State of the MMO: Industry Luminaries On The Genre, Its FutureDiscussion between SOE President John Smedley,ZeniMax Online Studios General Manager Matt Firor, Themis Group CEOAlexander Macris, GamerDNA.com Director of Community Sanya Weathers,EVE Online GameDesigner Chantel Zuurmond, IGN PC Executive Editor Steve Butts and theformer Executive Producer of Star Trek Online Daron Stinnett.
by Dana Massey
, 30 Apr 2008 4:48 pm
The MMO industry has grownfrom a two-horse race at the turn of the century to one of the largestsegments of the gaming industry and perhaps the last true footholdgames have on the PC. Yet, during this same period, there have beeninnumerable failures, and many questions remain wide open. Can MMOstruly be global? Is the subscription model in decline? To what extentshould developers innovate or evolve gameplay? What role shouldestablished IP play? Have these games gotten too expensive to make?
To answer these questions, we spoke to cross section of people fromaround the industry to get a handle on the true "State of the MMO". Wespoke to SOE President John Smedley, ZeniMax Online Studios GeneralManager Matt Firor, Themis Group CEO Alexander Macris, GamerDNA.comDirector of Community Sanya Weathers, EVE Online Game Designer ChantelZuurmond, IGN PC Executive Editor Steve Butts and the former ExecutiveProducer of Star Trek Online Daron Stinnett to get their thoughts onall these issues and much more.
State of the Genre Today
"It's pretty bleak right now!" explained Daron Stinnett, formerlyExecutive Producer of the ill-fated Star Trek Online. "If you take alook at the games in the shadow of WoW, you'll find a pack of MMOs thathave managed to hold onto one or two hundred thousand subscribers."
It was a sentiment shared by most of those we spoke to. It's obviousthat World of Warcraft has the market by the throat and have becomeperhaps the only truly global game in the MMO-space. That means sometough realities for the games in the next tier.
"[MMOs are in a] state of unrest, right now," said Matt Firor,General Manager of ZeniMax Online Studios, a sister company ofBethesda. "World of Warcraft is ruling the subscription game market,and no one wants to compete with them directly, so they go off forniche markets."
Chantel Zuurmond, Game Designer for CCP Game's EVE Online, agreed:"I think any game that wants to coexist with WoW and do well should tryto cater to a niche."
This leaves developers and investors with a choice. They either runat the colossus that is WoW head-on, or they do as Zuurmond suggestsand try and carve out a unique - but smaller - niche.
"Publishers and developers look at the 10 million-plus subscribersand can't help but want a piece of the action," noted Steve Butts, IGNPC's Executive Editor.
Over the last two years, a slew of MMOs have hit the shelves andfailed utterly. Games like Tabula Rasa, Auto Assault, Vanguard and manymore were all big budget, retail subscription MMOs with loads ofmarketing dollars behind them that have either fallen off the face ofthe Earth or settled into a small niche. Clearly, the most recentgeneration of MMOs hasn't been doing enough to fire the imagination ofgamers.
"It seems like many people learned the wrong lessons from WoW,"commented Sanya Weathers, formerly of Mythic and now Director ofCommunity Relations at GamerDNA.com. "[They] are busy spending ungodlyamounts of money on what amounts to feature creep with bonus graphicbloat."
Her deadpan delivery aside, it's become a valid point that many inthe industry agree with. The simple fact is that World of Warcraft isan accessible game, both in gameplay and system requirements, and mostof the forgotten MMOs of yesteryear failed at one or both of thosethings.
"What's happened in the MMO-space parallels what's happened in thegame industry as a whole," noted Themis Group CEO Alexander Macris."The cost to create a AAA title is now greater than the expected returnfrom selling the game to the core gamer audience."
As such, developers and publishers have had to expand their horizonsand appeal to more than just core games. When you release a game withsystem requirements that outstrip the average consumer's machine,you're definitely in trouble.
"That's one of the biggest places we made a mistake with EverQuestII is the system requirements," admitted SOE President John Smedley.His title, a sequel to the most successful MMO on the planet at thetime, did well enough, but was completely overshadowed by World ofWarcraft when both launched in late 2004. Later, they published - andthen absorbed - Vanguard, which Smedley noted sold 250,000 copies, buthad no chance to retain a good percentage of those players given thenumber of people who simply couldn't run the game on their PC.
So what can be done? Where should development companies be spending those resources?
"The 'me too' approach to development won't work," added Butts. "Anygame that hopes to compete with WoW has to do so by offering asubstantially different setting or game design."
Weathers agreed. "The Next Big Thing will come out of a studio that tries to build a wind powered car."
Innovation or Evolution?
