jump to navigation

Casual worlds and MMOGs are proliferating February 29, 2008

Posted by jeremyliew in games, gaming, kids, mmorpg, strategy, virtual worlds.

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.

Free to play arguments February 27, 2008

Posted by jeremyliew in advertising, business models, casual games, digital goods, freemium, games, gaming, virtual goods.

At GDC the argument continues over whether free to play and microtransactions are the future of games, or whether single sale and subscription models will continue to hold sway.

As I’ve opined in the past, the economic principle of marginal cost pricing suggests that free to play models will become dominant. At a round table on digital goods business models at GDC, one of the EA folks working on Battlefield Heroes noted that their surveys found that hardcore gamers and older gamers objected the most to digital goods, but that casual and younger players accepted it without comment. If the future of gaming is about breaking beyond the hardcore to the mass market, those defending the old models may be missing the larger opportunity.

Russell Carroll has an interesting post at GameSetWatch that sheds some further light on this issue. It is ostensibly about piracy in the casual game business and opens with the stat:

“It looks like around 92% of the people playing the full version of [the game] Ricochet Infinity pirated it.”

Carroll asks, if piracy can be stopped, can sales be increased by 12x? (i.e. would all the pirate players buy). After looking at all the methods by which the company could reduce piracy, and the impact of these methods on both downloads and conversion rates, he concludes:

As we believe that we are decreasing the number of pirates downloading the game with our DRM fixes, combining the increased sales number together with the decreased downloads, we find 1 additional sale for every 1,000 less pirated downloads. Put another way, for every 1,000 pirated copies we eliminated, we created 1 additional sale.

Though many of the pirates may be simply shifting to another source of games for their illegal activities, the number is nonetheless striking and poignant. The sales to download ratio found on Reflexive implies that a pirated copy is more similar to the loss of a download (a poorly converting one!) than the loss of a sale.

Think about this from the other direction. Currently, for every 1000 players, 80 bought the game and 920 are playing a free, pirated version. So the company makes around 80 x $20 = $1,600. If they were to eliminate piracy, they would sell one additional game, so their revenue would be $1,620.

At a recent panel on casual games, Alex St John said that he was able to sell advertising to support casual games monetizing at 15c/gameplay and that he was sold out of inventory.

To make $1,620 on advertising at 15c/gamplay, the 1000 players would on average need to play the game about 11 times each, which doesn’t seem unreasonable. (This assumes that the source of advertising dollars will be scalable.)

If you add to this a digital goods opportunity, the alternative becomes more interesting. Daniel James (CEO of Three Rings) has said in the past that the ARPU from digital goods is about the same as that from subscription, but with a distribution curve that looks more like a power curve – some heavy spenders and a long tail. An industry rule of thumb for digital goods monetization is around 5-10% of players will pay. Applying the same metrics to this game suggest a digital goods revenue stream in the $1,000-$2,000 range, incremental to the advertising revenue.

And finally, this doesn’t even begin to address the question on how many more players will play the game if the free period is not limited to 60 minutes. These incremental players all become candidates for monetization by both advertising and digital goods. Crossing the Penny Gap can dramatically cut the universe of users, as Josh Kopelman has noted before.

I would advise game designers to consider baking digital goods and advertising opportunities into the core mechanics of their new games so that they have the flexibility to explore both these business models as well as the proven subscription model.

UPDATE: Carroll has more data on his casual game pirating experience here.

Semantic web in travel February 26, 2008

Posted by jeremyliew in data, meaning, semantic web, structure, travel.

I saw today that Radar raised a Series B for its semantic web application. As I’ve noted in the past, I am a believer in approaching the semantic web top down rather than bottom up, i.e. by inferring structure from domain knowledge rather than requiring all websites to mark up their content in RDF. The user doesn’t care about the semantic web (just as they don’t care about wikis or web 2.0 or tagging), all they care about is that they can more quickly get to the things that they want. The mechanisms that we use to create this better experience should be invisible to the user.

Two companies that are taking this approach are doing it in travel. Travel is a good vertical to start in for three reasons (i) lots of users (ii) well defined universe of data and (iii) easy to monetize.

The first of these is Tripit. Tripit takes travel confirmation emails from multiple sources and creates a master itinerary. As Mike Arrington noted in Techcrunch:

It’s dead simple to use and it keeps you organized – all you have to do is forward confirmation emails to them when you purchase airline tickets, hotel reservations, car rentals, etc. Tripit pulls the relevant information out of the emails and builds an organized itinerary for you. You can send emails in any order, for multiple trips, whatever. It just figures everything out and organizes it.

