Sunday, October 28, 2012

The Importance of Being Innovative

Author’s Note: This is Part II of a III part series in a look at the rise of F2P in the West. I will take a hard look at the path to a F2P MMO market and what it means for gamers and developers alike.

Part II: Innovation

What is Innovation? Is Innovation fun? Does Innovation lead to greater sales and profit? What is Innovation? When things are going badly developers will do anything to stop the hemorrhaging; they’ll throw everything and the kitchen sink at the problem. They say ‘Necessity is the mother of all invention’, which is why Innovation is often defined as 'it’s when things are worst that you’ll do the previously unthinkable'.

I envision innovation with regards to F2P as choice. Someone once wrote that the true goal of civilization is to give the great amount of choice to its peoples. While often times F2P is seen as getting something for nothing, with regards to the business side of F2P, I believe that choice is its greatest innovation. Before F2P, there was only the subscription; $14.99/month. And it worked for many years. Often times when something works fine, the school of thought is to leave it as it is. As costs and expectations rose in the wake of the explosion of popularity in the MMO market, the subscription market met a saturation point. It’s entirely possible, likely probable, that the business side of MMO’s will return to the subscription model, even if it’s just in conjunction to the F2P model. While, there is a growing surge from the consumer side for F2P, there is a core minority that wishes things to remain the same.

A recent article at Eurogamer featured the trio of Ragnar Tornquist, the game's creative director, Joel Bylos - then lead content designer on The Secret World, now game director, and Funcom's communications director Erling Ellingsen; the de facto public faces of The Secret World. In it Joel Bylos asked: "Guild Wars 2 is a very high quality product funded by the largest MMO publisher in the world. Will people be expecting that quality in all free-to-play going forward? What about smaller companies like us? We want to try and create that huge experience, but we don't have five or 15 MMOs that we own that are still making money all over the world. Do the bigger companies then drive out the smaller companies?"

It’s a question I’ve been pondering as the anticipation of F2P, by gamers, the media, and developers alike reaches a fever pitch. It’s not a small question. Unless you believe that the subscription-less market was small because of publicity and quality, you must acknowledge the possibility that a sizeable amount of smaller less well-known games and development houses are going to close as a result of the industry wide switch from subscription. The argument can be made that this is a free market and only the strong survive, of course that’s akin to saying the popular kids in high school were the best and the brightest lights.

Gamers have for the most part hailed the rise of the F2P; most gamers look at it as getting a superior or equal product for free. Various people have put the number at upwards of 60%; of F2P gamers who never pay a dime. Freedom can have unintended consequences, as one only needs to look at the world’s economy to see the perils of deregulation done poorly. There is the story of the King who says to his General ‘I am your King, I decree this war shall be won’. As the General is walking away his second-in-command whispers to him jokingly ‘You never told me that I could win wars simply by pronouncing them’. More than anything it troubles me that gamers have such disregard for reality. Ragnar Tornquist said: “It might be the right path for MMOs; as a consumer, as a player, I appreciate it. As a developer I'm with Joel in thinking that it is unfortunate for a lot of smaller companies or medium-sized companies."

F2P often works similarly to the big gambling casinos. There are four types of gamers: The Whale, the Everyman, the Gambler, and the Compulsive. Firstly, the Whale, for whom spending hundreds or thousands of dollars is just good fun; they are the holy grail of F2P players. Though just a small percentage they make or break most F2P games. Secondly, there is the Everyman, this gamer is mostly dipping their toes into the water. They might spend a few dollars here or there, but mostly they’re playing for free. Thirdly, there is the Gambler; these types play the odds and look for the best deals. Lastly, there is the Compulsive spender who burns through money like water; this is often the type that you will read stories about, the ones that make good copy for advocates against gaming. This type tends to spend money on a whim, without strategy or planning, they see a shiny object and they have to have it. There is a fifth type, a secretive type that crosses all boundaries, this gamer is often looking for the exploit, the incorrectly labeled or coded item that is more than a simple bargain, often times breaking the game until fixed but this gamer has little to no bearing on the economic side of F2P. They do, however, bring notoriety to a game and name recognition for a smaller game can pay immense dividends. EVE Online, for example, is famous for individuals who have swindled others.