While Weathers argued for the wind powered car, there was far morevaried opinion on the evolution vs. innovation debate. Others took amore conservative approach.
"If you try for too much innovation, you turn people off," arguedFiror. "That's the Catch-22 of MMO development. MMOs are about givingpeople a world they are comfortable in, and if you don't follow therules they expect, then they are not comfortable and look for onlinehousing elsewhere."
And Firor wasn't alone in a call for balance.
"We have the job of making great games, running great games andinnovating," said SOE's Smedley. "I think you have to balance it. Ifyou go too crazy with innovation, you might drive your loyal customersout." He then noted that if there is not enough, then their audiencegrow beyond the current core gamers.
All agreed, though, that the absolute key to success is a focus onquality regardless of the approach taken. It sounds simple and obvious,but it's the big thing that separates games like World of Warcraft fromthe rest of the pack.
For his part, Stinnett brought up a great counterpoint to Firor and Smedley's position. "The Nintendo Wiidisproves that theory," he said of the argument that people need somekind of familiarity to enjoy their online worlds. "People will buygames that are fun whether they are fresh and innovative or simply asurprisingly good implementation of a tried-and-true formula."
While people at game conferences often stand up and pontificateabout the lack of innovation and proliferation of derivative gameplay,this group was not quite as outraged as some might expect.
"I think the industry is incredibly innovative. People who don't seethe innovation simply aren't looking for it," argued Macris. "Itreminds me of a friend of mine, who used an exploit in Asheron's Callto level up to 40 without ever leaving one spot in Dereth, thencancelled because the game was boring. "
And it's a valid point. MMOs have been defined by many - our websiteincluded - as a subscription-based virtual world that people must buyin stores. More recently, digital distribution has become anincreasingly acceptable method of selling and delivering games, but thereal meat and potatos of the industry might lie somewhere else entirelythese days. The question is, where?
"I think we're seeing the emergence of a massive amount ofnon-traditional MMOs, the Barbie.coms, the Club Penguins," saidSmedley. "The emergence of the much more casual player into theMMO-space."
Together, these games and others like Runescape may well representmore players than all of the subscription-based MMOs combined in NorthAmerica, World of Warcraft included. Yet, they don't get the hype. Theydon't get the press. They're largely ignored by regular gamingjournalists, let alone the mainstream media, and obviously have zeropresence in traditional retail outlets. Yet, they have millions ofplayers and in some cases - like Runescape - even millions ofsubscribers.
These companies all started small and have quietly grown into epicbusinesses, but it is often small companies that make it big thatreally push the boundaries in terms of new ideas.
"The next big thing is not going to be a sword-and-board,stylized-looking, smack-the-pellet-bar Skinner box. I don't mean to saythere isn't plenty of room for further success in that category, butthe next thing that makes the mainstream do a double take won't looklike it's related to WoW," said Weathers. "I think that now that we'redown to two giant behemoths roaming the earth, it's time for themonkeys to climb down out of the trees and evolve into the next bigthing."
And perhaps these quietgiants of the MMO-space, the free-to-play, generally browser-based andmicrotransaction-supported games that already dominate the market, willbecome the next big thing simply by being recognized as such.
It has begun. "Free-to-play games are getting more and moresophisticated, and are starting to compete (especially in mindshare)with the more traditional sub-based MMOs," added Firor.
But the question remains open: Who drives innovation?
Smedley sees the responsibility for innovation shared between thebig, traditional companies and the upstarts. "Some of it will come fromthe smaller ones and some of it the bigger ones."
His company is hard at work on FreeRealms, for example, which heinsists will have a global appeal, but it's definitely not atraditional MMO. FreeRealms targets a much younger audience; it's freeto play, free to download and definitely not swords and sorcery.However, SOE is one of the few big companies to make a move like thisand are simultaneously developing a host of more traditional gamesaimed at the core market.
Generally, most agreed that there is a coming gulf between the bigand small developers. The big boys are going to make bigger, fancierand more expensive MMOs based on huge IP and carrying hugeexpectations. The smaller, more independent developers will be forcedby spiraling costs to innovate in a few specific areas to carve out aniche.
"Smaller developers have to niche," Macris said bluntly.
It All Comes Down To Money
The basic fact is that all these trends are being driven byexponentially growing development costs. MMOs were once merelyexpensive; now they're multi-million dollar endeavors that dwarf somemovie productions. The risk is huge at this price point, and investorsneed to take whatever precautions they can against failure. That meansbig budget games are less likely to try anything unproven.
"It's that the stakes are getting bigger in this space," saidSmedley. "My personal belief is that the quality bar is going to getraised and that does necessarily mean that the cost of development goesup."
While quality goes up, risk also goes down.
