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Notes from my keynote at Engage Expo Virtual Goods conference today September 23, 2009

Posted by jeremyliew in games 2.0, virtual goods.
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Virtual World News has some notes from my keynote today at the Engage Expo Virtual Goods conference

$200 off Engage – Virtual Goods, Games and Social Media conference August 10, 2009

Posted by jeremyliew in conferences, games, games 2.0, social media, virtual goods, virtual worlds.
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I’m speaking on the VC panel at Engage Expo next month, Sept 23-24 in San Jose. I’m on at 1pm on Wed Sept 23.

The agenda is shaping up well – I’m looking forward to the social media and virtual goods tracks especially. This conference used to be called Virtual Worlds Expo, and I think the intersection of virtual worlds and social media is particularly interesting. Zynga’s Yeoville is the best example of a port of a virtual world to a social network, but arguably games like Restaurant City, Rockyou Pets, Farmtown and Farmville are all examples of asynchronous virtual worlds with a strong single player component overlay.

If you’re thinking about attending, use the discount code SPEAPERVIP SPEAKERVIP to save $200, and if you’re sure you’re going register before Aug 14th to get the early registration rate.

“Wars” style social games placed in context of other web based massively single player games June 19, 2009

Posted by jeremyliew in games, games 2.0, social games, social gaming.
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Worlds In Motion plays Mafia Wars and compares it to other web based massively single player games, including ForumWarz, Kingdom of Loathing and Urban Dead:

There are plenty of other MSOs … but the successful ones all have some attributes in common:

–All are based on stats, money, loot, rank, and clans or guilds
–The best extent to which players can communicate with each other is through messages, forums, or chat, all of which don’t occur “in game”
–All require alternative and creative revenue streams, and must be free to play. Methods include microtransactions, merchandising, and donation requests
–Actions or turns are limited so as to reduce server loads and costs. Some regenerate slowly every few minutes, others simple reset every 24 hours
–Must have interesting or popular content, especially if merchandising is a revenue model
–They generally prohibit multiple character creation
-They encourage player-banding by heavily rewarding group associations in order to recruit new players to expand the player base and sustain merchandise sales.

This last point is ironic, since these are essentially single player games, but it forges communities based around the culture of the game. In the case of Mafia Wars, that culture is Facebook, which partially explains why player interaction is limited.

Quests are the new grind in social games, and that is why they are a good idea June 1, 2009

Posted by jeremyliew in game design, games, games 2.0, mmorpg, social games.
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The first generation of MMOG apps on social networks rely heavily on level advancement as motivation for players to keep playing. In the Mob Wars/Mobsters/Mafia Wars genre, the grind is driven by doing jobs to gain money and experience, and hence to level up.

We’re starting to see the introduction of quests into the social network based MMOGs as a way of alleviating the boredom that can set in with a primarily level advancement based game dynamic. But this can lead to a different sort of grind. There are a couple of good recent posts that are worth reading for people building MMOGs on the social networks that look at “quests as the new grind” in World of Warcraft, Lord of the Rings Online and other MMOGs.

Wolfshead first raised this topic last August when he wrote about the unintended consequences of quest based MMOs, primarily that:

* MMOGs become much more single player experiences
* There is a loss of community
* When the quests run out, players find themselves at a loss for what to do

His post is much more eloquent and considered than this summary and is worth reading when you have some time. He bemoans that the addition of rails (via quests) dimishes replayability. He revisited and updated his thoughts on the topic in March.

Over at Brighthub, Michael Hartman agrees with Wolfshead and says that quest based MMOGs are anti-group, repetitive and immersion disrupting. He says that quests change games into simple to-do lists.

Psycochild examines the grind in light of these perspectives and finds something to like about the grind of questing. Firstly, repetition is not inherently a bad characteristic of games. As he points out:

…games are all about repetition. Playing a simple game of Klondike Solitaire is pretty much all about repetition: looking for place to play a card, flipping over more cards, finding more places to play cards, eventually trying to win. Boring, right? Except people are eager to point out that solitaire is likely the most played games in Windows.

The truth is that most games are about repetition, even offline and non-computer games. Games usually have a set of rules that intentionally limit the options in the game. Klondike wouldn’t really be much of a game if you could just go through the piles and pick out the cards you need. So, you apply the rules repeatedly in the game to reach the eventual goal. From this perspective, “repetitive” describes 95% of games out there.

Secondly, he describes ways that the negative aspects of grinding can be mitigated through game design:

* Encourage players to do varied things
* Discourage boring behavior
* Provide alternative gameplay
* Encourage socialization

His post gives more detail on each of these points.

