This week, for some reason I don’t understand, my brain was fired up at night, I couldn’t sleep and that idea came back to haunt me. So, I spent a couple of hours with LinkedIn and here is the result, a year after Realtime Worlds shut down (maybe that’s my subconscious at work here).

Methodology (sort of)

The method I used is very simple and a bit flawed, but by the time I realized that, I had done most of the data mining and was too lazy to start over. I went in LinkedIn, used the advanced search and looked for anyone who worked at Realtime Worlds in the past. I will obviously miss anyone who hasn’t a linked account, and will include anyone who had left before the studio shut down. The search has to be done per country, and I didn’t search *all* of them but I covered the most important countries in Europe, North America, Canada, South Korea and Japan.

I grouped employees by “job category”: biz/publishing/QA (one of my early mistakes — I should have made QA its own category considering how many people fall under it), producers, game designers, artists (including audio artists), coders. In a few instances, I made calls that are questionable (I put all the IT/admin staff in publishing for instance), but I was consistent doing so and I don’t believe that drastically changes the results.

The results

There are 352 people on LinkedIn who state they used to work for Realtime Worlds. RTW used to have an office in the USA, so it is impossible (without a lot of painful research) to know how many of those currently living there moved from the UK. I will assume that they were all already in the US when working for RTW. The same is true for the employees currently based in South Korea. Everyone else, I think we can assume has relocated to a new country within the year after they left RTW. Here is the repartition per country:

So basically, 90% of RTW employees remained in their own country. Unsurpisingly, the countries that attracted the RTW talent are either very strong in online (Germany, Iceland) or offer very strong tax incentives (Canada). I didn’t have any expectations when starting this research, but this seems like decent retention.

However, despite being based in the UK, I tend to have a more global approach and global concerns, and I am more worried about talent leaving the industry altogether than I am of foreign brain-drain.

Even if it is unfortunate when a country loses talent, at least the industry as a whole is doing OK. With that in mind, I did some segmentation per industry, with the following groups: Games industry, Finance (totally biased choice, I was expecting it to be a strong competitor, especially for coders), Other IT (I included middleware providers in the game industry – so anyone employed by Unity wouldn’t be here for instance), Other industry (none of the above) and ‘status unknown’, which covers basically 2 cases: anyone still working at RTW according to their profile (they could be unemployed or happily working somewhere else, we just don’t know) and anyone who is freelancing. ‘Freelancing’ is really vague – freelancers could be very successfully working in the games industry, or barely making a living, or freelancing in the games industry and the cinema industry or anything else. Because it’s so open-ended, I decided to set freelancers apart. There are also a few cases of people saying they are looking for a job, but it could be that they haven’t updated recently or they are still looking now, so I put them there.

All that said, here is the result worldwide:

So, the game industry has lost 37% of the RTW pool – and that’s a scarier picture to me. Arguably, it is not THAT bad. It could have been a lot worse. Next chart is the same, but only for the UK employees and I added two categories, eeGeo and APB released, to check the number of people who found work through the spin-offs of RTW.

First, the UK numbers are quite similar to the WW numbers – it makes sense as this is the biggest group of the survey. There is a bit less Other IT (RTW US employees were more prone to switch to this segment) and more Unknown status (not a good thing in my book), but the ratio of retention of the game industry is roughly the same.

What is a lot more interesting is to note that the RTW spin-offs only cover 12% against 50% for other game companies. It is by no means a small number. Not having gathered that data, I can’t say which company really helped there, but top of my head, going through the profiles, it is mostly Jagex, CCP and Codemasters. Kudos to them, I am sure they were quite happy to be able to get staff with online experience, a profile hard to get in the very-console oriented UK industry.

The last charts I want to share are the ones highlighting where each job category ended up in in terms of industry.

So, that’s about it. I have put all the data in a google spreadsheet if anyone wants to play with them – as it is imported from Excel, charts won’t look pretty. I should also add the disclaimer that I did this on the spur of the moment for fun, and doing this analysis seriously would require a bit more thinking through beforehand and more rigorous process (for instance, several formulas are likely to break).

GOOGLE SPREADSHEET

Expect a very different topic next time I have insomnia.

