Archive for August, 2008

Microtransactions coming to an iPhone near you

Thursday, August 21st, 2008

Exit Games’ Neutron cross platform multiplayer gaming service announced yesterday that they’ve upgraded to now include iPhone support.

Neutron will now feature game lobbies and various matchmaking capabilities, real-time, turn based tournament and multiplayer options,  buddy lists, leaderboards, profiles, in-game voice and text chat, and last but not least, our personal favorite: billing and in-game microtransactions.

“The iPhone presents a very unique opportunity for mobile online gaming as it is both specifically designed for online services and comes with the App Store, an already successful and accessible distribution channel”, said Christof Wegmann, CTO of Exit Games. “Neutron’s support of this new and innovative mobile device will ensure that iPhone game developers have a means to take advantage of its wireless connectivity and add social gaming features.” Wegmann further adds, “The iPhone will surely establish itself as a dominant mobile gaming platform and we’re pleased to support multiplayer and social features in games developed for the device.”

Neutron utilizes not one, but 5 SDK’s to provide a wide variety of connectivity and features right out of the gate.  Together with it’s hosting services, it allows developers to use even some of their most sophisticated features on a mobile platform, with a minimum time and cost investment.  Adding support for the wonder of Cupertino was a no brainer (and probably little to no sweat) for Exit Games, as the Neutron already supports J2ME, BREW, Windows Mobile, Flash Lite, and Blackberry, not to mention PC and console platforms.

Reblog this post [with Zemanta]
 

David Perry at GCDC: Free to play is the future

Wednesday, August 20th, 2008

While Leipzig might be a brand new town for David Perry, video games, development, and the industry are not.  Perry, a 27 year veteran of the gaming industry lead the panel at the Games Convention Developers Conference yesterday.  His topics ranged from personal history (the PS9 spoof was outstanding), statistics on the current status quo, and important players to look at in developing markets in China, Korea, and India.

Perry’s ‘time capsule’ intro included insight to Perry’s first programming tool – a Sinclair ZX81 with 1KB of memory, right on through to today’s complex media.  He covered the landscape from old media (cassettes) to new (Blu-ray, DVD, etc.) and on to developing storage media (hard drives).  Perry firmly believes that the industry will continue to push towards a global digital distribution outlet, with hard drives being the main storage media.  He did however also highlight another possible step after storage: virtual media.  Perry envisions a world where full games and even processing power wouldn’t be sitting on your desktop or console, but rather a cloud computing scenario where games would be broadcast across the internet.  He also admits that there are problems with this theory, and that today’s internet would maxed and taxed by this scenario, and fast and strong broadband is needed.

Exploring expanding game markets, Perry launched first into China, which has seen 65.9% overall industry growth over the past year.  Perry highlighted China’s must successful publisher Shanda as a benchmark as to where companies in that market are headed.  While Perry was visiting the Shanda offices, he shared a note that lots of team members were playing western videogames in an effort to match the quality seen herein.  While Chinese and Korean titles may not match western quality, they are certainly doing their homework, and should be on par shortly.

Creativity and risk are two key factors that allow eastern publishers to florish.  The free-to-play MMO Dance! Introduced new social systems by simply adding a chat feature, along with reasons for people to keep talking – embarrassing scenarios where players are forced to dance in strange costumes and marriage systems that allow players to look each other up and play together.  While these social additions sport high numbers, Stardoll (19 million members) and Zynga (55 million members), Perry is quick to point out that they lack one crucial component: the viral factor.

Using facebook as a testing ground, Perry highlighted his new Facebook Create a potato app as a viral experiement.  He says that he hopes to identify nodes within the network that will help spread the word about the game (and future viral projects).  He also spoke to Blizzards recent testing and entry into the viral market with their aggressive ‘recruit a friend – get an exclusive mount’ program.  Perry sees this as a failure waiting to happen.

Heading into the final stretch of his presentation, Perry made it clear : Free-to-play models are the future.  This shift will be possible in part by something he calls the “money wall” – the tipping point at which certain consumers will no longer be willing to pay for entertainment.  With consoles ranking in huge entry fees, and the average game cost of $59.99, this “money wall” is already keeping a large portion of ‘potential’ gamers out of the mix.

