SOE’s The Agency now looking at microtransactions and IGA

Sony’s upcoming title ‘The Agency’ will not be looking at a subscription based model, but rather in-game advertising and microtransactions as steady revenue streams.

The Agency presents a unique quandary for SOE – how do you build on-going revenue streams into a title that spans the gap between MMO’s and FPS’s?  The first group is used to monthly subscriptions and a rich virtual world.  The second group has no experience with subscriptions, and expects plenty of shoot ‘em up, and is less concerned with playing with others, or simply just shooting them.

While SOE is carefully studying the market reaction to it’s free-to-play title Free Realms, which earlier this week released a line a Topps collectible cards as an additional income stream, and noting what does and what does not work for the community as a whole, all the while making a title enjoyable by all.
Edwin Evans-Thirlwell from Kikizo.com gets the ‘Scoop of the Week’ award, with his outstanding interview with SOE’s Senior World Designer Kevin O’Hara.  Some highlighted quotes include:

“The Agency is our online persistent shooter,” he says. “We’re not generally using the term MMO, although we do put a lot of MMO abilities that we’ve learned from our other projects into it. We really want to first and foremost be an action shooter as a game, which means first person or third person view, which really brings in the crowd who like that type of visual experience where when you aim and shoot your skill is important.”

“We’re acutely aware that shooter players are not used to playing monthly fees, so I doubt we’ll go for an outright $15 a month, which works on some of our other projects. So we’re checking out Free Realms to see how they’re going to do with their micro-transactions, and we might incorporate some of that. We’ll definitely have some ad revenue models.”

Having a look at various screenshots and trailer for The Agency, all I can say is, I can haz now plz?  I personally I’m not a big player of FPS’s, but this one might just drive me over to the dark side.  It looks like this super slick spy shooter would be a perfect place to drop the occasional $20, to pick up a silencer, a sniper scope, and oh, just for kicks, let’s toss a bazooka in there.  The rich textures and landscapes, including urban environments lend themselves well to un-obtrusive IGA’s.

THQ and Massively sign multi-year exclusive in-game advertising deal

THQ.  It’s been a banner year for them.  From opening a new office in Shanghai, to bringing Dragonica to the North American market, these guys are on a roll.  So it should come as no great surprise to hear that THQ has yet again taken things to the next level.  They’ve recently announced their signing of a multi-year deal with Microsoft owned, in-game advertising network Massively.

This agreement will place Massively as THQ’s exclusive in-game advertising partner for all upcoming PC and Xbox video game titles.  The agreement will provide for in-game advertising inclusion in a number of THQ’s existing titles including “Saints Row” and “Saints Row 2”, which shipped over 2M units globally during the first 2 weeks of it’s October release.

“By aligning with THQ, Massive is now poised to represent new content and franchises that are realizing enormous market success globally,” said Eric Bassman, COO of Massive. “And with an open-world, mission-based game such as “Saints Row 2″ coming into the Massive network, we can work creatively with advertisers to place their brands in new, edgy environments.”

THQ EVP of publishing Scott Guthrie adds, “We have entered into a strategic agreement with Massive because it is a leader in the emerging industry of in-game advertising.”

“The Massive team has a strong track record of collaborating with game developers, sports leagues and advertisers to find a unique way to place brands and products that enhance the gameplay experience.”

By adding THQ to their already impressive roster, Massively now has even more leverage and more importantly, eyeballs, on it’s in-game ads.  THQ’s inventory extends across a wide range of game titles, and varied demographics, thereby offering new advertising opportunities to brands seeking to reach a traditionally difficult market.

Italian animation studio Rainbow invests $25M to create new free-to-play MMO

With over $116.3M in worldwide annual sales, Italian animation Giant Rainbow has recently invested $25M in the development of a free-to-play MMO based on its popular Winx Club franchise.

