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OGDC: Devs Debate The Business of Online Gamers
by N. Evan Van Zelfden [PC, Console/PC]
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May 11, 2007
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Arguably the highlight of the Online Game Development Conference in Seattle was Friday's panel focusing on new payment models for online games. The blue-ribbon panel covered topics ranging from Microsoft’s points and iTunes to secondary markets and farming, as well as the history of payments in the Asian market.
Rich Wickham, business manager for Microsoft’s Games for Windows program, began by discussing the amount of people in the marketplace: “We do have to find new and different ways to get people into these games.”
John Maffei of Affinity Media (which owns Allakhazam and other sites aimed at MMO players), noted that users of his site spend an average of 22 hours a week playing online games. “I think a subscription model is fine,” he said, but noted that “diversification is a key thing.” Maffei believes that players might spend time in disparate worlds, but wouldn’t devote their time to two nearly identical games. “Can I see someone signing up for a hack-n-slash game and a sci-fi game? Yes.”
Joshua Hong, founder of K2 Network and moderator of the panel then introduced the topic of ‘free to play.’ Peter Gollan of EVE Online developer CCP said that it depends on the content inside a game is supported. EVE is a subscription game, and new content is released twice per year. Perhaps, said Gollan, if content isn’t regularly updated, maybe the game doesn’t deserve subscriptions.
Tony Park from Chinese publisher The9 said that, in Korea, there are only ten to twelve subscription games. None of them, he noted, were casual games or developed in the past two years. The market is moving towards subscription, though in terms of the profits, not necessarily the number of total games in the market today.
When the secondary market was introduced, a lively exchange began. Maffei stated that “all successful games have a secondary market,” noting that “a lot of the controversy arose because [gold farmers] detracted from gameplay.” It’s a challenge facing the industry, he says, but developers must decide “how to allow a secondary market.”
Maffei believes that, when players feel that they own something, “that’s a good thing – you want people thinking that way.” When Flagship Studios’ Steve Goldstein responded, he joked that the opinions he was about to offer were his alone and not necessarily those of his employers. “No, it’s wrong, don’t do it – it’ll ruin your business,” he said of allowing users to feel they own items.
Admitting that “the secondary market actually exists, that you have a multi-billion dollar industry," Goldstein asked, "who on earth would have thought that would happen? You have to admire the foresight of people who [made a profit of it],” concluding that “it’s a very hot potato, and I’m not really ready to touch it. We’ll have much better answers in a few years.”
Maffei reiterated: “If you have a compelling game, a secondary market will exist. Apparently it’s not going away. A large percentage of users will consider these items their own, regardless of what a EULA says.” He predicts that when publishers begin to ban not just gold farmers, but the players who participate in the market, the companies will gain reputation of being anti-consumer.
Park noted that, traditionally, there has always been the trading of items between users through monetary means – some people have more money, some people have more time, he said. With the Korean government recently announcing a crack-down on farming practices, Park said that the cost of in-world items is dropping as farming operations sell their inventory in anticipation. “It’s like a stock market chaos.”
Whickham shared Goldstein’s wonderment “that this market could exist.” He went on to say that “ignoring it or not thinking about how it impacts your game is not a good idea.” It’s also important, he said, to have a model that incorporates something that accrues some sort of value to the person that puts effort into it, such as concepts currently demonstrated by Microsoft Live’s achievement points, or Sony Home’s trophy room.
“As large companies, we’re scared of it, because it’s a gray area,” Wickham said of these secondary markets for in-game items. But as players, he believes we should attack the issue wholeheartedly.
When micropayments were mentioned, Maffei raised the point of iTunes charging $0.99 per song, while purchases such as Microsoft Points are an abstract. He agreed that there has to be a flexibility in ways consumers pay for items.
Gollan says they’ve had to simply the process because EVE is available in 80 countries. Whickham said, “I’m not going to defend Microsoft Points, but it was the best solution that a lot of smart people in Redmond came up with.” The point system, Whickham said, span the geographies of some 38 countries. “When it comes to micro-transactions, it’s a massive barrier to something becoming successful outside Korea, and to a lesser extent, China.”
Park detailed that the history of micro-transactions. He noted that in the days of Lineage, Korea had – very uniquely – a lot of cybercafés with fixed IPs. That way, publishers were able to bill the stores based on the IP address. Customers would purchase coins, and then give those coins to the cybercafé, with the café then directly making bank payment to publishers. “People didn’t have to worry about micropayment.” The changes came about from looking into the Chinese market, and other places, and the subsequent need to find newer payment models.
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