In his regular Gamasutra column, analyst Paul Palumbo recently crafted a must-read article titled Online vs. Retail Game Title Economics. As a 12-year executive in both the online and computer game industries, co-founder of Interplay's Online Gaming division and a founder of Engage Games Online, I tell you it is the best review of the current online games business situation I have read. Every business development person in the industry should read that article.
In the article, Mr. Palumbo wrote the following:
Nevertheless, it's still a question of volume for online games as well. 3DO's experience with Meridian 59 revealed that while there is a dedicated group of online gamers, their numbers are small. Meridian 59 averaged about 10,000 players per month. That was enough to cover ongoing production and maintenance, but not enough to reach full development payback.
Both retail and online markets have their problems: Retail has too many products chasing too little retail shelf space. Online titles are chasing too few initiated users and investors have yet to warm up to the concept.
This is the one point in Mr. Palumbo's article that screams for more detail. It's not a matter of the online gaming market being too small. By my most conservative estimate, there are at least 2.5 million hard core gamers with access to the Internet and online services today. OK, that isn't the mega-millions everyone wants, but it is potentially $300 million annually in subscription fees at the current standard of $9.95 a month. That's not chicken feed, and the market is growing in the double-digits every year.
However, for-pay online game sites today still have real trouble scaring up more than 10,000 subscribers. The largest, Ultima Online (www.ea.origin.com), claims some 50,000 +, although that will certainly go down now that players actually have to pay for the service. Even non-pay sites such as the well-publicized and distributed Mplayer (www.mplayer.com) claim only 200,000 subscribers. Microsoft issued a press release on 2/18/98 claiming 1.1 million registered users for The Zone (www.zone.com) and 6,500 simultaneous users at peak hours. More interesting statistics for them to release, I think, would be the number of unique users per month (I'm a registered Zone subscriber, but I rarely drop in more than once every couple of months) and the number of paid subscriptions to their one premium game, Fighter Ace.
Which begs the question: We're building it, why aren't the gamers coming to play?
I tell you this up front: The $9.95 standard pay-for-play fee is only an incidental reason. It is not the main reason people avoid online gaming sites. If it were, freebie service Mplayer would have far more than just 200,000 subscribers and the free section of The Zone would be looking at eight digit subscriber numbers. Gamers have shown in the past that they will pay fees as high as $6 an hour for access to some games. Remember The Zone numbers in the paragraph above? Prior to December 1, 1996, AOL's Games Channel used to have similar simultaneous player numbers every night. And they charged $2.95 an hour. So what is the reason the players aren't flocking?
It really all boils down to one thing:
Retail game publishers and most online game sites don't know diddly about online game management or customer service.
Players are looking for a safe place to play, one with a level playing field. If companies such as 3DO and Origin had done some basic market research before embarking on their online journey, they would have discovered one over-riding fact about online games: 90% of the work begins after initial development is finished and the game is deployed. Managing a multiplayer game correctly after the launch is the key to customer satisfaction and continued growth.
And boy! are they learning the hard way. Players expect added value for added costs, and that means proper game management. That doesn't mean just adding new features and game scenarios on a regular basis, which is something game companies know how to do. Far more important - and something very few developers or publishers understand - is having humans on hand to:
A) Train the new players, and;
B) Listen to and resolve problems as fast as possible.
The operative word above is 'resolve.' That implies the sysop is empowered to take action, and has the tools and authority to do so.
The Important Role Of The Sysop
How many times have you seen it? A new player pops into being in an online game, fumbles around for a while, then leaves in frustration, never to return? In some games, players just hanging out are generally happy to help, but that's no guarantee of hands-on assistance to the new user.
That first five minutes of play is a critical time for an online game; the customer will make up his or her mind in that time whether or not to spend money on playing. If there is a sysop present to get new players started, the chances are good that they'll decide to play long term, and pay for the privilege. Or, in the words of online games expert Bridgette Patrovsky, "The first five minutes customers are in your game, they're interviewing you. If you don't make a good first impression, you're unlikely to get the 'job.'"
This is no secret; we've known this for over a decade. If you drop into Gemstone III (www.simutronics.com) or Legends of Kesmai (www.gamestorm.com), you have a very good chance of finding a sysop or game master available to help you. And I'm talking meaningful help here, not just a company stooge to tell you how to call customer service. Done correctly, it works like a charm; the new player gets started fast and has a good experience his first time out, and the company gets a new customer.
So why are 9 out of 10 online games not doing this? Look at who does this, and who doesn't. Online game developers such as Kesmai, Simutronics and Mythic Entertainment, who have been developing multiplayer games since before the over-hype of the industry, do this without thinking twice. Dilettantes like 3DO and Origin are fumbling around, trying to figure out what it means.
What Does It Mean?
There are always problems. This is a fact of life in online games. If it isn't a database bug destroying player characters or a bank bug ruining the economy and giving some players an unfair advantage, it's a personal conflict between two or more players or teams that erupts into a firestorm and disrupts play for everyone. Every online game is going to see these problems; how they are dealt with, and whether they are dealt with in a timely manner, will separate the winners from the losers. Remember: 90% of the work for an online game comes after it is released.