"Sure, spiraling costs have an impact to innovation. But that'snothing new," said Stinnett. "Costs have been spiraling in the gamesindustry for decades and I don't see MMO development costs as out ofline given the additional complexity of creating online games."
But for his part, Smedley doesn't think the independents willactually be frozen out. "EVE is a classic example of something thatcame out of nowhere and turned into a real powerful brand."
CCP's Zuurmond believes part of the success of EVE is their agilityas a company. "We need more MMOs like EVE, where we do try to addcompletely new content that doesn't use already established gamesystems"
EVE Online has organically grown from a game even its creators admitlacked content at launch into a virtual universe. In the coming years,they hope to add avatars to supplement the space flight and truly roundout the experience. Their success at producing new content andconsistently growing their product has turned them from an obscureIcelandic start-up into a leader in this genre.
They are not alone. "The French guys that made Dofus show what asmall shop can do - it's a great game, but not one that required lotsof money or tons of developers," noted Firor.
Stinnett argued that the biggest obstacle that stands in the way ofinnovation, at least among the big guns, is the sheer size of World ofWarcraft's lead. "There would be still plenty of investment andinnovation if anyone believed they could get more than a tiny fractionof the pie, but so far, no one has proven that it is possible."
Thought it may seem impossible, there was a time when no onebelieved EverQuest's roughly 500,000 subscribers would be topped.Something will inevitably come along.
"I think the space is about to explode with a large number of veryhigh quality name brands getting into the space," argued Smedley,formerly the Director of Development for Everquest who knows all toowell that any game can eventually be topped. "Players like Ubisoftgetting in with their Clancy series. That's a huge thing."
Microtransactions vs. Subscriptions
There are open questions beyond just innovation, though. Currently,there is a fight underway between two very different methods ofmonetizing MMOs. For years, games have existed with subscription feesdominant in North America and microtransactions (paying for smallchunks of content rather than blanket access to the game) in Asia. Now,as more Asian games are adapted for North America, that model hasspread. Coupled with the struggles of some high profile subscriptiongames, it makes one wonder if the subscription model is now on its lastlegs.
"Publishers love a standard subscription model because they canmultiply 'x' players by 'y' dollars and know exactly how much revenueis going to be coming in next month," pointed out Butts. "What they'recounting on with MTs is that a small percentage of those players willbe so hardcore that they're willing to pay money out of their ownpocket each month to gain access to the premium content."
Most seemed to believe that the two models could coexist, but it isnotable that while some argued purely for microtransactions, not a souldared to say subscriptions would win the day.
"I firmly believe that this space is going more towards the velvetrope, microtransactions," said Smedley. "Subscriptions will always bethere as a component of that, but it won't always be there as theprimary revenue generator in this space."
Firor agreed, "Different kinds of games can support differentpayment models. Blizzard would have been very careless to make WoW freeto play or micopayment based - we're talking Western world here - asubscription model was perfect for them."
The key point is to tailor the payment model to the game or product on the market.
"I suspect the big boys are racking their brains to go micro, andanyone developing a 'network' or an 'experience' is too," explainedWeathers, "but I think the smaller products that consider themselves tobe 'games' will stick with the subscription model."
There is precedent for markets that employ dramatically differentmethods of monetization for the same product without issue, Stinnettpointed out. "TV programming happily coexists with pay-per-view."
Still, not everyone thought subscriptions had a future.
"Subscription is on its way out," said Macris. "If there's a segmentof consumers that makes sense to reward, it's the ones with cash, andlikewise if there's a segment of consumers you can afford to lose, it'sthe ones without any money. This is just straight economics."
Fantasy, Sci-Fi: Is That All?
It seems every MMO that comes down the pipe is either fantasy orscience-fiction. Why have virtual worlds failed to branch out into newsettings?
"When you poll core gamers, their favorite genre is always fantasy,by a wide margin, followed by science fiction," said Macris. "So it'snatural that we keep going to those genres. That said, we need toeither go broader or go narrower, rather than fight for the same coregamer."
Unlike most genres, MMOs have actually tied themselves to a specificsetting through their very nature. Stinnett pointed out that at eachgame's core is a progression system, and in many ways it's inextricablylinked to the kind of content fantasy worlds offer.
"The key to unlocking success in settings beyond fantasy will be newprogression systems that don't rely so heavily on equipment and magic,"he said.
But people don't simply claim to like fantasy games; they also feel comfortable there.
"MMOs are different from traditional games in that they are worlds,and players of MMOs want to be sure that they are entering a world inwhich they are comfortable before they purchase/download the game,"said Firor.
"Part of the appeal of MMOs is that you can escape your day-to-daylife and do something completely and utterly different and becompletely submerged into it," said Zurrmond. "Maybe the other genresare too close to our day to day life in a way?"