If you missed some of my comments on twitter, or more likely if you just unfollowed me after the spam (you can follow me again, the event is over, I will behave in the coming weeks), I have put together here some of my notes on the Fighting Fraud panel and the Kickstarter panel.

These are my rough notes of what was discussed. If I got anything wrong, please let me know.

Fighting Fraud Panel

Moderator Sanjay SARATHI (Vindicia)

Panelists Robin WALKER (Valve), Arthur CHU (Nexon), Michael LIBERTY (Paypal)

The panel objective was to educate on what you can do to fight fraud, and it was aimed an audience with limited knowledge on the subject. Here are the key take aways for me:

Fraud is painful. Fraud is difficult to fight. Fraudsters will always be very creative in bypassing your system, and you will always have to play catch up. But you really can’t ignore it. Before anything else, the first thing to do is to make sure you can measure fraud and understand that it is happening. The moment you reach about 2% of chargebacks on your transactions (stolen credit cards were used and the money is taken back), Arthur CHU estimated you have about 2 months before it becomes a LOT more painful. However, before you reach that stage, investing heavily in fraud fighting might not be necessary.

One fight at a time. Michael LIBERTY made a very good point on the fact that if you are not a big company and you are starting to charge online, it is best to go through a payment management system like Paypal (Michael’s company, to be fair). Until you reach a certain scale, micro-managing the payment processors and the related fraud is too time consuming.

Game features influence fraud. Robin WALKER pointed out that a game with a trading system was more likely to attract fraudsters. While he has a fair point, this won’t remove all fraud and it does take a serious chunk of the social features (Arthur CHU made this point in the panel very eloquently). What it emphasized was the fact  that the game design can help control fraud to a certain level: limited trial accounts, high level items “soulbound”, Gold lock systems (as in Rift). Convincing the developers to develop them is the hardest part.

Measure, measure, measure. Beyond measuring the fraud itself, it is also important to measure the game features that fraudsters use and abuse. To be able to fight fraud requires understanding what they do and how they do it. Leading to:

A tool is only as useful as the person holding it. All panelists agreed that going out and buying fraud fighting tools is useless unless you already know how you want to use them. These tools can be very efficient (for Nexon, it led to a reduction of fraud by a factor of 10), but they need to be used properly in your context. There are two kind of  tools specifically that were mentioned: geo-location and device reputation tools.

Understand friendly fraud from criminal fraud. All games have a number of “friendly fraud”, the typical case being kids using their parents’ credit cards without their approval. The panel recommended to, again, check the users’ activity, in order to identify friendly fraud and also to have a clear policy in place to manage it. Valve is calling really big spenders, for instance, to make sure they are aware and intended to make large purchases. Michael LIBERTY recommended kids’ games specifically to have a “generous” policy, as they were more likely to see kid-driven friendly fraud.

Current trends. Arthur CHU was very vocal about the increase of the number of account takeovers, and how fraudsters are getting more and more sophisticated in their attacks. Where they once launched blanket attacks to get as many accounts as possible, they now target accounts that they know are very valuable.

Kickstarter Panel

Moderator Cindy AU (Kickstarter)

Panelists Alex NICHIPORCHIK (tinyBuild Games), Wiley WIGGINS (Karakasa Games), Colleen MACKLIN (Local No. 12)

Kickstarter is the most prominent crowd funding website at the moment, and has been used by a number of game studios. The panel highlighted three case studies from companies that have successfully raised money through the service. Cindy AU provided very interesting information as well. I have linked the project for each panelist above, with their company name. So, some takeaways:

Kickstarter data. The website has successfully raised $70m across 20,000 projects to date. IIRC, the biggest project they had was a movie that raised about $500K. After submission, Kickstarter takes about 24h to greenlight a project. Once greenlit, the company can publish the project on the site when they want.

Best practices. Cindy AU gave 3 core rules to maximize your chances with your project.

Rule #1 – Make a video. The web is very much about videos nowadays, and projects with good videos are the ones that are the most successful. It doesn’t need to be super professional, but it certainly needs to clearly describe the project.