CEO Iginio Straffi said that the company plans on hiring approximately 100 Singaporean full time staff including animators, programmers and artists by 2011.  The project is also expected to generate over 200+ jobs for independent freelancers and merchandising experts.  This expansion will effectively increase the companies’ size by one-third, as Rainbow’s current staff is comprised of 185 full time staff based in two Italian animation studios and offices in Germany.

The Winx Club franchise currently has over two million register worldwide users, with animated cartoons airing around the world on cable television channels including the Cartoon Network.  The new MMO is expected to be based on a free-to-play model and monetizing via microtransaction updates, and presumably character customization.

While other locations where looked at for the expansion including, Italy, Germany, and the Netherlands, Straffi commented that the available talent pool in Singapore was one of the main reasons why Rainbow decided to develop the game there.  If the MMO does well, Straffi and Co. plan on further investment and development of the fledgling studio including animation creation for television and silver screen.  Straffi also added that the superior internal telecommunications systems, strong intellectual property rights, and government support helped swing his decision.

Manohar Khiatani from the Singapore Economic Development Board comments, “It will provide an essential avenue for us to nurture talent and push Singapore into the limelight in the field of animation and gaming.”

This can be seen as a major win for Singapore, who’s aggressively been courting digital media developers since 2000.  In September of 2008, US based DigiPen Institute of Technology set up shop and accepted it’s first batch of 60 students that will be focusing on the creation of video games.  The National University of Singapore has also earmarked $11M to start an Interactive and Digital Media Institute.

UK gearing up for best-ever Q4 game sales

A recent report published by Top Global Markets, a combined monthly report from leading providers of the video games industry consumer and retail information, The NPD Group, GfK, Chart-Track Limited and Enterbrain Inc., shows that combined video game software sales across the world’s largest three markets had a 1 percent growth Q3 (July-Spetember) 2008.

The United Kingdom took the show, with a remarkable 15 percent growth rate, the US coming in a second at 8 percent.  To clarify, the UK has a skewed growth rate pattern though, as a 26 percent gain was experienced in console software, while portable software dropped 1 percent.  The US on the other hand might be a better indicator, with console software shipping plus 6 percent and portable software growing 10 percent.

“Taking into consideration the marked differences between the 3 territories, the UK market in particular is gearing up for a best-ever Q4 performance overall, even under the well-documented financial climate,” said Dorian Bloch, Business Group Director, GfK Chart-Track Limited.  “We fully expect UK consumers to drive sales for the full year to unprecedented heights, especially considering the line-up of exciting single and multi-format new franchises currently hitting the market, not to mention the evergreen portfolio of Nintendo-published Wii & DS titles which have done such a great job of expanding the market to a far more mainstream consumer.”

The US market, however, was the only sector to experience positive growth YOY with an 5 percent growth in Q3 ’07 and 8 percent Q3 ’08.  The UK, on the other hand, is experiencing explosive console software sales, but actually diminished growth YOY – a 34 percent increase in Q3 ’07 vs. a 15 percent increase in Q3 ’08.

“In the U.S., third quarter total industry unit sales grew 8 percent versus 2007, even as the economy showed accelerating signs of recession,” said Anita Frazier, industry analyst, The NPD Group.  “As would be expected at this point in the console lifecycle, games sales are starting to take the spotlight even as the average retail prices of games increased slightly.  Heading into the critical fourth quarter, the U.S. games industry is on solid ground.”

And then there’s Japan.

Most, if not all of our consoles are pumped out of Japan at an astonishing rate.  The flat performance of unit sales in Nippon cast a wave upon the Japanese software market, currently being felt across the industry.  Q3 ’08 shows a dramatic 21 percent overall decrease YOY, with consol software taking the biggest hit at 33 percent, portable software at 13 percent.