This is a great example of the semantic web being used to improve a users experience, invisibly. The user neither knows nor cares that Tripit is inferring structure from the emails (e.g. SFO is an airport in San Francisco, the Clift is a hotel in San Francisco, and since your reservation at the Clift starts on the same day as your arrive into SFO, Tripit will offer driving directions automatically from SFO to the Clift etc). All the user knows is that they automagically have a single itinerary compiled and supplemented with other relevant information (e.g. maps, weather etc).

The second is Kango. Kango helps travelers decide where they want to go by crawling 10,000 sites and 18,000,000 reviews and organizing that content semantically. As Erik Schonfeld of Techcrunch notes:

But what’s promising about Kango is the way it slices up search subjectively. Kango is building a semantic search engine focussed narrowly on travel. It parses the language in all of those reviews and guides, and categorizes them by generating tags for them. “You cannot wait for users to add tags, you have to derive them,” says CEO Yen Lee. So hotels that have been reviewed across the Web (on sites like Yahoo Travel, TripAdvisor, or Yelp) with words such as “perfect,” “relaxing,” “couples,” “honeymoon,” or “spa” would rank higher in a search for romantic travel. Hotels associated with the words “kitchen,” “pool,” and “kids,” would rank higher in a search for family trips.

Again, the semantics are being applied in a way that is invisible to users. Users don’t need to know how key words in reviews are mapped to characteristics like “family” or “romantic”. The company uses its domain knowledge to make this transparent to the user.

Expect to see more such semantic web approaches to specific verticals.

Genius is 1% inspiration and 99% perspiration February 25, 2008

Posted by jeremyliew in game design, game mechanics, product management.

Thomas Edison is credited with the saying that “Genius is 1% inspiration and 99% perspiration”.

Many of the most successful web 2.0 companies understand this intuitively and it is reflected in their product management. Although they all have a general vision for their product, it does not spring full formed from their minds. Rather, they build A:B test harnesses to explicitly test their hypotheses on live users. They don’t ask their users what they want, but rather they watch what they do. They try multiple versions of everything (title text, call to action copy, buttons versus links, number of screens in signup etc) and they let the data decide the direction of the product. They’re not driven by philosophy, but by the scientific method. Examples of companies that take this approach include many of the standout viral growth companies of the current generation, including RockYou, Slide, Plaxo, LinkedIn, Facebook, Tagged, Flixster and many more. (Disclaimer: Lightspeed is an investor in both Rockyou and Flixster)

For game design, the equivalent would be the trend towards metrics driven development. Raph Koster wrote up the Master Metrics presentation given at GDC by Dan Arey and Chris Swain from USC. They talk in part about Microsoft’s approach to metric driven design:

MS User research group… using heatmaps. When a project goes thru MS, 3 people from the user research group assess the gameplay experience. They are a real thought leader in this area.

1. usability testing – can user operate software
2. playability, does user have a good play experience
3. instrumentation, how exactly is the user playing, using tracking software

This is the first year that they are talking about this stuff publicly, the Wired article (Ed Note: Halo 3: How Microsoft Labs invented a new science of play), etc. Here’s a picture showing black dots on the Halo map. So dense on deaths that there is no info. So let’s tie it to color intensity. Then patterns emerge, you can see a pattern of where people tend to die.

In single player:

– tracking time on task, red zone indicates usability problem
– comparing if designer intent matches what players do… designer maybe wants intense “speed through gauntlet” feel, but heatmap shows players moving slowly…

In multiplayer:

– tracking deaths by weapons lets designers read exactly how players use items, more useful than written reports or lists of data. Designers collectively tend to be visual thinkers.
– Designer tuned placement of items and terrain to achieve most satisfying play experience.

User researchers independent from developers. Researchers help quantify into something measurable. Designers say “We want feeling of chaos” — researchers help pin that down.

Researcher are passionate about good game experience, but dispassionate about design specifics. Developers tend to fall in love with their designs.

Danc had a nice summary of metrics driven game design a couple of years ago that is worth re-reading.

As we see more games move to the web, allowing for much better real time data, true A:B testing against live users (not just beta testers), and shortening development cycle times, I would expect to see even more of this metrics driven approach to game design emerge.

Demographics of the top three game networks on Facebook February 23, 2008

Posted by jeremyliew in facebook, games, games 2.0, gaming, social games, social gaming.
1 comment so far

Bret Terrill follows up his last post with a breakdown of the demographics of the top three game networks on Facebook:

The Takeaway:

SGN games attract an overwhelmingly male audience. They tend to skew slightly younger as well, with the exception of Pirates which is only ~5% of their total audience. I believe this is due to their content: fighting (Fight Club), medieval strategy (WarBook), and car racing (StreetRace) are all genres that historically have skewed male. Jetman, well…I’ll let someone else figure out Jetman.