Perry left us with two scenarios regarding the outbreak of free-to-play models in the western market.  1. A publisher decides to release a major tier 1 game (think Halo, WoW, StarCraft) as a free to play, or…2. The Korean, Indian, of Chinese market begins producing games on the level of their Japanese neighbors like Miyamoto of Hojima, creators who inevitably will realease their games under the free-to-play model which is already strongly in place in the region.  Either of these events would set the ball in motion, says Perry.

While Perry’s presentation went well over the 1 hour time he was given, he managed to present listeners with an insightful view of the gaming industry.  Certainly there will always be those that disagree and see it in 22 different ways, but a growing number of industry experts are echoing, and adding to, Perry’s vision of a free-to-play global economy.  fatfoogoo is preparing for this future today.  What are you doing?

Reblog this post [with Zemanta]
 

EA’s Battlefield Heroes will be a phenomenon

Tuesday, August 19th, 2008

The numbers don’t lie.  The free to play, microtransaction based gaming business model works.  It not only works, but it’s making lots and lots of people lots and lots of money.  The North American market has been less than speedy in accepting this form of play.

Nexon entered the market first, and brought titles like Kart Rider and Maplestory to an audience that had never experienced this form of play.  So when big guns EA went out on the ledge and said, “Hey…we’re going to build a top notch game, able to hold it’s own at any shooter table, oh…and it’ll be free to play,” the reception was a bit lukewarm.  Granted, this has to do with the title not actually being ‘out’ on the market yet, but as momentum begins to grow, I’ve personally noticed more and more ‘w00t!  can’t wait to get my hands on this!’ comments springing up across the myriad of sites I cover each day.

Now I’m not about to put myself in the same category as David Perry, but it seems that we’re thinking the same thing on this one.  Perry recently sat down with GamesIndustry.biz and let the fan flag fly.  “I think Battlefield Heroes is going to be a huge hit, it’s going to be a bit of a phenomenon.  I have incredible faith that EA is going to pull this off.”  Perry continued, believing that most people are underestimating the project.   “For them to actually make that announcement was huge, I thought that was one of the biggest statements that EA has made in years and it just went over people’s heads.”

Building upon this, Perry noted that EA is still at heart, a retail company.  The make games, produce them, put them in pretty boxes and ship them off to retailers to them put their tax on, and pass along to the consumer.  Announcing a free-to-play, download it if you like game is not a great relationship builder with said retail outlets.  EA has already invested in the Korean market and The9 in China, but keeping it under the radar.  Battlefield Heroes is in fact, NOT EA’s first free-to-play, but rather the one that most North Americans have heard of.  EA built FIFA Online as a free MMO.  A smart move to test the international waters, as most North Americans favor their football involving a brown pigskin and not the round black and white ball the rest of the world sees as a football.

When asked about the free-to-play model itself, Perry said that the model actually allows for the potential of even more revenue generated compared to the traditional model.  “It’s a whole different world you enter when you get into free-to-play, it’s like the industry that we’ve all been missing and the second thing we’ve been missing is the idea of letting people pay what they want,” he explained.

“I’ve made so many games and we never, ever had the idea that people would pay more than the price of the game for the game, no one would pay over $60 if it’s a $60 game. On our 2Moons game, you’ve got people that spend $3,000 happily, and if we had more stuff for them to buy, they would buy it.”

As a point of comparison, most retail games sell for around $60, while Acclaim’s free to play games average a $75 take/person/game.

Reblog this post [with Zemanta]
 

fatfoogoo at the Games Convention and Developers Conference

Monday, August 18th, 2008

The Games Convention which kicks off in Leipzig, Germany this Wednesday and continues through Sunday in will see two equal sides of fatfoogoo. CEO Martin Herdina will be speaking at the GCDC (Games Convention Developers Conference) about in-game economies and item trading, while Loki and DT will be scouting the floor, reporting on and talking to gamers about the newest trends in various multiplayer games.