“Japan did experience sales declines in both software categories, but it is important to keep in mind that not only is Japan a more mature market than the U.S. and UK, but 2007 was a banner year for the Japanese software market, with the titles released in the third quarter of 2008 not being as highly anticipated as those released during the same time period in 2007,” said Ricky K Tanimoto, Global Marketing Analyst, Enterbrain, Inc. “Also, software titles generally have stronger launch sales in Japan, which represent a large percentage of the total sales in Japan compared to the U.S. and UK. In regards to expectations for the remainder of the calendar year, we estimate overall video game sales in Japan this holiday season will not be greatly affected by the world financial crisis, especially in the portable space. Portable software sales are particularly strong, and new portable hardware systems like Sony’s PSP-3000 and Nintendo’s DSi will prove to be driving market forces in Japan throughout the 2008 holiday season.”

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Microtransactions and the food service industry

uWink serves up diner entertainment, advertising, and gaming, all while waiting for an order to be delivered.

The NY Jets beat the (previously) undefeated Tennessee Titans this weekend, and I spent a good 4+hours in an American sports bar watching the game with fellow Jets fans.  After a quick glance around at all the tables, necks craining this way and that to see the game, I thought to myself (and I knew it was myself, as I recognized the voice), “Why not have individual monitors at each table?  Why not give people the choice to watch what game they want to watch while at their table?”

A quick search this morning brought up a VERY interesting concept and company doing just that…and more!  UWink.com is a self described entertainment and hospitality software company.  They think they’re on to something quite unique, and they’re not alone.  The recently won Hospitality Technology Magazine’s 2008 award for overall technological innovation.

The technology is seemingly simply enough: uWink restaurants have individual touch screen monitors placed at each table, where customers can order food and drinks, view movie trailers, take surveys and quizzes, and, yep, you guessed it: Play Games.  The software allows for the delivery not only of your cheeseburger (yes, you can haz), but targeting advertising, and monetization of customer game play via microtransactions.  Diners pre-purchase game credits and can have them included in the bill.

uWink’s software allows customers to select from over 70 single and multiplayers games, all at tabletop level.  Now, thanks to a partnership with Volanté Systems, uWink is branching out beyond it’s own doors, and can offer the same technology, prepackaged to any restaurant (presumably with a LAN network).  This integrated point-of-sale and backoffice system is open source, features peer-to-peer technology, and handles credit/debit processing.  In other words, literally, a plug and play microtransaction monetization module for restaurants everywhere.  According to uWink, their systems have resulted in larger than average checks and margins, labor savings, increased customer loyalty, increased transaction speed and accuracy, and reduced lines.

Just WHO had this brilliant idea?  To me, this is just the icing on the cake: Nolan Bushnell.  If you play games, are over the age of 25, and ever owned an Atari and/or forced the parental units to take you to Chuck E. Cheese’s, you should know the name Nolan Bushnell.  He’s co-founder of the original Atari enterprise, and the man behind millions and millions of quarters and animated dancing mice.  For the past 30 years Nolan has been pumping out successful business ventures, and something tells me he’s well on the verge of a revolution with uWink.

While Nolan and co.  are enjoying running a restaurant chain, they see the future of the company in licensing out the technology to other restaurant owners and operators both nationally and internationally (uWink is available in 11 languages).  Given Nolan’s track record, I’d bet on the man behind Pong to do it all over again.

uWink currently has two restaurants in the Greater Los Angeles Metro area:

6801 Hollywood Boulevard, Los Angeles, CA

and

6100 Topanga Canyon Boulevard, Woodland Hills, CA

Along with one Mountain View, CA (Wanna bet that Larry Page has been there?)

401 Castro Street, Mountain View, CA

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Casual Collective plans to release additional game packs via Microtransactions

Chances are that you’ve never heard the names Paul Preece and David Scott.  On the other side of the coin, chances are that you’ve wasted an hour or two in the office at home playing the highly fun and addictive game Desktop Tower Defense or perhaps Flash Element TD?  Yeah.  Me too.

