While working the AI interface for Relic Entertainment’s Warhammer 40,000: Dawn of War was good enough for Jamie Cheng, there was something missing.  Something perhaps like…your own company?

Jamie Cheng now sits in the drivers seat of Klei Entertainment and has released his own original downloadable games including Eets on PC and Xbox Live Arcade, and helped Metanet develop N+ for Xbox Live Arcade.  And while these accomplishments are impressive in their own right, it’s Cheng’s recent deal with top free-to-play publisher Nexon that is starting to make big waves.  Described as an “online arena combat game”, Sugar Rush seems to have a bright future ahead of it.

But it seems as though Klei didn’t  initially start out to build free-to-plays.  “While I was at Relic, I decided I was going to make my own game on my own time, so I got some friends together,” says Cheng.  The ragtag team rented out a basement and started work on a 2D puzzle game, Eets.

Working on Eets as a labor of love, Cheng says, “I never really intended to sell it, I just wanted to see what we could do.”   Luckily other members of his team saw the financial potential in the game an spurred Cheng on.  “I used all the savings I had at the time, then I used borrowed money from my brother, then I started using government money after that.”

In 2006, Eets was released on PC and the followup Eets: Chowdown later arrived on Xbox Live Arcade.
Speaking to the recent deal with Nexon Cheng says, “We didn’t start working with Nexon because we were afraid of taking risks, or because we wanted the money. We felt Nexon really felt they wanted to do the right thing for a North American free-to-play game. We are their first North American free-to-play game.”

While Cheng’s titles are hits in the hands of gamers, it’s his take on free-to-play that makes a boatload of sense.  He’s quick to admit that most people tend to see free-to-play titles as those of inferior quality to paid titles.  Not reaching any further than a keyboard, Cheng points out a number of other free services that we use everday – Those that we do NOT expect a diminished level of quality and service.  Gmail, Facebook and Craigslist are all free, and yet we don’t give any of these products the cold shoulder.  Cheng also points to the music industry as an example.  Radiohead recently gave away it’s most recent album, and charged only for concerts.  Along this avenue, the classic of all classics: Woodstock, was a free concert that drew revenue from other streams such as merchandising.

Speaking of alternative revenue streams,  Cheng spotlights the two leaders in the free-to-play arena: Microtransactions and in game advertising.  “Yes, we do have advertising. No, we don’t force it right in front of your face and force it on you,” Cheng says. “What we want to do is incorporate advertising right into the games and make it enhance the experience.”

Cheng does however stress that microtransactions that radically unbalance a game are a bad thing.  “If you sell a stronger sword, people are going to be pissed off,” he says.  Along the Radiohead line, Cheng illustrates a common concert factor.  If you go to the concert and enjoy it, you’re very likely to stop at the TShirt booth on your way out and pick up an ‘exclusive’ concert tour TShirt.  Not only as proof that you were there, but also as a way to become more involved with a subject you like.  The same is true for microtransactions.  In regards to the in-game advertising vs. microtransactions, Cheng admits that his current setup is “heavily weighted” in favor of microtransactions.  “You have to have a huge amount of volume before advertising becomes a large part of your revenue,” Cheng says.