Many publishers have expressed interest in or are currently in search of additional revenue streams for their virtual worlds. Discounting the ‘traditional’ subscription fee, thousands of developers are either already in the game or standing at the starting line with free to play titles springing up almost everyday. The problem? How do we monetize it and recoup some of (read: ideally all of) the development costs? If the already established gold and item trading system (aka Blizzard) wasn’t already the Goliath these David’s are staring down, more and more suppliers are shying away from ‘Secondary Market’ third party suppliers. fatfoogoo has comprehensive experience with developing, managing, and providing ‘ready to go’ in game ecosystems, which makes it the ideal partner for a number of these publishers. fatfoogoo can function either as the Primary Trading platform or an Add-on marketplace. Combine this functionality with Comscore’s data: 32% of all Internet users play online games – and they’re prepared to spend money on it, along with the NPD Group’s recent study stating “…more than half of the Extreme Gamers and just over a third of Avid PC Gamers said that they would definitely download a feature to enhance a specific game that they own.”

Another interesting topic being covered in at the GC is the future of specialty trading. Not exactly new, but the genre is…eSports. Could we be seeing microtransactions being applied to “coach’s hours” whereby players receive special tips and tricks on how to command in-game mastery? Stay tuned as developments continue….

Martin Herdina is scheduled to speak on Wednesday morning, delivering his talk: A New Revenue Stream – Legitimizing the Trading within a Virtual Market. fatfoogoo is in good company, as Acclaim co-founder David Perry will deliver the Keynote speech with 125 other speakers and approximately 1000 industry participants discussing the future of the gaming industry.

Reblog this post [with Zemanta]
 

Chinese online gaming market hits $645 Million in Q2

Monday, August 18th, 2008

A recent press release by Digitimes places the combined market value of the China online gaming market at $645 M (4.43 billion yuan).

With an explosive growth rate, this places the market at an 11.2% growth over Q1, and a 65.9% increase on the year.  Big players Shanda (Who recently partnered with THQ to release Company of Heroes in a microtransaction format), Netease, and Giant (formerly Zheng Tu) took the top three spots respectively.

While the Chinese output is already an impressive showing of growth, with more and more chinese titles being filtered, translated and repackaged for North American shores, one can only wonder if the sky truly is the limit for Chinese developers?  Will these titles in combination with EA’s Battlefield Heroes, and ID’s Quake microtransaction based games finally break the mold and lead to overall acceptance by the North American gaming community?  Only time will tell.

via Digitimes

Reblog this post [with Zemanta]
 

David Perry’s 33 ways to monetize games

Sunday, August 17th, 2008

David Perry recently laid out an impressive slideshow over at Business Week with 33 examples of how to monetize games.  Perry a 27 year industry veteran has over $1 Bn of retail game sales receipts to his credit, and co-founder and chief creative officer of Acclaim games.

Perry fully admits in the article that the rapid and expansive growth of the gaming industry will and should probably make his 33 ways list obsolete rather quickly.  Perry sees games that fall into the ‘social’ catagory as those with the most explosive growth and potential.  Siting an NPD Group study, Perry notes that 15% of retail game sales go to the adult ‘mature’ audience, and 85% to everyone else.  Social games are asynchonus (meaning, busy players take turns going back and forth at each other, and do not necessarily need to be ‘playing’ at the same time) and fall nicely into the mid-zone between these adult ‘mature’ gamers and all others.  In other words, covering the most amount of the market with the widest net.

Distribution methods are also covered by Perry.  Nintendo, Microsoft, and Sony, former kings of brick and mortar distribution methods, have changed their tune and opened online distribution channels.  As soon as ISP penetration reaches the tipping point, Perry sees physical media such as cartridges and DVD’s going the way of the dodo bird.  The players to watch in the digital distribution battleground?  Facebook, MySpace, Google, and Apple.

While Perry’s list covers a wide range of money making gaming ideas, his microtransaction side is of particualr significance, pointing out even staunch anti microtransaction publisher Blizzard’s recent dipping of toes into the ‘let’s measure their reaction’ pool:

Micro-Transactions

These are small, impulse-driven purchases bought for reasons of vanity, saving time, better communications, or even moving up a level more quickly. (Levels are a player’s ranking within a virtual society.) They’re generally paid for using virtual points, either earned in the game (by playing), or bought for real money (which is a massive time-saver). A new trend is offering virtual items in exchange for access to a player’s real-world friends. So for example: “You can have this magic sword, if you invite a friend to play.” Getting that balance right can mean stunning revenue growth, which makes it even more important for you come up with offers the gamers really want. This technique works well on social networks like Facebook as friends are just a click away. If you can get more than a 1 to 1 ratio, the game goes viral, which results in exponential growth. That’s the goal here.