Combined, the two flash games have been played over 210 million times.  And what started out as a hobby is now on the verge of becoming a full ledged business for these two gents.  Not happy to rest on their laurels, Preece and Scott have been busy developing four more titles that are now available at Casual Collective, a platform for the team’s developments and those uploaded by the community.

If this user community development (i.e. crowd sourcing/programming) sounds familiar, Kongregate and of course the old standby Newgrounds might come to mind.  The goal here is to foster community involvement, social networking, chat rooms, and community tools all aimed an enhancing the users overall gaming experience.  Players are further encouraged to register and participate via receiving various rewards, bonus content, and customization options.

The duo is also sure to be pushing their own products quite heavily on the site, but hey, who can blame them (Dang it…just lost another tower….what was I saying?).  Their 4 new games went live yesterday, with further plans to license them out to additional gaming portals.  The new titles are:

• Minions – a real-time strategy game
• Buggie Stars – a platformer
• Desktop Tower Defense – ok, not new, but go check it out – the fun begins all over again (think multiplayer mode)
• Flash Element TD – again, same title…whole new way of looking at the game

As with many/most browser based flash games, the majority of revenue comes from advertising dollars, but Preece and Scott are also planning on releasing game upgrades and enhancements via microtransactions.

Funded by one of our Silicon Valley favorites, Lightspeed Venture Partners, Jeremy Liew didn’t think twice before handing the team a $1M check.  He’s an avid fan of Desktop Tower Defense and says,

“I wanted to meet the guy who was such a drain on my productivity.”

Liew also believes that the Casual Collective falls right in line with web 2.0 gaming trends – shorter development cycles, cheaper budgets, web distribution, and widgetization, i.e. games aren’t tied to home, but can roam about to just about any site across the web.

If you’ve not yet played Desktop Tower Defense (are you living under a rock?) have a visit to the Casual Collective and give ‘er a whirl.

On a side note: It turns out that Wagner James Au from GigaOm covered Desktop Tower Defense in May of 2007.  Preece was working as a VB programmer and making games in his spare time, all the while pulling down high 4 digit advertising revenues per month.  Apparently this didn’t bode well with the boss man, and Preece was given the axe.  Preece and Scott are now set with seed funding until at least 2010, so really…who’s laughing now?

Wishing all the best to the Casual Collective – certainly one to watch.

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Mobile Games Market value expected to double by 2013

A recent report published by Juniper Research predicts that the mobile gaming market is expected to reach revenues of more than $10BN by 2013.  One of the key factors driving the prediction?   Apple’s iPhone.  The iPhone has single handedly driven mobile gaming publishers and developers into frenzy to get their games to market ASAP.  The consequence?  Paid-for mobile game downloads have more or less flatlined across North American and Western Europe.

At the same time, it’s not all roses for mobile gaming developers.  The potential for growth is being damped by a combination of limited on-portal revenue shares for publishers and poor games marketing.  The resulting outcome is a mass exodus from the mobile gaming industry.

Dr. Windsor Holden comments, “The revenue share offered by Apple to games publishers is incredibly attractive. The danger is that if operators do not respond with a similar business model, publishers faced with low margins may simply exit Java completely, thereby reducing consumer choice in the longer term.”

A suggestion?  What about a monetization toolkit for mobile games developers that could dramatically shorten their time to market AND help fund continued development?

Juniper’s report also found that ad-funded downloadable content has increased in popularity, BUT the revenue generated from this advertising is most likely insufficient to provide developers or operators with a primary revenue stream (read: why bother?).  Given the current state of financial affairs, CPM rates are falling through the floor, thereby making ad-supported games less and less attractive to developers.  Again, see suggestion above.

But fear not mobile game developer, for all is not lost.  Juniper does see room for growth and profitability in the Indian Sub Continent, Africa/Middle East and South America.  Increased mobile use and low levels of console gaming systems combined with fixed (landline?) Internet have been a driving factor in making mobile phones the gaming platform of choice.