Rule #2 – Rewards are very important. Each project offers unique rewards based on the size of your pledge, and it is up to the project owner to define them. Unique, tangible rewards with a strong cool factor help their projects significantly.

Rule #3 – Leverage your existing community. If your project already has an existing community you can leverage to contribute to it, and also to spread the word, this increases the likelihood that your project will succeed. Cindy mentioned that projects with more than three backers succeed 90% of the time.

The panel made very interesting comments on the importance of designing your rewards thoughtfully. Wiley WIGGINS regretted offering a poster reward, because they didn’t calculate properly the cost and the pain of delivering them to their backers. Kickstarter doesn’t get involved in the design of rewards, and it is really up to the company to do its homework as far as costs are concerned. Reward design is very important.

Another consensus was that the duration of the pledge, the length of time allowed to reach the project’s target, didn’t need to be long. The logic is that your early backers will reach it in the first few days anyway, and then progress will be slow and regular until the very end when lurkers may decide to chip in and help.

It was also interesting to note that the Kickstarter system attracted whales in the same way. Thunderbeam offered to make $1,000 contributors their ‘best friend’, which they essentially added just for fun. They now have many new best friends.

I learned quite a bit from these panels, and will definitely be keeping an eye on Kickstarter – I hope they find a way to accept non-US projects down the line.

·Web and digital habits

A lot of Asian games, especially free to play, are built on platform portal websites running best on Internet Explorer, which is the incontestable #1 browser in Asia. Habits in Europe are very different : in most countries, Firefox has 30-40% market share at least, and up to 50%+ in some countries. Overall, it is now above Internet Explorer in Europe. Chrome has also been growing a lot in the past years, reaching close to 20% market share. So having a website accessible only or optimised for IE is a big mistake in this part of the world. Fortunately, it’s not as frequent as it used to be, but as an example, Silkroad Online’s website is still not accessible through Chrome today. For the same reason, it’s out of question to use ActiveX controls for downloads or game start, as many Asian game portals do.

SEO-wise, Google is hugely dominant, so it’s useless to use Yahoo or Bing-specific techniques. Running a game site as an iframe inside a portal page, or doing everything in Flash, are both going to impact your SEO very negatively.

Website design also responds to different norms in Europe and in Asia. Europeans generally don’t like heavy, slow Flash sites, loathe animated intros, and even for gaming websites, pay attention to the text and wording. Most European users dislike when there are too many menus, or when a link opens a new tab or window, and they hate pop-ups and pop-unders with a passion. A big no-no is also auto-playing of video or music, like for example NHN USA’s portal ijji.com does. And most users prefer clear pages with minimal information. Displaying anything after the fold, obliging users to scroll down, is also detrimental in Europe.

Forums are generally presented differently, using thread-based presentation rather than multiple replies on different topics on the same page. Users also tend to se less smileys, and much less elaborate ones.

Europeans are also very much reluctant to dowloading and installing anything. They don’t like registereing either, so Facebook Login is pretty much compulsory nowadays.

Security software can be a problem too : Many EU users are very put off by GameGuard, X-Trap or Hackshield. However, if the original version of the game has been developed counting on this kind of solutions, it’s generally difficult to bypass it (the users don’t like bots and cheats either).

Finally, the whole open source software culture is much bigger in Europe than it can be in Asia. European online game developers preferably use Linux servers and LAMP environments.A sizeable part of tech-savvy users see Microsoft as « evil ». Experienced Windows server engineers are difficult to recruit in the games industry, as there aren’t that many.

·Marketing/PR

The gaming media in many Asian countries, especially Korea, are very consolidated and established, with few outlets commanding very high advertising prices. Ads seem to be bought mostly CPM or CPC, with the publisher taking on most of the risk in the acquisition process. On the contrary, the media in Europe are very fragmented, blogs and community sites are a huge part of it (and the boundaries between official media and blogs are very blurry, with many blogs having a huge audience, and many journalists of official media allso working wor blogs on the side) and most free-to-play campaigns are either Adwords or CPA banners purchased via ad networks, where the risk is shared.