The image that Perry chose?

Pointing out Blizzard’s new ‘recruit a friend’ campaign whereby new comers and those that recruited them can now gain ‘triple xp’ and summon each other to each other, thereby saving a great deal of time.  The recruiter also has the opportunity to receive an exclusive in game mount if the recruitee follows through on certain terms and conditions.  See it any way you want…but it looks like a crack in Blizzard’s armor.

View Perry’s article at Business Week.

View Perry’s slideshow at Business Week.

Reblog this post [with Zemanta]
 

Fraud and how MMO’s are dealing with it

Saturday, August 16th, 2008

As the MMO industry continues to develop and grow, sadly some of the ‘darker’ aspects of economies rear their ugly head.  Credit Card fraud has become an increasingly hot topic of debate, with a number of specialist firms engaged in spotting, reacting to, and deterring future fraud in the MMO world.

Chargebacks from fraudulent credit cards are a growing problem for MMO publishers.  Chargebacks are the process by which credit card sales are refuted by the holder of the credit card.  Gamesutra recently sat down with Gene Hoffman, Chairman and CEO of Vindicia, a billing an fraud management company for a Q&A about the state of fraud in the MMO industry.  Hoffman’s views prove to be very interesting:

…. micro-transactions do seem to work fine in, say, Korea!

Gene Hoffman: Americans love “all you can eat”. Even the mobile phone companies have really evolved to all you can eat. We always challenge people to name the bill they get every month or year that isn’t in actuality all you can eat.

Outside of government granted monopolies, most people know what they are going to pay. That said, using a base plus metering can make a lot of sense. It allows you to then offer more subscription tiers that allow your best customers to pay you a higher base and less variable – again much like the plans and pricing that the mobile industry has evolved.

do you have any response to the MMOG Business Models: Cancel That Subscription! article we recently ran?

Gene Hoffman: Business model flexibility is the key issue for all the various games, and the dynamics of the game itself should drive pricing strategies. When game developers are approaching a more casual market it certainly makes sense to give more access and time to get buy-in and adoption.

It follows something we tell lots of our clients, which is “don’t be afraid of giving away what is free to you to acquire more customers and keep them longer.”

That said, we think that it is better to give people larger doses of time to create a base subscription service using tools like “payment method required free trials” and then stack additional micro-payments on a base of something more like a $5 per time period price. We see a lot of game developers and other merchants being too shy about the value of their game which leads them to under-price.

As virtual economies and the games they serve continue to evolve, so will the criminals trying to fraud the publishers.  Luckily though, through articles and interviews with industry experts like Hoffmann, we all benefit by increasing the visibility of security features on the backend that must be closely monitored and continually improved.  At fatfoogoo we’ve tested, developed, and are continually improving and updating our fraud detection methods, thereby giving the publisher one less thing to worry about.

Reblog this post [with Zemanta]
 

New updates on the Battlefield Heroes front

Friday, August 15th, 2008

EA demoed it’s cartoony entry to the free to play, microtransaction title Battlefield Heroes again yesterday at the EA Summer Showcase.

Lead by Swedish development firm DICE, Battlefield Heroes builds upon DICE’s successful Battlefield franchise.  After making a name for itself with Battlefield 1942, DICE moved on to tackle Battlefield Vietnam, created a futuristic offshoot, and successfully reinvented it for console play.

While Battlefield Heroes shares a number of traits with it’s predecessors, it also differs in a number of ways.  Obviously, first and foremost is the free to play, microtransaction based business model.  While the game will be supported primarily (for now) by in game, between battle, and website  advertisements.