Other significant findings in the Juniper report include:

• China and the Far East will remain the largest regional market for mobile games throughout the period covered by the report.
• Global revenues from in-game advertising will rise significantly from 2008 to 2013.
• Operators need to reduce data charges further for out of bundle customers to encourage casual mobile Internet usage and thereby stimulate the mobile entertainment market

Further details and the study are freely available at Juniper Research.

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Acclaim released more info about Spellborn, tags it Freemium

Acclaim has recently released more info about Frogster’s Chronicles of Spellborn, the highly anticipated free-to-play, or Freemium as Acclaim has recently dubbed it, MMORPG.  The closed beta testing is scheduled to get underway starting November 27th, and has a release date of January 2009.  Acclaim has licenses for Spellborn in North America, the United Kingdom, New Zealand and South America.

European countries will go live on the 27th of November, while Acclaim plans a simultaneous closed beta opening.  Both launches will have the exact same product featuring identical Freemium (read: free-to-play, microtransaction monetization models) models, but the Europeans will act as guinea pigs, ensuring that everything is smooth sailing before the Acclaim launch.

The game has undergone some key upgrades and enhancements, now allowing more players to participate and enjoy the game.  Spellborn will feature a Freemium model whereby the game will start with a free-to-play zone, but a Premium subscription service will be required to unlock additional zone of play.

The Spellborn client will be free to download and install, and will feature said free-to-play zone with no time restrictions.  Spellborn will however, impose a level limit before kicking in the ‘Want to play more?  Pay up’ process.  Some key features of this free-to-play zone include:

• Free players are limited to the starting zones Hawksmouth and Aldenvault.

• A gameplay limit occurs at Fame level 7, when free players have progressed approximately 90% towards Fame level 8.

• Upon reaching this limit, all character progression is blocked and the player will receive a pop-up informing them of this block and what is obtainable beyond this with a premium subscription.

Some element will specifically be blocked including:

• Players will be unable to gain Fame in any way or form, frozen at a fixed amount.

• The player will be able to accept quests, but not able to complete any objectives/quests.

• Able to kill mobs, but the player will receive no kill credit. This means, no fame reward, no pep reward and no item reward.

Unable to travel beyond the zones Hakwsmouth and Aldenvault.

Acclaim’s freemium model is moderately priced, clocking in a $15/month to open all game content.  A decent break from the standard $30 $15 or so per month (Thanks Aetherworld and Armory Light for the catch) most MMO players are used to via World of Warcraft.    Feedback thus far has been outstanding, while MMORPG.com places Chronicles of Spellborn at #3 over the past 30 days (WoW ranks #8!), and developers have been keen to incorporate this feedback.  The hype machine is gearing up, and all I can say is, it’s worth it.  I personally played Chronicles of Spellborn at the Games Convention in Leipzig, and had a full walk through with Frogster Developers.  Spellborn really is delivering what they’ve promised; a top notch MMO at an amazing price, with a ton of features that you’d expect at this level of development.

For more, visit Chronicles of Spellborn at: www.tcos.com

Free to Play Cross Fire places CounterStrike in the Cross hairs

10,000 closed beta keys gone in 10 hours?  Wow!  That’s what SilverBirch Inc. and G4Box Inc. are claiming regarding the recent launch of their premier free-to-play, first person shooter, Cross Fire.

The closed beta went live on November 7th, and runs for approximately one month, during which time, fraggers can participate in one of Cross Fire’s four hair raising game zones.  Cross Fire is looking on target for a January 2009 commercial launch, but gamers can continue to download the game for free at www.crossfire-en.com.

“The response to the English version of Cross Fire has far exceeded our expectations,” said Kevin Astle, Interim President and CEO of SilverBirch. “Cross Fire’s fast-paced action, superb graphics and compelling features have already made it a hotly anticipated game among English-language gamers.”