Often times F2P gets criticized for its ambiguity in both form and function. One developer can mean something entirely different from another. While understandably this can frustrate gamers who aren’t particularly sold on the business model; it’s not surprising that there are growing pains. I find that games that seem to have the most goodwill are the ones that have subscriptions with some free credit for the cash shop every month alongside of the F2P model. The best games seem to have subscriptions along with F2P with a ‘limited everything’, as I call it. The ‘limited everything’ means that no part of the game is unplayable for the F2P customers, however it is not as fleshed out as the subscription side, it allows for freedom to see the game without giving away everything for free. LOTRO, STO, and perhaps the soon to become F2P SWTOR all do the same things. The obvious exception is Guild Wars 2, whether you believe that it is the exception that proves the rule or not, I wouldn’t be surprised if Guild Wars 2 comes out with an option for subscription. It would likely be business driven from a wish to have a steadier income flow, than the highs and lows of the cash shop model.

In many ways MMO’s are likely to be the micro proving grounds for economic theories of the macro in video game business. According to the Washington Post last month: “In real life, if you want to know what’s happening with car sales, you might call up a handful of car dealerships and ask what their sales are like this month… In a virtual world, you just know everything. There’s no sampling, there’s no error. It’s perfect information, said Dmitri Williams, a researcher at the University of Southern California.” It’s not just economic theory that benefits from using the video game genre to collate data according to a Wall Street Journal article: ‘In the largest public study of electronic gaming so far, Mark Blair at Simon Fraser University in Vancouver, British Columbia, is analyzing the behavior of 150,000 people who play the popular online game called StarCraft II, pulling together more than 1.5 billion data points of perception, attention, movement and second-by-second decision-making. By analyzing so much game play, he hopes to learn how people become experts in an online world. That may shed light on how new knowledge and experience can become second nature, integrated into the way we react to the world around us.

One thing to realize is that innovation often comes from smaller companies, or at least less well-known games. In Guild Wars 2, the combat its freeform play and its lack of reliance on the trinity of tank, healer, and damager dealer is a signature. However, other games have gone that route in one form or another. Vindictus, Dragon Nest, Tera, TSW, are just a few of the games in recent years to step away from the trinity and become looser and more freeform combat based. Often times it is the smaller games and companies which can afford to be risky simply because they need something to stand out from the crowd. Bungie before Halo, Epic before Gears of War, Bioware before Baldur’s Gate, Eidos before Tomb Raider; and the list goes on. Ragnar Tornquist said in the Eurogamer article: "On the positive side, this brings change to MMOs, and the market needs it. MMOs had stagnated, and that's something we tried to address as well. Hopefully that things are stirring up now means that there can be new games, new types of games, and those will often come from the smaller guys or the medium-sized guys, and not the big ones, because the big ones are playing it safe."

The most important idea behind innovation is how it is perceived. The Old Republic innovated in story, and after the initial buzz it was largely ignored to the point of switching from a positive to a negative in comments made by writers and gamers alike. It is not enough to merely innovate; it must be innovation that is well received by the audience or consumer base. It is akin to the premiere show of a play. Initially there is a good buzz until word comes down that a major critic has panned the show. In minutes the formerly packed hall is empty. Perception is everything, and often much more important that the actual innovation involved. Consider that the MMO’s likely to be the most innovative are sandbox MMO’s. Sandbox MMO’s have very few rules and regulations; they are much more a free world to do as the gamer desires. Consequentially it is much more work for the dividends to pay off. The innovations of sandbox MMO’s are perceived to be more akin to work than play and thus a large percentage of gamers will often times stay away. Perception is everything in regards to innovation.

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