Facebook is also becoming more and more prominent in marketing for online games in Europe, when it may not be so much used in some parts of Asia (whereas others such as Indonesia and Philippines have embraced it). Some Asian companies seem keen on buying fans on Facebook : generally, the numbers get impressive but the users are very low quality (and generally not from Europe). We don’t recommend that practice, it’s money very badly spent.

In many parts of Europe, Twitter is still not a good medium to communicate with a gaming audience : the demographics are older and rather corporate. It’s fine for corporate communication/talking to journalists though.

PR-wise, it seems customary in Asia to hold most of the game’s information until closed beta, and then suddenly communicate a lot in order to generate interest. Such a strategy is in most cases likely to fail in Europe: gamers are used to slow reveal of information over time, interviews with developers, developers blogs, etc, in order to build the hype.

·Local content needs

Europe is hugely fragmented, and there will be a lot of need for custom and reactive local content. It is generally a bad idea to have a centralised web team at the Asian headquarters that only updates the content on request, as it can impair reactivity and local initiatives. CMS systems such as Expression Engine, Drupal or Joomla are widely used and can offer flexibility. The local teams will also need dedicated tools to manage the shop and local events.

·Means of payment and fraud

Prepaid cards have not met such a wide acceptance in Europe compared to the US, and credit/debit cards are not necessarily widely held and used online depending on the market. SMS are a popular and widely accessible, but the payment companies/carriers are taking huge margins compared to most Asian providers (generally about 40-50%). Fraud for some means of payment such as credit card or ELV is also very high compared to countries like Korea, where accounts are generally linked to an individual’s social security number.

As a result, it is not a good strategy in most cases to open offices in Europe but expect the web, marketing, PR, and billing to remain driven by the head office in Asia. Giving the local teams freedom to operate on their own market is necessary for success.

A couple of weeks ago, following the E3 trade show in Los Angeles, Kogi Tagushi, Senior Executive Officer at Square-Enix, declared he was “humiliated by the decline of Japanese titles”. Now, Mr Tagushi was mainly talking about the poor representation of Japan at the show in terms of new games and IPs, however the decline of the Japanese games industry has been a popular topic of discussion recently, and a second interpretation can be seen of this, relative to two large Japanese game companies that seen to be willingly putting on a blindfold and driving as fast as they can against a wall, namely Sony and Nintendo.

Sony : “I don’t believe in gaming on phones”

Sony’s “next big thing” is the formerly NGP, newly named Playstation Vita, a portable gaming console that is supposed to succeed where the PSP Go has failed. In my blog post about the Nordic Game Conference, I already mentioned Sony’s poorly chosen communication axis against smartphones, but hearing it repeated almost word for word at E3 made it clear is with more than a general guideline or a personal initiative from the Sony exec at Nordic.

Sony’s “I don’t believe in gaming on smartphones” is indeed poorly chosen, however when you look at it, it can only be a very bad marketing positioning. Sony already tried to dismiss smartphones in its “Marcus” video campaigns for the PSP, and is doing it again despite the failure of the first attempt. Surely, it is just a communication mistake. Otherwise, would it be possible to think that a company as large as this one would be completely blind to the rise of mobile gaming that has been one of the most obvious trend in the games industry in the past couple of years ? That they would publicly dismiss their own initiative to create a gaming smartphone (Sony-Ericsson’s Xperia Play), in favor of a push for a new console so heavily reliant on a few dying partners ? (namely : the retailers)

Surely, that can only be a communication mistake…

Sony, not believing in gaming on phones, yet building the first Android smartphone dedicated to gaming

Nintendo : “Free-to-Play is evil”

While some acclaimed the announcement of the Nintendo Wii U at E3, I was mostly unimpressed by what is mostly an Xbox 360 type of machine coupled with an iPad-type of controller that isn’t portable, and supported by a lineup of ports from other platforms as well as the usual remakes of Nintendo IPs that have seen little change for the past 10 years. I was however, excited by one “tiny” announcement related to the new platform : it was to host Ubisoft’s Ghost Recon Online, the team-based shooter announced as the publisher’s first big entry into the free-to-play business model on PC.

At the time of the announcement, nothing was told about the game’s business model, and Ubisoft refused all comments, until Nintendo made it clear : the Wii U won’t support free-to-play games. Mr Satoru Iwata, Nintendo’s President, declared in a widely covered interview that his company isn’t “interested in making free games” and that the free-to-play business model was “bad for the industry”.