Despite this mindset, there is still definitely an appetite amongthose with whom we spoke to expand the borders and try a few newsettings.
"I think horror will be a big genre in this space; I know that's something we're looking at," said Smedley.
Macris agreed, "I think the comic book genre has the potential to bea big winner right now. Spy/espionage is another. I also thinksomething like World War II Online, updated for 21st-centry conflict,would be very successful. In general, themes that are modern but stillescapist and action-oriented."
The consensus was with Macris on this last point. People want toescape; they do not want to leave the real world for the drudgery ofanother, and the upcoming slate of MMO releases, beyond those in theimmediate future, points to a more varied atmosphere. This year we'llsee Age of Conan and Warhammer Online, two fantasy games, but beyondthose are games like DC Universe, The Agency and All Points Bulletin,which are all firmly in the category Macris described.
Fantasy is by no means dead, and will likely continue to command aninordinate percentage of new launches, but with each generation, theoverall balance should shift away from its current virtual monopoly.
The Intellectual Property Debate
There has also been an uptake in licensed, IP-driven MMOs in recentyears. At first, they were almost universally set in original worlds.Now, at minimum, most major MMOs carry a big gaming IP, if not someseries of books or movies. This year's three major releases will be Ageof Conan, based on Robert E. Howard's novels (and obviously not hurt bythe films); Warhammer Online, which is derived from the populartabletop game; and Stargate Worlds, which has both a movie and two TVseries behind it.
"We have seen it in PC games where games were released on an IP andthey failed miserably because people didn't really work on thegameplay," said Zuurmond. "I assume that people learned from that andput the work in and not just hope that because some people mightrecognize the name it will be a success for everybody."
Like any game, it remains all about quality, as Zuurmond points out.Gamers just want good games, but again, is this not the divide betweenthe big and small?
"It depends on what type of market you are trying to hit," notedFiror. "Pirates of the Caribbean Online obviously hits its mark basedon IP. Dofus doesn't need new IP, because they have their sights setlower."
Recently, Real Time Worlds announced that they had reacquired therights to their game from publisher Webzen, partly for this reason. Asthe costs of developing a AAA MMO went up, investors wanted to makesure the game limited its risk, and there is a pressure to go with anestablished IP from the money men. RTW felt they could better securethe future of their original IP under their own control and chose thatroute. However, they had the advantage of $50 million in financing,which likely makes them the exception to the rule.
It is entirely possible that the future will consist of original IPupstarts taking on established IP industry giants. And if one of thoseupstarts makes it big, well, suddenly their original IP is considered alot more valuable. Look no further than EVE Online for proof of thisphenomenon.
The trick for IP-driven games is to secure both IP worth exploring, but also the freedom to do it properly.
"It depends on whether or not the studio with the license has thecajones to innovate and the ability to project the flavor of thelicense," said Sanya Weathers. "Not everyone's got the knack."
However, it may be about more than "cajones". Sometimes an IP justdoesn't allow the kind of freedom a developer needs, and it isn'talways because of the licensor. Stinnett's last project was Star TrekOnline, where he constantly marveled at the amount of flexibility theywere given to do what they wanted. The question then becomes, will thehardcore fans accept it?
"I like both [original and IP-based MMOs]. Though I think IP MMOscontend with the double-edged sword of familiarity and limitations," hesaid. "While it is easier for players to get immersed in a familiarIP-based world, I think they can also come with constraints that hindergreat game design."
Regardless, as IPs driven become more and more common, they areusually tied to higher budgets and a greater fear from investors that abad product can not only flop a game, but destroy an entire franchise.
"As a rule, the next releases need to go up and up in quality and big name IP helps keep the bar high," explained Smedley.
Once again, this is somewhere Blizzard has an advantage over most of their competitors.
"The WoW folks have it best of all because they have an amazinglypopular IP but they're still the ones in control of it all," notedButts.
The MMO genre continues to grow, but never in a straight line.Everyone we spoke to sees unique trends shaping the industry, and whilethey generally got along on the major points, there is still obviouslya lot of differing opinions on where things will be in a year, letalone five.
What we do know is that 2008 should be a huge test for thesubscription model in North America and Europe. Smedley pointed outthat in most territories, online games continue to grow, but even headmits that World of Warcraft is the major reason why. This year,Warhammer Online, Age of Conan and Stargate Worlds all intend to testthe theory of subscription models, retail distribution and big IP. Willthey be the last gasps at the end of an era, or will they cause us toremember games like Vanguard, Tabula Rasa and Auto Assault asabberations on an unchanged course of development? It's impossible toknow now, but as gamers, it definitely will be worth watching.