starts making money again, NCSoft will at least think about it more before shutting it down.

(2) En masse petition NCSoft to put BACK a monthly subscription fee, and all sign up for at least 3 months service.  Again, this would change the economics for NCsoft.

(3) Form a non-profit, raise a significant chunk of cash, and offer to buy the rights to run the servers from NCSoft.  You will then need to get them running on a cloud hoster, get volunteer manpower to administrate them, and collect  enough from your community to keep the servers running. (Hint: Charge them a monthly club-dues.  Sound familiar?)

You see the theme here.  All of these solutions cost money. Which is why they could work and why they wont happen. Whining however, costs nothing.  It also does nothing.

Edit A number of commentors have rather colorfully asked how I conclude that there was no profit in the game.  Besides the basic dictates of logic, no game company shuts down a profitable game, here is a cite for how badly it has performed this year:
http://unsubject.wordpress.com/2012/05/19/city-of-heroes-villains-a-limited-bounce/

Wednesday, September 5, 2012

The best MMORPG you might not try...

I have been playing Secret World now since launch and I am afraid that, in the rush to compare numbers and the misinformation about them being propagated out there, you might not look at this game so I want to call out some reasons you should.

(1) The classless/level-less system actually works.
While it takes some practice or analytic skills to do good builds, it rewards that work with greater flexibility and depth of play.  Perhaps even more importantly, you don't have to go back to "first level" to create a second or third build.  You can use your existing build to quickly gather the points for that alternate build.

This does raise the question of "what good are alts"?  Frankly, the only reasons for alts I can see at this point are role-play reasons.  for that reason, Funcom might want to consider letting you "clone" your alts rather then starting from scratch again, but thats a small com,plaint over-all.

(2) The setting is really different and interesting.  If you are as tired as I am of men-in-tights games and teen-power-fantasy games, you might enjoy this too.  The real world setting brings a subtle level of connectedness that I think adds to the immersive feel of the game.  It is a dark and foreboding world where every time you turn around, there is some new horror awaiting.  It is a world that makes me feel small, which is a much more interesting feeling and lends a much greater feeling of accomplishment when I win out anyway.

(3) Raiding is integrated into the story flow
In a lot of recent MMORPGs, there have basically been two games.  The leveling game and then, when you are done with that, the raiding game.  This creates a number of subtle problems but the biggest one to me is that it takes what is often to me the most interesting part, the story driven leveling, and encourages people to rush through it to get to what, to me, is the least interesting part-- the repetitive raids.

TSW integrates the raid mechanic into your character progression.   There are "dungeons" in each major area of the game and spending some time in them equips you best for the are you are going to next.  This integrated "mini-raiding' mechanic I think works better then the aging "end-game raid" mechanic and keeps your focus centralized on the deep leveling content.

(4) The depth and breadth of play is phenomenal
This is the biggest thing for me.  The grind just doesn't feel like a  grind to me and this is because you are constantly being presented with new challenges that take new strategies to solve.  Although there are "kill X foozles" quests, the foozles look, feel and most importantly play differently from each other. I never get the feeling that a quest is there just to mechanically slow me down in progression, and thats what every other MMORPG I have played has felt like.

The story lines are deep, intertwined, and most importantly integrated with the play.  If you don't listen and think about the stories, you will find it very hard to play the game as the mechanics necessary are constantly shifting and the clues as to what you need to do are in the dialogues and descriptions.  TSW does the best job I have seen to date of being an action adventure game as opposed to a CRPG.  Although there are mechanics to optimize in terms of builds, and the requisite crafting and loot collecting, your most important attribute is the brain of the player.  I find this refreshing, exciting and incredibly immersive.

The number of story layers is also very impressive.  Every time I go back to an area I thought I was done with, I find plot threads I didn't pick up first time through to explore.  More then just "side quests" these deepen the world and my understanding of it.

To this, TSW adds multiple mission styles.  No longer is every mission a hack-a-thon.  Some missions are designed and flagged as "sneaky" missions.  Other missions are flagged as majoratively puzzle solving.  This labeling is more important then I would have initially thought.  i am not always in the same mood when I play and making it clear what kind of mission is what allows me to tailor my experience to where I am at the moment.

To sum it up, this is the first MMORPG I've played where play didn't end up feeling like boring, repetitive work.  Is it perfect?   Ofcourse not.  The "solo quests"have an annoying way of breaking up groups and in general, this game still suffers from the "how do I meet people" MMORPG problem.  Its still alot more a single player game then I would ultimately like my online worlds to be.  But its a major step fowards in  a lot of important ways.

Will this be "the next WoW"?  Its doubtful.  Even WoW isn't "the next WoW" anymore.  What I think we are seeing is an industry that is bifurcating. On one side are the cheaply produced/run mass market crud that can really be profitably off of the drips and drabs they can skim off the users.  On the other side we are seeing more niche products that give a smaller market a much deeper and richer experience-- one they can charge real money for.

For many reasons TSW is a niche product.  It requires too much thought and effort to play for the masses.  It doesn't serve the teen-age wish fulfillment market.  And it was a comparatively expensive game to produce and operate.  But it serves a niche well, and I think therefor long term is going to see greater retention of its paying user base.

And if this is a game space that interests you a all, you should at least give it a try.  (Funcom is currently running 3-day free trials.)

Monday, September 3, 2012

Congratulations to Funcom

The Secret World seems to have stabilized at a subscription population of 200,000 users.  There has been a lot of chatter in the press about this being "disappointing".  I couldn't disagree more.



What people seem to be totally forgetting is that, by the numbers at their height, a Zynga made a profit about $1/user/year on a gross of about $3.00/user/year. (As per their IPO documentation.) Secret World brings in a gross of $180/user/year just in subscriptions. So 200,000 subscription users is equivalent to 12,000,000 f2p users-- 3 million dollars a month of gross revenue. 

Thats quite a financial success, actually.

Editor Note: it has been correctly pointed out that this is a sold-through number, not a conversion number.  However its still impressive when you look at the fact that WoW only shipped 240,000 units when  it launched and a shipped number includes the units to fill the retail chain whereas a sold through number does not.  Conversion rate is not clear yet but based on user meta-critic scores Funcom is predicting a high conversion and retention rate.  http://www.gamesindustry.biz/articles/2012-08-13-funcom-poor-metacritc-damaged-secret-world-performance

The market has clearly bifurcated.  The days of mass market product being able to charge a premium price are over.   As is *always* the case in the US market, the mass audience is happy to sacrifice quality for cost.  This is the "lowest common denominator" micro-transaction market where you have to keep cost per user very low in order to see any profit.

However, as usual, there are still premium niche markets in the US that are willing to pay a reasonable fee for content that is deeper, not annoying, and more tailored to their specific wants and desires.  Funcom has demonstrated that you can make a lot of money by successfully addressing one of these niches.

So congratulations to Funcom and thank you for not giving up on the quality market. I am sure they chuckling all the way to the bank at their nay-sayers.  If they don't say so publicly, do you blame them? the longer the industry keeps its jaundiced micro-transaction centric view, the longer they have these markets to themselves.