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Nexon’s Maplestory sold $30m of digital goods in the US in 2007 May 27, 2008

Posted by jeremyliew in digital goods, games, games 2.0, gaming, mmorpg, virtual goods.
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The WSJ had an article on Friday about Nexon and the virtual goods model. Not new news to most readers of this blog but some good information nuggests in the article:

Prepaid cards used to buy Nexon game items are now the second best-selling entertainment gift card at Target Corp. stores in the U.S., after cards for Apple Inc.’s iTunes Store, Target says…

Nexon’s biggest hit in the U.S. so far is MapleStory, an online role-playing game popular with teenagers in which players assume the identities of warriors, magicians and thieves and collectively fight monsters. The game has 85 million users globally, of which 5.9 million are registered in the U.S. Last year players world-wide bought more than 1.3 million articles of clothing and more than one million hair makeovers for their MapleStory characters. Nexon’s U.S. revenue last year more than tripled to $29.3 million from $8.5 million the prior year.

With $30m in US sales and 6m US registered users, assuming a 20% “active player” rate and 10% “buyer rate”, that implies an ARPU of $20/mth which sounds about right and is consistent with number we’ve seen from games in Asia. It sounds like the US will be following very similar models of virtual goods monetization that we’ve seen in Asia.

Monetizing MMOG players without creditcards through retail May 21, 2008

Posted by jeremyliew in business models, digital goods, games, games 2.0, gaming, mmorpg, virtual goods.
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Raph’s latest post says that there is a market glut of MMOGs, but most of them will survive. In passing, he shows a picture that is worth a thousand words:

MMOG cards at Target

… here is the rack of game cards available at Target — snapped this weekend, and strongly reminiscent, finally, of similar shots I have taken in Korea, Japan, and China. For years, there was no such rack in the US. Then it was just a couple of cards, and only at some checkouts. Now it gets a rack right between the TV box sets and the top pop albums (you can see REM’s latest CD there, abandoned on the top shelf).

Besides the cards you maybe expect to see, like Club Penguin, WoW, and Zwinky, there’s also a large stack of ‘em for gPotato games (Flyff, Shot Online, etc) And Acclaim, which make their living by bringing over games from Korea. There’s WildTangent cards, and the Gaia cards are almost sold out. The diversity is interesting, as is the lack of cards for most of the core gamer MMORPGs. The strong presence of the often-marginalized Korean games is telling.

One of the challenges in monetizing MMOGs through virtual goods in the US has always been finding a way to sell them to young players who don’t have credit cards. Gaia even employs 3 people whose sole job it is to open snail mail envelopes full of cash that people send in for virtual goods.

Pre paid cards at retail are an excellent way to monetize this audience. I have heard from a number of MMOG companies that they have seen a substantial increase in both ARPU and velocity of spending since releasing these cards. Watch this space.

Getting player culture right is important to MMOGs and social media sites May 20, 2008

Posted by jeremyliew in culture, game design, game mechanics, games, games 2.0, mmorpg, social media, social networks.
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Massively has a summary of the panel discussion from ION last week that gave a five year forecast for MMOs. Lots of interesting predictions from the panel, but the quote that really struck me was:

The number one reason people leave games are basically f*ckwads. While this comment generated laughter from the audience, it also made them all nod in agreement. Erik Bethke points out that if players were given the right social structure and tools, then they might be able to clean up the f*ckwads themselves. Scott Jennings offers the epiphany that, “We really are in the feudal ages with MMOs.” Which is very much true. I’m of the opinion that both methodologies are going to see use and that they both have their place.

Crass, but this is very true. Too many of Bartle’s “Killer” player type can really destroy a game’s community.

Player behavior is undoubtedly influenced by game mechanics. But it can also be heavily influenced by the dominant culture that new players encounter when they first enter the game. New players take their cues from the environment that they first see, and from the reactions that their behavior elicits from the rest of the community.

I am reminded of one of Lightspeed‘s portfolio companies, Stylehive. Stylehive is a social shopping website where users use a social bookmarking tool to contribute interesting clothing, jewelry, shoes or furniture into the site. Think of it as a user generated Lucky Magazine. They could contribute anything that they want into the Hive – news stories, pictures of exotic travel destinations, even porn. But they don’t. The reason is culture. New users of Stylehive quickly learn the norms – what behavior is applauded and what behavior is ignored.

MMO Game designers and social media sites should think about how to expose new users/players to the sort of model behavior that they want users to emulate, and how to build feedback loops into the system so that users can self police undesirable behavior.