While already a hit in Asian markets, Cross Fire has received 1.9M hits leading up to the November 7th launch, two-thirds of which coming from right here in the US.  The Asian market version has received millions of registered players, and has an excess of 500,000 users regularly playing the game together online at any given time, all within a short nine month time period.  Not Bad.  Not bad at all.

“Cross Fire has been a huge success in China, Japan, Vietnam and other Asian markets,” said Howard He, CEO of G4Box, noting that the game is now more popular in Vietnam than World of Warcraft. “Based on the positive initial response from North American gamers, we look forward to replicating this success for the English-language version.”

The Game

Cross Fire is a CounterStrike killer in more ways than one.  The storyline focuses around two international mercenary forces duking it out for domination.  Players chose their side; either Black List terrorist or Global Risk mercenary.  They then join an online team of fellow FPSers and must work together to complete objective based scenarios.  The game features four game modes: Team Death Match, Team Match, Annihilation Match, and the new Ghost Match.  Players receive xp points based on game play and performance and are promoted through various military ranks.

The Cash

SilverBirch and G4Box will monetize the free-to-play title via a microtransaction based in-game item shop.  Here, players can customize their characters to their heart’s delight including appearance and equipment.  Both companies forecast revenue generation shortly after the January 2009 official release.

Interested players should head on over to FilePlanet to obtain an exclusive closed beta key.  Cross Fire is even sweetening the deal by offering current participants the ability to invite up to 10 friends to join them on the battlefield.  Grab this one now while it’s hot!

Free to Play World of Kung Fu partners with MMOsite for Giveaways

VestGame Entertainment, publisher of free-to-play martial arts MMORPG ‘World of Kung Fu’, has recently announced a partnership with MMOsite to host a giveaway of valuable items from the WoKF item mall.

Coincidentally riding on the heels of Nexon’s 7-Eleven announcement (bad timing?), VestGame Entertaintainment is partnering up with popular gaming portal MMOsite.com and will be giving away a ton of new in-game items (read: WotLK just came out – where did everyone go?).

World of Kung Fu has approximately 250,000 registered users that adventure and explore the 3D virtual world of ancient China.  The game takes place in a fantasy land steeped in ancient Kung Fu morals of justice and heroism.  Both hard core and casual gamers are enveloped in Chinese Kung Fu philosophy, grasshopper, with graphics inspired by landscapes and open countryside settings portrayed in traditional Chinese artwork.

Players visiting MMOsite.com can take advantage of these free, in-game promos by visiting the contest section of MMOsite.  Items to be given away include:

1. Gallant Steed - Fast moving white horse. Lasts 7 days.
2. Novice Tai Yi Pill - Ancient medicine that restores 50,000 Hit Points.
3. Wooden Waist Pendant - Nice accoutrement. HP +20.
4. Small Experience Charm (5) - Gain 120% experience for 1 hour.
5. Deepfried Steamed Bun (5) - Restores 150 HP over 15 seconds.
6. Novice Lion Toy (5) - Enables player to revive at current location.

“We are happy to see so many new players in World of Kung Fu, and would like to take this opportunity to show our appreciation for their support”, says Zhenghua Zhuang, Head of North American Operations at VestGame.

“MMOsite was chosen to host this event because of their long standing support of World of Kung Fu as well as for their credibility in the MMORPG community”, he added.

I gave World of Kung Fu a whirl over the weekend, and while my comments above regarding Lich King is out - where did everyone go? are meant as a slight jab to the MMO community in general for all of a sudden grinding back to life, I found WoKF quite enjoyable.  Granted, there wasn’t the massive server population as experienced in WoW, which actually made the game quiet nice.  The scenery and graphics are well executed, and the storyline is pretty interesting.  Would I make this my main go-to M-F?  Probably not – but at a free-to-play price, and now including free goodie bags, it might be enough to get me started on an alternate project while I’m waiting 45+ minutes to log onto a WoW server just to see what all the excitement is about.

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