The second departure stems from the overall graphics of the game.  Bucking the trend of ever more ‘realistic’ shooters, Battlefield Heroes play centers around a cartoony, ‘feel good’ design.  If Team Fortress 2 comes to mind, you’re on the right track.  However DICE’s Ben Cousins is quick to point out that, “Battlefield Heroes focuses on a mixture of vehicle and infantry combat in large, open environments.  We’ve also got a full MMO-style leveling-up and character-customization system. We’re also free to play, with really low system specs. We’re designed for a much more casual audience than Team Fortress. We’re third-person, and we’re really focused on a fun, easy-to-get-into, accessible gameplay. I’m a big fan of Team Fortress and have been playing it since the Quake version, but it’s still a pretty hardcore game. Heroes, with our matchmaking system, is much more focused on bringing a new audience in to shooters.  Everything else we’re doing is different. “

The third and biggest differentiator is the skill system.  Each class has several skills that are activated al la World of Warcraft.  Vehicle repairs, healing, shields, special attacks (think fiery bullets and repetitive grenade launches), etc. which are/were traditionally bound to items, are now activated at the click of a button.

When questioned about the entire microtransaction system, Cousins had quite a bit to say.  Gamespot.com recently interviewed Cousins:

GS: This microtransactions model hasn’t taken root yet in the West. What do you look at in terms of successful predecessors for the microtransactions model in the US? Yohoho Puzzle Pirates? Acclaim’s games?

BC: MapleStory is doing really well, and Puzzle Pirates is also doing well. I’ve been going to a microtransactions roundtable at each Game Developers Conference over the last few years, and there used to be maybe a few guys operating small businesses, small-scale role-playing games and that kind of thing. When I went this year, it was clear there were a large number of [successful developers].

I think it’s interesting Heroes is the first microtransactions-based game from a major publisher. So we appear to be breaking the ice and doing something cutting-edge, but there’s a good precedent in the West for reasonable success for a smaller-scale business. There’s an audience there and a demand for this sort of game, and we think we can bust it open with Heroes with a higher profile and the higher-quality game we’re offering.

GS: Is there anything to be gleaned from the fact that none of those successful microtransaction games you mentioned were action-oriented?

BC: There’s little precedent for action-oriented microtransaction games in the West, you’re right, but the predominant microtransactions genres in Korea and the Asian markets are action games like Special Force and Sudden Attack. Having studied the way they do it in Asia–we’re also developing a specific Battlefield game for the Korean market which is separate for Heroes–we’ve learned quite a lot about what you can do and can’t do with item sales in an action game.

While it may appear as a setback for EA and DICE that the release has been rolled back to ‘late 2008’ (we’re wagering on the Christmas Holiday season 2008), it looks like this story has a silver lining.  While Battlefield Heroes is currently in a closed beta, DICE sites that they have approx. 10,000 users testing the game right now, logging in an impressive 16,000 hours of gameplay.  Obviously, they’re doing something right.   Battlefield Heroes is a risky play for EA, and the extended buildup and hype may just prove to be a winning marketing and advertising strategy that others could learn from.  While EA and DICE take this time to iron out any potential wrinkles, they continue to drive the buzz mill with posts just like this one.

I for one am looking forward to seeing YOU on the Battlefield this Christmas.

Reblog this post [with Zemanta]
 

NPD Group releases Games Segmentation 2008 Report

Thursday, August 14th, 2008

The market research firm the NPD Group recently released its 2008 Games Segmentation Report which reveals some staggering numbers.

According to the US Census population clock, there are currently 304 million Americans.  This includes all living breathing persons within the American borders.  While some of these people do not fall into the range of NPD’s survey (ages 2-65+), NPD found that there are approximately 174 million Americans playing games.  Even if we were to take the entire US population, that means that 1 out of every 2 Americans is playing some type of game on some type of platform.

The report divides the total number of gamers into 7 distinct “gamer segments” and analyzes their usage and ownership patterns.  The breakdown looks like so:

  • 3% are Extreme Gamers
  • 9% are Avid PC Gamers
  • 17% are Console Gamers
  • 14% are Online PC Gamers
  • 15% are Offline PC Gamers
  • 22% are Young Heavy Gamers
  • 20% are Secondary Gamers

Young heavy gamers make up the majority of the survey with a whopping 38 million strong.  These gamers tend to favor portable platforms, make up at least one third of the system owner’s group with 6 out of every 10 owning a DS and/or PSP.