Ultimately, I think that we’ll see a lot more quest based game design in social games. Wolfshead sees World of Warcraft as the epitome of the quest based grind and says in his updated post:

It’s evident that WoW was designed to attract non-MMO gamers all along. Here are a few points that demonstrate this:

the simplicity of the interface (as noted by one of the interviewers)
the focus of quests for herding the player into new areas
the lack of challenge in the enemy encounters
the story revealed to players via the quests

In retrospect it’s almost as if WoW was designed to be one big tutorial for gamers new to MMOs. A MMO so easy and attractive that it’s greatest strength would always be in attracting new players (defined in industry parlance as “churn”).

Yet here we are 5 years later and all is not well. Eventually new MMO gamers become veteran gamers.

He is right from the point of view of an veteran gamer. But WoW is the biggest commercial success that the MMOG genre has ever had and indeed the biggest commercial success that the game industry has ever had. It succeeded precisely because it could entice new players, non-MMO gamers.

The social networks offer an opportunity for a huge number of non-MMO gamers (indeed people who would not consider themselves gamers at all) to be converted into MMO gamers. The social games so far have raced to far higher player numbers than any MMOG has in the past, precisely because they have gotten non-gamers to play. As a result, quests will be a very important component of game design on social networks for some time to come. It will be a long time before these new gamers become veteran gamers and become dissatisfied with quests.

If onling gaming is growing so fast, why are the companies not valued more highly? May 6, 2009

Posted by jeremyliew in games, games 2.0, gaming.
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Asia is significantly ahead of the US in the development of the free to play MMOG market. If China’s market is an indication, the future certainly looks bright. Says GamesIndustry.biz:

China’s online games market will exceed USD 5.5 billion by 2012, according to Pearl Research, which estimated that the market grew more than 63 per cent to USD 2.8 billion in 2008.

The study, entitled “Games Market in China”, reported that six online game operators, including Tencent, Changyou, The9, Netease, Shanda and Giant each brought in more than USD 200 million in revenue last year.

Peak concurrent user rates are phenomonal, especially when you consider that free to play MMO publishers in the west consider a game successful if they get more than 50k PCUs:

China’s most popular online games were named, with Netease’s Fantasy Westward Journey leading the pack at 1.8 million peak concurrent users, followed by Giant’s Zhengtu Online at 1.5 million.

Tencent’s Dungeon and Fighter hit 1.2 million concurrent users, while Blizzard’s World of Warcraft, operated in the region by The9, came in at 1 million users.

But a rising tide does not raise all boats. 70% of Chinese Gaming companies are operating at a loss according to iResearch Consulting Group:

There are about 200 online games in the Chinese market presently, said insiders. But only several developers can make a profit on their games, such as NetEase.com, Inc. (NASDAQ: NTES), Shanda Interactive Entertainment Ltd. (NASDAQ: SNDA) and The9 Ltd. (NASDAQ: NCTY).

Such estimates may stun those people who believe that the business generates huge profits. But from analysts’ points of view, the huge profits, if existing, have been killed by costs on human resources, hardware, promotion and after-services firstly.

T2 Entertainment Co., Ltd., a Chinese online game operator, invested about CNY 30 million in the South Korean game Freestyle before the open beta testing in China, including over USD 1 million on the operating rights and CNY 20 million on promotion.

Besides, the R&D of an ordinary three-dimension online game often costs CNY 10 million, insiders said, adding that of ten online games, only one is profitable.

Because of the hit driven nature of gaming, if the cost of a “shot on goal” is high (as the examples above suggest) then most launched games will not be profitable. Also each game is a “project” with an end-of-life, rather than having ongoing enterprise value. Some hits have the ability to build sequels, but in many cases a company that created a hit game in the past doesn’t have a guarantee that their next game will be a hit.

As a result, some of the nominally successful online games companies are not that highly valued. Shanda, NetEase, Changyou and Giant are all valued at over a billion dollars. However The9, noted above, currently has negative enterprise value. (See Avista Partner’s video game industry April Briefing – page 6 for online games.) This means that The9 is valued by the market at less than the amount of net cash that they have. (The9 recently lost it’s World of Warcraft license in China to NetEase. WoW represents 75% of The9’s revenue and they have not had a true hit of their own outside of WoW.)

The9 is an extreme case, but in general the median multiple for the online gaming category is just 7.0x 2008 EBITDA. Even for the four online gaming companies with more than a billion dollars in market cap noted above, 2008 EBITDA multiples average just 10x. Given the high growth rate of this industry, that is a surprisingly low multiple. As an online MMOG typically has a 4-6 year life, there isn’t much credit being given for companies being able to launch new hit games.