Zynga also attracts many more men then women, with the exception of Scramble which is the only game among the top three developers dominated by women(63%). I think Zynga’s male leaning can also be attributed to content, strategy games skew male. However, card games as a category tends to be more gender-balanced, though not necessarily when it comes to gambling type games like Poker and Blackjack. The age of Zynga players is spread more evenly among the three age segments, but with ~50% in the 22-25 age bracket.

Blake Commagere’s Monsters games also have ~50% of their users in the 22-25 age bracket. They also have a fairly even male-female ratio. The outlier being Slayers with an only 23% female audience. I believe Slayers was the last Monsters app to be release with a tagline about slaying those annoying monsters. For the female audience, slaying isn’t as fun as infecting? Somehow I think it comes down to the simple fact that infection is primarily a social activity, but slaying is a perceived as a violent activity. If anyone has thoughts on this please leave them in the comments.

NY Times on why young women are driving the social web February 21, 2008

Posted by jeremyliew in social games, social gaming, social media, social networks, user generated content.
add a comment

The NY Times realizes that teen girls are driving social media:

Research by the Berkman Center for Internet & Society at Harvard Law School, the result of focus groups and interviews with young people 13 to 22, suggests that girls’ online practices tend to be about their desire to express themselves, particularly their originality.

“With young women it’s much more about expressing yourself to others in the way that wearing certain clothes to school does,” said John Palfrey, the executive director of the Berkman Center. “It ties into identity expression in the real world.”

That desire is never so evident as when girls criticize online copycats who essentially steal their Web page backgrounds and graphics by hotlinking (linking to someone else’s image so it appears on one’s own Web page). Aside from depleting bandwidth, it is the digital equivalent of arriving at a party wearing the same dress as another girl, Professor Palfrey said.

People building social media and social games need to think about their teen girl strategy; as I have noted in the past, it is no accident that Typhoid Mary was a woman.

Demographics for top 10 games on Facebook February 21, 2008

Posted by jeremyliew in facebook, games, games 2.0, gaming, social games, social gaming.

Bret Terrill has posted a chart of the demographics of the top 10 games in Facebook. He notes:

Despite all the recent posturings by Zynga and SGN, neither companies has more than one game in the top ten. That honor goes to Blake Commagere.

Most games, with one exception, have a significantly higher ratio of male players. Does this mean men play more games? Answer: No. It means that no one is making games that appeal to female players – I’ll post on that in the future.

Interesting bits:

* Jetman has virtually no users over 26.
* Scrabulous (and Vampires!!!) has an equal male-female ratio.

The other interesting point is that all the games skew pretty young, even relative to Facebook’s audience. The stereotypical casual gamer is a middle aged woman, so this is a bit of a deviation from the expectation.

See his post for the chart and details.

Freemium service models – paying for convenience in games February 20, 2008

Posted by jeremyliew in asynchronous gaming, business models, digital goods, freemium, mobile, subscription, virtual goods.

Last week I noted that free-to-play games will become increasingly dominant. I’ve also noted in the past several use cases for the digital goods business models that will be one of the primary monetization mechanisms for free-to-play games. Selling increased functionality can result in user dissatisfaction if players perceive that the only way that they can “win” is to buy more powerful in game functionality. This can be managed through the use of a dual currency system, as Matt Mihaly noted in a guest post.

One other monetization mechanism that free-to-play games can offer is services. Some games, especially real time strategy games, can be somewhat inconvenient to play because they require constant monitoring and occasionally require actions to be taken in game at a certain time. Gameplay can inconveniently interfere with other activities, like work and sleep.

Travian is a good example of this. In Travian each action takes a certain amount of time, and there is no way to “queue up” orders (e.g. if you want to upgrade your mine after you’ve finished upgrading your farm field), or to “schedule” orders to be carried out at a certain time (e.g. if you want to time a raid on another village to be coordinated with another attack). Instead, Travian requires a player to be in the game at a specific time to give an order.

Offering a player the ability to queue up orders or schedule orders as a premium service is a non controversial way to monetize users. Players who do not want to play can be just as effective as players who are willing to pay (they just need to be able to get online at the right times to give their orders). Players who pay for the service are paying simply for convenience, not for additional in game power.

Managerzone‘s mobile premium service is another example of such a service. As I noted previously, the mobile service gives a player certain alerts and allows a player to take a number of actions in the game from their mobile phone, without having to log on to the website from a computer. This makes the game much more convenient to play, but again doesn’t disadvantage a player who choses not to pay for the mobile service since they can still do everything from the website. It looks like Blizzard may also be considering a mobile version of World of Warcraft.

I’d be interested to hear from readers of other examples of games monetizing premium services.

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.

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.
1 comment so far

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.