Now if we can give the benefit of the doubt to Sony, Nintendo doesn’t have that chance. One good comparison to Nintendo’s situation, is the battle between traditional TV channels and “the almighty Internet”. Seeing their audience shrinking each year, especially among the teen/tween audience, traditional broadcasters never fail to prepare long features about the dangers of Internet, and about how much video games were bad for your kids and it’s surely much better to have them watch TV all day.

Trying to position itself as a maker of “premium” gaming experience worth paying for is a valid strategy, it is how MMOs such as World of Warcraft or Rift can be successful while asking for an initial payment and subscription, but you don’t see either Blizzard or Trion publicly stating that free-to-play is bad, as that would put them into a corner they would have trouble to get out of.

In a recent interview with GamesIndustry.biz, Thomas mentioned that traditional companies were afraid of the free-to-play business model because of its potential for disruption of what they have been doing for so many years, and this is exactly the case for Nintendo. Free-to-play is disruptive, and it is dangerous, but not for the games industry : in this case, free-to-play is dangerous for Nintendo’s business if they don’t embrace it (and can be very good for them if they do). Sony has embraced the model with its SOE game and free MMOs on PS3, Microsoft is deeping a toe in the water with Age of Empires Online and a couple of other free-to-play online games on PC, but Nintendo seems to be heading into simple denial.

Now, I wonder why their shareholders are not happy…

Nintendo, still very much focused on harware

Joe Danger developer Hello Games mentioned in a recent article published in Edge, that Japanese game companies have a very different approach to game development, spending years and years trying to perfect an existing and very well known recipe rather than aiming for new areas of the business. Large corporations are usually much slower to accept change, but will they be too slow to adapt before it’s too late ? It would be easy to say that Sony and Nintendo’s errors are a sign of the decline of the Japanese games industry, however that would be forgetting how forward-thinking companies such as DeNA or Gree are on the mobile gaming space, for example. Nintendo and Sony are simply showing an attachment to the business they have been doing for too many years : a business based on the sales of hardware, making them blind to the fact that, in tomorrow’s marketplace, value will be in content and community more than devices. Will they manage to wake up early enough ?

This question will be answered in the next couple of years, but if I was a developer or an investor, I surely wouldn’t bet too much on Nintendo’s chances…

Let me start with the following statement: E3 has been one of the best events for ICO this year. I had excellent meetings there and I was very happy with the outcome for us. But, Iultimately believe it was an anomaly.

This was my first E3 since 2006, the last “big year” for the show. It went into limbo for 2 years (well, no, it went to Santa Monica but as far as bells and whistles are concerned, that was about the same) to come back to the LA Convention Center in 2009. And while it is not as big as in 2006, bells and whistles are there and very loud. It is shiny again, it has sexy almost naked booth babes again, it is the biggest video game show around again. Right?

My issue with E3 is that 5 years have passed since it went into a deep crisis and nothing has changed. Or more exactly, what has changed feels wrong: Kentia Hall has disappeared.

For those who never knew E3 before, Kentia Hall was the space for small companies involved in games. Kentia, right below South Hall, hosted those without the budget to have a big noisy booth, and it ended up being a mix between horribly bad business ideas, beautiful undiscovered gems and everything in between. It was also where you would find the companies that didn’t directly publish or make games but that would have a role in the production or the distribution process. I loved Kentia Hall. It used to be my favourite part of E3 (after the babes, some would say).

For me, the disappearance of Kentia is the surest sign that E3 is headed in the wrong direction. It used to host a large number of diverse companies, but now features a much smaller number of exhibitors, most of them very large. The show is effectively dependent on those few publishers, most of whom are seeing the biggest part of their business – retail – shrinking fast. This also means that E3 is totally missing many innovative initiatives in the gaming space. I am not even talking iOS games or SN games, but simply the work of independent developers, where more innovation is happening than with traditional publishers. Just look at the Activision’s E3 release praising the innovations being pushed by the company – journalists are making fun of their wording, with all the games in the line-up being existing IPs and sequels.