These relatively low multiple are being driven by three factors:

1) High cost to launch a new game
2) Low number of new games launched each year
3) Low probability of each game being a “hit”

In order to unlock the much higher multiples that a market growing as fast as online gaming should allow, companies will need to figure out a way to address one or more of these factors. I think a few of the free to play “social gaming” companies that are starting to figure out how to do this

Social Gaming Summit coming up in June May 4, 2009

Posted by jeremyliew in conferences, games, games 2.0, gaming, social games, social gaming.
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Last years Social Gaming Summit was well received so Charles Hudson, David Sachs and I are doing it again this year. The Social Gaming Summit 2009 is a one day event focused on the intersection of games and the social web. This year’s event will focus on helping social games developers build, monetize, and grow their social games. We’re bringing together the leaders in free-to-play games, social networking, and payments infrastructure for a full day of panels and talks.

The event will be on June 23rd at the Nikko Hotel in San Francisco.

I’m moderating a terrific panel with Mark Pincus from Zynga, Dan Yue from Playdom and Sebastien de Halleux of Playfish, the three biggest games publishers on social networks.

This will be the first time that Playdom has spoken at a conference. We’ve also got the first game conference appearance from Xiaonei (the Facebook of China) and Challenge Games, plus a few speakers that you won’t have heard speak much sharing their game industry expertise.

The rest of the agenda is shaping up really well, and we’re considering adding a separate track or day of practical workshops as well. Here is what it looks like so far:
_____________________________________________________________
8:30 AM to 9:20 AM Breakfast and Registration
Join your fellow attendees for a light breakfast and some pre-conference mingling. Register in advance to save money and time at check-in.

9:20 AM Welcome and Opening
Charles Hudson

9:30 AM Social Gaming Industry Overview and Update
Justin Smith, Inside Social Games

10:00 AM – 10:50 AM Panel: Building Social Games At Scale
Mark Pincus, Zynga
Dan Yue, Playdom
Sebastien de Halleux, Playfish
Moderator: Jeremy Liew, Lightspeed Venture Partners

11:00 AM – 11:50 AM Panel: Social Games – A Platform Perspective
Jason Oberfest, MySpace
Gareth Davis, Facebook
Andrew Sheppard, hi5
Joe Chen, Xiaonei

12:00-1:15 PM Lunch
We’ll have lunches available for everyone from Noon to 1:15 PM. Grab a bite and take advantage of the opportunity to catch up with friends, check your Blackberry, or recharge your batteries.

1:15-2:00 PM Panel: Monetization Infrastructure for Social Games
Erikka Arone, Zong
Adam Caplan, Super Rewards
Rob Goldberg, GMG Entertainment
Renata Dionello, PayPal

2:00-2:45 PM Panel: Customer Acquisition and Retention for Social Games
Jia Shen, RockYou
Anu Shukla, Offerpal Media
Greg Tseng, Tagged
James Currier, WonderHill
Moderator: Sean Ryan

2:45-3:15 PM Afternoon Break
Need caffeine? How about a cookie or a snack? We’ll have refreshments on hand to keep you going through the rest of the day.

3:15-4:00 PM Expert Talks
“Getting the Most Out of Your IP: Extend or Prepare to be Cloned” – David King, (Lil) Green Patch

4:00-4:45 PM Panel: Social Games in the Wild: Living Outside of Social Networks
Matt Mihaly, Sparkplay Media
Andrew Busey, Challenge Games
Jim Greer, Kongregate

4:45 PM Closing Remarks
Charles Hudson

5:00 PM Reception
After a full day of conference sessions and conversations, join the group for a beverage before you head out for the evening.
_____________________________________________________________

Early bird rates are available until May 23rd. If you’d like to come but early bird rates are all gone, use my registration code, JEREMYLIEW, to get a 15% discount.

Hope to see you there.

Best practices in MMOG metrics April 30, 2009

Posted by jeremyliew in games, games 2.0, gaming, metrics.
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I missed Daniel Jame’s presentation at GDC last month, but he has a great blogpost and slideshow about how to use data dashboards to run an online game. Go read it, and pay attention to the sample reports in the appendix.

How to build an eldergame April 28, 2009

Posted by jeremyliew in game design, games, games 2.0, mmorpg.
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Via Raph, Richard Bartle’s IMGDC keynote on how to build an eldergame is very interesting. He notes one of the problems with many MMOGs today is that once players have leveled all the way up, many of them quit. There is essentially nothing new to do. In a packaged software business that isn’t a big deal. But in a services business (whether subscription or virtual goods) you want to keep your best players around as long as possible. Bartle’s analogy:

• When you start off in a new mmo it’s like arriving in a foreign railway station on a backpacking trip

• With classes and races, The designers have provided trains that are guaranteed to go to interesting places

–You want to shoot fireballs? Board the mage train!

• Quests are the enginesthat pull the carriages along?

• However, trains run on rails

• if you want to disembark and go elsewhere, Well, you can’t!

• The design philosophy is all about controlling the player experience

• The same philosophy is applied for newbies and oldbies alike

• It’s consistent –but players aren’t!