Dealing with in-game inflation May 7, 2008

Posted by jeremyliew in business models, economics, game design, game mechanics, games, games 2.0, gaming, mmorpg, virtual goods.
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Siqi Chen, CEO of Serious Business (publisher of the Friends for Sale game), pointed me to an excellent white paper on the money supply impacts on an online economy recently.

It notes that in most games, players control the rate at which new cash is introduced into the economy. To avoid hyper-inflation, it recommends four steps:

Consumables are important in creating new Cash – If large amounts of new cash can be created without consumables, then there is no economic brake on cash creation.

Players set the prices of Consumable – This is the other side of the coin, since only player set prices can legitimately respond to changes in the money supply. Attempting to do this programmatically in such a diverse economy as a typical MMO is to invite failure. National governments have not been able to do this.

Fixed drains need to be in place – This provides a mechanism to remove a Crafter who is economically irrational from the business game, as well as to provide equilibrium in prices and money supply. Thus a regular fixed cash fee for doing business is required, and set by the game.

Variable Drains via percentage commission of the sale need to be in place – This provides a damper that mitigates wild swings in the money supply. Fictionally Sales commissions provide this damper. The percentage is set by the game, on Facility Type basis.

People building social games should read the whole thing.

Gaia’s new MMO is likely to become a major contender April 30, 2008

Posted by jeremyliew in gaming, mmorpg, virtual worlds.
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In February, Gaia announced that it would be using its current virtual world user base to launch a casual MMOG. Virtual World News has an interesting interview that gives more details about the Gaia MMOG:

Beyond the virtual world background for the casual mmo, Georgeson also highlights the fact that Gaia offers more variety in its gameplay than some other MMOGs. Locations will behave differently according to the number of people present, monsters will spawn in different ways, and a wider variety of scripts, he says, create a sensation of spontaneity.

Also, there’s golf.

“One of the other things I’m particularly proud of is that a lot of MMOs have the same experience where you go or no matter what you’ve done for how many people are in the area,” said Georgeson. “It’s a big treadmill of killing monsters and getting loot. We still have that, but we also have aboveground game like golf that people can play even if there’s a battle raging around them.”

Although the kids/teens based MMOG world is getting increasingly crowded, especially as the media companies like Disney and Nickelodean launch new games, I think Gaia’s new game will likely be a success. As Virtual Worlds News notes:

Gaia Online is described as a virtual world and a forum, which makes it seem more open-ended and unformed that it actually easy. There’s actually already a fairly extensive guild system, roleplaying community, and narrative built into the world, though. It’s just not always readily apparent.

Gaia has held many scripted special events in the past that brush right up to the edge of becoming an MMOG. They already have an avid user base that has created and customized avatars, an in-world economy, and a digital goods business model. They also have an expertise in creating fun gameplay. Adding in levels, skills, quests and powerful virtual items is a small step for them to take.

I’ll be watching their launch in the summer with great interest!

Managing Virtual Economies March 28, 2008

Posted by jeremyliew in economics, game design, game mechanics, mmorpg, virtual goods, virtual worlds.
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Scientific American has an overview of how some MMOGs manage their economies (found via Massively).

The article discusses the approaches of EVE Online, Entropia Universe and Second Life in trying to keep their virtual economies balanced. Getting the balance of crafting, economics and other such features right can drive behavior like specialization/division of labor, guilding etc, as Eyjólfur Guðmundsson, EVE Online’s economist, notes:

The new player who isn’t able to succeed roams around space trying to make ISK[s]. He tries to be a player-versus-player pilot and loses in battle. He needs help to succeed in the community. Players themselves have found ways to deal with this by creating corporations and alliances. It’s not just economics, but also socioeconomics in general.

For new game designers, keeping virtual economies in check is a non obvious but extremely important element of game design. While most designers spend a lot of time thinking about how to add money into a system and how to price virtual goods, some do not spend enough time thinking about how to balance these two elements. If you allow users to transfer virtual currency between each other, trade in virtual items will emerge. If the economies are unbalanced, you run the risk of side effects such as inflation in pricing of virtual goods or too many “high power” items in the wild. Both of these can make it hard for a new player to join the game after it has been ongoing for a while as they are either too poor or too weak to be able to do anything fun. While these things can be managed after they become problems, it is better to have spent some time thinking through the issues before launch.

Notes from the Casual MMO panel at SXSW March 11, 2008

Posted by jeremyliew in mmorpg, virtual worlds.
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I just wrapped up moderating a panel at SXSW on casual MMOs. Liveblogged notes from Virtual World News are here. Venturebeat also has a writeup here.