So… E3 is a show about media (and retailers). But it’s designed to serve traditional ‘megaphone’ media, as it was done in 2000. Media has evolved and became social, and so far E3 doesn’t seem to be recognising this in any way. Some publishers Get It, but their word-of-mouth success isn’t helped by E3′s format and structure; rather, it happens in spite of these. As a sign of times to come, the biggest (and almost only) video game print media publisher in France just announced that it’s entering bankruptcy.

A few weeks ago, Thomas and I attended the Nordic Game Conference in Malmö, Sweden. Although most of our time was spent meeting with representatives of the very impressive Scandinavian game development industry, we had a chance to see some of the talks, and came back with a few thoughts on current trends in the online games business.

“Go Online or Die”

The first day saw a very interesting panel and group discussions about the current trends in investment in the games industry, and where this industry is going. Casual and Social games, two segments of the industry being rapidly integrated, are obviously the place to be these days. London Venture Partners pointed out that over 40% of total investment is going into this field, with a strong presence of developers coming from the UK and Nordic regions. While this space is already quite crowded and very competitive, opportunities are still open, with the expected growth of cross-platform HTML5 games, as well as the rise of the “niche”, providing a much better ROI while requiring much less volume of users.

There is no need to say here that our industry has changed a lot over the past few years, and the question was asked whether “big” publishers will be able to make the transition, or if they will suffer and die from it (like the dinosaurs with whom they were compared). In this discussion, EA was highlighted as being well positioned to handle the change thanks to an already strong presence in the digital and free-to-play space, while Activision is benefiting from the online expertise of Blizzard. Ubisoft is likely to be another successful survivor, using its experience in building strong brands among various media types to smooth the transition.

Nobody knew when the breaking point would occur, after which it will be too late to begin the transition from a product-oriented business to a service-oriented model. However, to conclude this section I will quote the Managing Director of Ubisoft Massive: the current trend seems to be “Go Online or Die”, and by now hopefully, everybody seems to be aware of it.

ChawaChawa : Gaming with a Heart

One conference the following day was focused on presenting ChawaChawa, a casual gaming portal based on a simple principle: 100% of the revenue is generated by advertising on the site, and a large part of it is used to buy furniture and items sent to people in need all over the world.

While the idea of gaming for a good cause isn’t new, this conference relayed once again the need for a better publicity for gaming and the games industry as a whole, because PR stunts and charity announcements from large game associations aren’t enough if not included in a broader long-term strategy.

The second interesting idea conveyed by ChawaChawa is that, in our modern and incredibly busy lifestyle where so many media are competing for attention, time has become a valuable currency, and a gaming portal like ChawaChawa simply transforms this currency into items sent to the ones who need them. “If you can’t give money, at least give some time” is something often heard on organizations run by volunteers, and now this can be done simply by playing.

Sony in an identity crysis ?

The conference held by Sony to introduce its new handheld console to developers from the Nordic region was slightly awkward. At the time, the PSN was still down with no news about a comeback, and the few slides promoting the connectivity of the upcoming hardware were greeted by bemused expressions from the audience. This wasn’t, however, the most interesting part of the talk.

The Sony representative started his talk by a bold statement: “Gaming on a phone? I’m not convinced.” Coming from a company that is launching a gaming-oriented Android smartphone with the Xperia Play, this statement feels a bit strange, and there was even more strangeness ahead. Although the public message is to differentiate the NGP from the iPhone and Android, all its marketing material seemed directly inspired by Apple design. Among the promotional videos shown to the audience, only the Playstation logo clued us in that theirs wasn’t a commercial for a smartphone. The language used strongly recalls phones as well, with the speaker mentioning Apps (probably meaning the “Minis” already available on the PSP). Finally, the NGP will also be hosting content directly derived from smartphone through the Android-focused Playstation Suite.

While the hardware looks impressive, there is a messaging problem here. Why go openly against gaming on smartphones right after using the same visual language to promote a console? Sitting between the Xperia Play and the NGP, the Playstation Suite and the Playstation Network, Sony seems to look for more security by exploring all possible venues, but risks losing focus and confusing consumers if it doesn’t get its message (and its strategy) straight.