Oldbies (experienced players) get bored when they’ve reached the end of the trainline and they want more to do. That’s where an eldergame can help.

Bartle thinks that many of the elder game options aren’t good, including raiding:

Well, the raiding game isn’t that good…

• Like quests, raiding content is fixed

–There’s only so many times you can run naxx before it’s samey

• Once, in fact

• Other attempts at the elder game also flop

• RvR (Realm vs Realm) is never resolved

–and therefore pointless

• PvP (Player vs Player) isbetter – if you’re good at pvp

–but the results are also pointless

• They provide burst fun, but no fun overtime

He says that to keep oldbies around, you need to let them create history:

• History is the player’s retelling of interesting events

• This means there must have been some interesting events

• No history means nothing interesting happened

–Where’s the fun in that?

• Problem: “interesting” changes over time

Bartle’s suggestion to solve this problem:

• Alice worlds are newbie-unfriendly but provide the depth and freedom that oldbies crave

• Dorothy worlds are very newbie- friendly but oldbies, who don’t want their hands held, feel disenchanted

• So: start off as a dorothy world and switch to alice for the elder game

Dorothy worlds are based on players who are like Dorothy in the Wizard of Oz, much like newbies:

… Dorothy, upon arrival in Oz, said: “We will go to the emerald city and ask the great oz how to get back to

kansas again”

• Dorothy is wary of the new world she has arrived in

• She wants a path she can follow to get through it

• She represents the modern, game worlds like wow

Alice worlds are based on players who are like Alice in Wonderland, much like oldbies:

When alice arrived in wonderland, her first words were: “curiouser and curiouser”

• Alice finds merely being in another world interesting

• She’ll go wherever fortune and fancy may take her

• She represents the old, balanced worlds like mud1

Barlte presents Eve as an excellent example of an Alice World, and hence an excellent model for an “eldergame”:

• although “user-createdcontent” and “user-generatedcontent” are often used interachangeably, there is a difference

–User-created content is created explicitly by the actions of players

–User-generated content is content created implicitly by the actions of players

• User-generated content is emergent

•Eve’s environment is so rich that interesting things just happen

In other words, allowing oldbies to indulge in freeform play is the best form of eldergame.

Crowdsourcing missions for MMOGs April 21, 2009

Posted by jeremyliew in game design, games, games 2.0, gaming, mmorpg, user generated content.
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Really interesting post at Kotaku about City of Heroes experience with crowdsourcing story arcs.

In a letter to the community posted on the official City of Heroes website, Matt “Positron” Miller revealed that within the first 24 hours of the new updates’ existence, players in both hero and villain factions had created more than 3800 story arcs, each consisting of five missions a piece – more content than the development team had created during the game’s entire existence.

Players have been busy trying out missions and critiquing them in the forums as well. Out of the more that 20,000 arcs now available in game, 2,860 of them have been rated 5-stars by players, with only 582 rated at 1-star. Popular themes include the 5th Column, featured in 794 arcs; the super-heroic Statesman, starring in 134; and time travel, which is the subject of 112 arcs.

As an indication of volume, this is more story arcs that have been created by the game developers in five years!

One popular element was creating custom opponents notes the City of Heroes blog

70% of the arcs that are published use Custom Enemy groups. These are enemies created using our fantastic costume editor, coupled with a large sampling of the powersets that the game already uses. These unique enemies have proven to be extremely popular and sparked new life into the game. Players absolutely love fighting custom enemies for the simple fact that they no longer know what to expect. One of the biggest problems with MMOs is you eventually learn what all the critters you are fighting do, and the game can get pretty rote. Developers make new critters, but there can be months before you get new ones. Now players have the opportunity to be constantly making new enemies with new, interesting capabilities that can challenge and vex themselves and their friends, any time they want.:

I don’t play City Of Heroes, so I don’t know how directly applicable this idea is to web based social games. However, any of the social games currently available have very similar structures (e.g. the “wars” genre) which can get old over time. Perhaps this approach of crowdsourcing missions might add some interesting eldergame elements to these games.

Erik Bethke on game balance in free to play games March 28, 2009

Posted by jeremyliew in game design, game mechanics, games, games 2.0, virtual goods.
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Interesting quote from Massively‘s GDC coverage about how to design for Real Money Trading:

Bethke imparts some advice on how the common mistakes can be fixed in terms of balancing. You can charge for things that are defensive in nature and the less skilled players with more money can buy them, while offensive items remain free of charge. The more skillful, more time-rich players won’t resent the advantages the other type of players has, as it won’t really stop them from doing what they want. Some companies have buyback programs for overpowered items, but this can set a bad precedent.

Lots of other interesting perspectives came from the panel – worth reading the whole thing.