Casual worlds and MMOGs are proliferating February 29, 2008

Posted by jeremyliew in games, gaming, kids, mmorpg, strategy, virtual worlds.
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The casual world and MMOG space is getting increasingly crowded. Many of the big media companies are launching virtual worlds now, often targeted at kids. Disney just launched Pixie Hollow, to go with its other virtual worlds, Toon Town, Pirates of the Caribbean Online and Club Penguin, and have reorganized to focus on launching more – investing up to $100m in new online world launches. Nickelodeon, MTV, Cartoon Network, and others are all also throwing their money and brands against portfolios of virtual worlds launches.

Another trend is the expansion of physical toys into virtual worlds. Webkinz led the way here, but many more toy companies are leveraging their offline distribution and brand recognition to create virtual worlds loosely coupled to a physical toy, including Barbie, Beanie Babies, Lego, Build-a-bear, Bella Sara and many more. The BarbieGirls virtual world hit 10 million registered users in 10 months, a remarkable growth rate for a virtual world. (Second Life reports 12.5m residents, equivalent to a registered user, and has been around since 1999).

In addition to these branded launches, a number of companies are bringing a portfolio of asian MMOGs to the West, including K2 Network, IGG, Acclaim, Aeria and OutSpark.

Startups looking to launch a single title MMO in this environment should think carefully about their player acquisition strategy, and how they will be able to stand out in an increasingly crowded environment. It is not enough to simply build a better product. With such a plethora of choice available, your users may not even get to try you to discover how much better you are. Smart approaches may include explicit plans for viral growth, particular expertise in user acquisition, targeting a less saturated demographic or genre, and novel channel strategies. But the best teams will always find a way to be successful in even this highly competitive environment.

Applying game dynamics to virtual worlds February 19, 2008

Posted by jeremyliew in game design, game mechanics, games, games 2.0, gaming, mmorpg, virtual goods, virtual worlds.
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Erik Bethke of Go Pets Live gave the standout presentation of day one of the Worlds In Motion Summit at GDC. He talked about applying game dynamics as a panacea for operators of virtual worlds.

From my notes:

1. Use points and leveling up to get people to do ANYTHING. (similar perspective to Amy Jo Kim‘s application of game dynamics to social media). Bethke noted the “completion bar” on Linked In and how it got him to complete his profile by spamming his friends for testimonials; the first time he had ever spammed his friends for anything. He said that he was mad that he couldn’t “solo LinkedIn”, but it still was effective in getting him to do the “group quest” of gathering testimonials.

2. “Quests” (especially those given by marked NPCs) are an established gameplay mechanic that can be broadly applicable. They work because they give people something to do when they first show up (and thereafter). This “Goal Interface” design is more important than User Interface design because it provides a framework of “what to do” that distinguishes games. “Transaction based” goals (ie measureable goals) are the best goals/quests. (see #1 above)

3. “Crafting” (turning less valuable resources into more valuable resources) is another established gameplay mechanic that can be broadly applicable. Players will engage endlessly in a series of many micro goals of attainment for self gain.

4. Free to play can mean casual (to start) but if you want to get paid, you have to focus on the hard core. They are the ones who will shell out real dollars for digital goods. There must be a satisfying hardcore experience even for casual and social games. Not only are they the sources of your revenue, they are also evangelists, and beacons on the horizon for new players. If you’re missing hard core, you’re missing deep fun. [THIS WAS A LIGHTBULB MOMENT FOR ME].

5. Even for a social virtual world, adding functionality for all four Bartle player types (not just socializers, but also achievers, explorers and killers) increased time spent in game. [ALSO A LIGHTBULB MOMENT.]

Bethke noted that it took Go Pets a while to identify who their hard core players were (measure everything and take a scientific approach to testing hypothesis to discover this), and what distinguished them from other players, but when they figured it out, they put in directed content to create more such players and were able to double ARPU. In the US and Japan his ARPU for paying users is $20/month.

More coverage of his presentation at Worlds In Motion.

19 rules for multiplayer game design February 17, 2008

Posted by jeremyliew in game design, game mechanics, games, games 2.0, gaming, mmorpg.
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Over at Lost Garden, an old but still good list of principles for multiplayer game design. Summarized here, but head over there to see the much more useful annotated version and relevant links:

1. Build in the “Norm Effect” if at all possible.
2. “Zero sum” is bad.
3. Pacing needs variety.
4. Strategies need “wiggle room”.
5. Legends must grow.
5. Court your newbies.
6. Allow personalization.
7. Keep the features down.
8. Include audio/visual subtleties.
9. Avoid numbers.
10. Include spectators.
11. Facilitate relationships.
12. Use time limits.
13. Include chance.
14. Keep the balance.
15. Include cooperation.
16. Make ‘em stay.
17. Allow handicapping.
18. Facilitate special events.
19. Leave room for ads.

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