On the other side of the coin, Extreme Gamers, those classified as playing a total of 22.3 or more hours per week, and having purchased nearly 24 titles across all their gaming platforms in the past three months, show a strong preference for the PS3 and Xbox 360.

“Although Extreme Gamers are heavily involved with the industry, they represent a small portion of the potential market for any new game that comes to market,” said NPD analyst Anita Frazier. “In order to promote continued growth, we must better understand all of the gaming segments.”

While the PC is used more than any single console for gaming, Extreme Gamers, Console Gamers, and Young Heavy Gamers are more likely to use consoles than a PC to play.

The study also found that Console Gamers; those that play on a console system, on average 8.2 hours/week, and purchased 3.2 games in the past three months, that own a PS3 are most likely to own other current gen consoles.  In contrast, only 10% of PS2 owners also own a PS3.

Regarding micro transactions, the NPD Group found that more than half of the Extreme Gamers and just over a third of Avid PC Gamers said that they would definitely download a feature to enhance a specific game that they own.

Speaking of downloads, 14% of games purchased in the past threee months across all segments were digitally acquired, with Avid PC Gamers making 27% of their purchases digitally.

About the NPD Group Study:

The data was collected from more than 20,000 members of NPD’s online consumer panel, ages two to 65+.  Responses for consumers ages two to 12 were captured by instructing a parent to take his or her child in this age range to the computer to answer the questions, either with or without the parent’s assistance. Qualified respondents reported they personally play video games on a PC, on a console or portable system, or on another device such as a mobile phone.  The following four key variables were used to create the gamer segments: ownership; usage; frequency; and purchased/received video games. Final survey data was weighted to represent the U.S. population of individuals ages two and older.  Fieldwork was conducted from January 11-February 5, 2008.

Note: This study was conducted in January, meaning that questions that refer to consumer behavior in the past three months include the Christmas/Hanukkah holidays.

Games Segmentation 2008 differs from Gamer Segmentation II (May 2007) primarily in the revised sampling methodology and the revised and updated Segment definitions. Gamer Segmentation II used a sample of individuals age 6 to 44. Games Segmentation 2008 uses a sample of individuals 2 to 99. By including all gamers, NPD will be able to continue to use and trend these segments for future waves.

Reblog this post [with Zemanta]
 

70% of Games Lose Money, microtransactions can recoup costs

Wednesday, August 13th, 2008

Former Sony executive Chris Deering recently stated at the Edinburgh Interactive Festival that only three in ten games will ever make enough money to break even, much less see a profit.

Kicking off this week’s Festival, Deering delivered his keynote and served up some juicy predictions for the gaming industry.  Based on his findings and correlations drawn from Screen Digest and other industry sources, Deering expects that by 2011, there will be 2.5 Bn potential gamers worldwide.  Traditional gaming platforms such as the DS, Wii and PS3 are expected to have a base of 500m by 2011, with alternative mobile platforms and gaming PCs splitting the remains with a billion users each.

Looking at the numbers, Deering warned that “traditional revenue sources will not be sufficient to fund games development” and as the market grows, studios must seek alternative revenue sources now in order to avoid becoming obsolete.

Citing the growth of new players to the market; mobile network carriers, cable, satellite, and DSL providers all working towards a ‘competitive array’, this competition is only going to get stiffer.

“Something is going to have to be there to make up the difference,” he said, citing a “creative use of hybrid online/offline advertising revenue models” as one key way to succeed. “These business models must be explored.”

Deering went on to cover areas and trends that he believes will sustain a 2.5bn person market.  On the development end these include WiFi, lighting and voice recognition, massive game worlds, cinema-real presentations.  On the player end; microtransactions and in game advertising topped Deerings list.  He also covered user generated and user enhanced games.

Perhaps planting a new seed, Deering also went on to unfold his vision of another potential revenue source; gaming.  “Gambling will become a source of development funding,” said Deering. “Perhaps not directly, but this area can provide some sources of income which eventually be directed back to the developer.”

Prior to his appointment as president of Sony Europe, Deering served as the head of Sony Computer Entertainment Europe during the launch of the original PlayStation, PlayStation 2 and PSP, which gave him significant knowledge of Sony’s internal and external development strategies. He resigned from Sony in 2005.

Reblog this post