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As the industry matures, online game developers and publishers are enjoying the luxury of being able to choose from a variety of products and services that can potentially reduce costs and increase quality. In a panel moderated by James Hursthouse, CEO of OGSi, George Dolbier, CTO Games & Interactive Entertainment at IBM, Michael Steele, VP and Evangelist at Emergent Game Technologies, Derek Wise, CEO of Global Netoptex, Inc., and Mark Rizzo, VP of Operations & Platform Engineering for Perpetual Entertainment examined the pros and cons of outsourcing online game infrastructure. A proponent of outsourcing, Steele declared that all of the big problems facing the MMO business had been solved over the past three years by market forces, leaving efficiency and scale to be addressed in a commoditized market. Further, he dismissed the notion that relying on third party solutions resulted in homogenized products. Drawing an analogy with the film industry, he pointed out, “Directors don’t operate the cameras and they shouldn’t have to.” On the question of building online infrastructure from the ground up, Steele felt the risks were extremely high. Rizzo thought it was possible, but that finding qualified people to make it happen was difficult and costs were prohibitive. Wise was cautious in his advice saying, “If you can take that side of the company and spin it off into a successful IPO, then yes.” Ultimately, when faced with creating an online infrastructure from scratch versus outsourcing, most of the panel preferred to rely on outside service providers. However, as Rizzo noted, “If you look at the companies that derive most of their revenue from online, not necessarily even game companies, but companies like Amazon and Google, the most successful ones build their own infrastructure.”
The Business of Online Game Infrastructure Rounding out the day was a look at the business of online game infrastructure through the eyes of a diverse group of developers, including Daniel James, CEO of Three Rings, Jon Hörddal, COO of CCP Games, Scott Brown, President and Co-Founder of NetDevil, and Steve Goldstein, Director of Business Development and General Counsel for Flagship Studios. Moderator Matthew Le Merle, CEO of Gameplay Holdings, LLC began by asking the panel to describe their companies’ online goals. Growth was the common answer with James adding, “I want to create something that grows virally. I want to create a forest fire.” However, as Le Merle pointed out, expansion brings with it new challenges. Hörddal responded, “Even if I have to over invest to stay ahead of growth, I’ll do it.” The conversation turned to outsourcing and the panel described the benefits of distributing parts of the online business to third parties. “Billing systems are not fun. If you make a mistake it can cost a lot of money and it would be nice if that was somebody else’s problem,” James said. Goldstein added, “We have to be light on our feet and we’ve done a lot of outsourcing.” Describing the interrelationship between outsourcers and clients, he said, “I take comfort in knowing that somebody else’s business is at risk as well.” Hörddal agreed, saying, “We have an aggressive plan to outsource everything that can be done better than ourselves,” adding that there is nothing wrong with outsourcing as long as it is carefully managed. However, Three Rings’ Daniel James sounded a note of caution saying, “I think it’s insane to outsource customer support.” |
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