Sysops are the caretakers and loremasters of the system. Or, put another way, they are the police, teachers, writers, construction and repair workers, entertainers, storytellers and, most of all, salespersons, of the system. Sysops online can answer questions and give information; if a player notices something going wrong with the game operation, or comes across a situation that cannot be otherwise dealt with in the context of role-playing, then any sysop on duty can be contacted immediately for assistance. When not addressing such issues, sysops are expected to keep the game fresh, exciting and new for the players and, when necessary, act as arbiters in player disputes.
But, first and foremost, the sysops are in the game for the players. As such they have - or should have - an enormous amount of responsibility.
So here's the secret. Here's how an online game developer or publisher can guarantee success for their product:
The single most important tool for that timely, effective customer service online is the trained, empowered, supported sysop.
Sysops are an online game's front line for customer service and retention. If sysops have some power and discretion, they can resolve problems on the fly and keep word of mouth about your product high. These problems can be something as simple as replacing a piece of game equipment a player lost due to a server crash or lag death, or as complex as acting as an adjudicator and bringing both sides in a personal conflict together to work it out. If the sysop has the tools to do these things, the authority to do them on his own discretion in a timely manner, and the training to help him make those decisions correctly, your customer base will get what it needs and be very happy, indeed.
Historically, word of mouth has accounted for over 90% of online game subscribers. A well-trained, motivated, empowered sysop crew won't just retain users and reduce churn by solving problems; the good word of mouth generated by their actions will actually draw in more customers, as players encourage their friends to join them.
The growth curves of multiplayer games supports this. Below are two charts, based on my direct knowledge of the growth and income rates of over fifteen online games, dating as far back as the initial years for such perennials as Air Warrior, Neverwinter Nights and Gemstone III. The first shows growth rates over the first year of a game's online life for properly managed games and the second for improperly managed games:
Figure 1: The SUBS numbers are a generalized rate to show proportions. For example, RPGs online generally do over twice the business of simulators. In a properly managed game, the initial subscription or monthly play growth curve spikes at about 4 months, then slowly churns off some users. By month 7, the effects of good word of mouth cause another subscription spike, and the churn rate reduces and finally plateaus to a predictable subscription rate.
Figure 2: In improperly managed or unmanaged online games, the product will still experience the 'first flush' effect on launch, as users come to check it out. However, the effects of having no timely authority to ameliorate the effects of bugs and inter-player conflicts begins to take it's toll by Month 4. Left unresolved, the curve continues to descend to well below income levels that will sustain the effort.
If you accept the charts as valid, it makes perfect sense to give your sysops the right administration tools, train them and give them the authority to help the players solve problems on the spot. The experience of games which have done this, including the popular Gemstone III by Simutronics and all of Kesmai's games, has been happy, satisfied customers and constant growth, meaning more income.
However, the role of the sysop is almost always lightly regarded by management, rarely supported by the Development team with tools and generally not empowered to effect change within the game or resolve difficulties. Without that support and power, all a sysop can really do is stand around and look stupid, which can make or break you when the manure hits the fan, as 3DO found out in Meridian 59 and Origin is now discovering in Ultima Online.
In M59's case, the 'Guardians' have never had any power; why they were even in the game is a mystery, unless it's so 3DO can say, "Hey, we have sysops!". The only power they have to solve problems is to encourage players to call Customer Service who, of course, also had no power to solve problems. Being so unempowered, when problems erupt, as when the male members of one Guild decided to drive a female player out of the game by holding a virtual gang rape in the public square, nothing was done by either the Guardians or CS. Heck, a Guardian stood in the square and watched the whole thing. The female player canceled her account, as did her seven friends, and they moved en mass to another game. This is not an unusual occurrence in this industry
Ultima Online is experiencing similar problems, for similar reasons. One of the biggest single complaints is the uselessness of the game masters. UO has hope, however; Rich Vogel, who used to be on the Meridian 59 team and lobbied unsuccessfully for more Guardian powers there, is now in charge of UO for Origin. If they listen to him, he can fix what's wrong in UO.
3 Important Factors
In summary, any company delving into online games would be wise to do three things:
If you do these things, they will come. If you don't, you'll lose your customers to those companies that will do them.
Jessica M. Mulligan is considered a pioneer in the online industry and has developed and managed online game and entertainment strategy for a host of industry leaders, including GEnie, America Online and Engage, of which she was a founder. Over a span of twelve years, she is credited with helping make possible some of the most successful online game and entertainment products in the industry's history, including Multiplayer BattleTech, Descent Online, Dragon's Gate, Warcraft II Online/Engage version, Advanced Dungeons &Dragons: NeverWinter Nights and Rolemaster: Magestorm. Ms. Mulligan is regularly invited to speak at industry conferences such as the Computer Game Developer's Conference, and has been published in key industry journals and magazines such as The Journal of Computer Game Design and Computer Gaming World. Now a consultant, she writes the quarterly column Biting The Hand… for The Cursor magazine (www.gamergals.com/jess) and is the co-author of the Joint Strike Fighter Strategy Guide for Prima Publishing and Eidos Interactive. She lives in Key West, Florida and can be reached at [email protected].