CCP, Creative Management Islandic-style

CCP was repeatedly mentioned during the first day as a perfect example of how to successfully target a niche audience and stick to it. With 360,000 players in 130 countries playing EVE Online and a revenue forecast of 60M USD for 2010, the company is surely known for its success with this, but also for its creativity, which is expressed both in-game and in other areas (note their music videos and chess-boxing contest). The CCP conference wasn’t about numbers or the company’s success, but rather about the source of all of it: creativity, properly managed.

As Stefania Haldorsdottir pointed out, the games industry takes a lot of its process and management models from the traditional software industry, but that’s maybe not the right way to be managing what should be a creative process. The takeaway from this conference might seem obvious but is always worth reiterating: when managing a team, the first and most important step is to know this team as well as yourself, then communicate what is expected of them and give them the tools to reach their goal. Communicate, involve people in the decisions that affect them, give them autonomy and ownership of their work, and most importantly: never bullshit anyone.

I’ll be back

The Nordic Game Conference is typically one of these events that make you feel good about working in the games industry. Seeing the creativity and potential of the companies present at the event is impressive in itself, but watching how the knowledge is openly shared between individuals is even more. I certainly hope we’ll be back next year for even more awesomeness!

As the recent game announcements have been multiplying, Mobile is the new frontier for online games and MMOs. The technical constraints have been mostly overcome, and the apparition of a hardcore audience playing mostly from home has made the main problem (good enough ping) less painful. The possibility of free apps with in-app purchases have finally make the business part of it sensible. It’s thus no surprise that many games are announced. However, as games like Pocket Legends find success, the room for growth is increasingly moving, like for social games, to outside of the US/English-speaking territories. What’s the market looking like in Europe?

Devices

According to ComScore’s last report Mobile Year in Review 2010 in Europe, the smartphone installed base in the 5 biggest EU countries (Germany, UK, France, Italy, Spain) in Q4 2010 is at 72 million subscribers (15% more than the US). The market is pretty evenly divided between those countries, with Italy and UK at about 23%, and Germany, Spain and France a bit below 20%. Compared to the respective countries populations, it means that Spain with 45 million inhabitants has almost as many smartphone subs than Germany with its 81 million people, and more than France with its 62 million people.

That trend can be seen in the smartphone adoption rates from the same countries, with Spain, Italy and the UK far ahead :

I couldn’t find any data for tablets installed base in Europe. According to IDC, shipments in 2010 have been around 6 millions in EMEA (of which 5 million iPads), and they forecast 22 million shipments in the territory in 2011.

Operating systems

It’s difficult to estimate precisely the market share for mobile OS in Europe, as the last months have seen several contradictory press releases from different sources quoting either iOS far ahead or Android winning all.

From a devices sales point of view, it seems that according both to IDC and Kantar WorldPanel, Android is now ahead in Europe.

IDC announced (in the above article) that Android got a 31% market share of Western European smartphone shipments in Q4 2010, compared with Apple’s 20% :

And according to Kantar WorldPanel, Android’s market share for smartphones sales in Q1 2011 is 38% in the UK (vs iOS’s 23%). In Germany, they announced Android’s market share was 35% (vs iOS 24%), in France it was 36% for Android vs 23% for iOS, and in Italy, iOS was shortly ahead with 20% while Android was at 19% (It seems that a lot of smartphones sold there are running Symbian).

All the numbers can be found here, although in a very blurry version:

Nevertheless, since Android’s growth was very sudden (its market share a year ago was only 4% according to IDC), what does it mean for usage and the current installed base?

Mobile OS market share data from GlobalStats StatCounter (an analytics solution which aggregates data fro all the websites that uses it). This data collection method has issues, counting hits on mobile browser is different than giving accurate installed base market share, but it’s nevertheless interesting to see the trends.

According to them, iOS has just below 45% of the market, when Android is just below 18%, a massive progression from just 4% a year ago. Symbian, Nokia’s OS, has declined a lot during that time.

ComScore has also recently published a study where they estimate the European smartphone installed base for the 5 biggest EU countries (Germany, France, UK, Italy, Spain). According to this report, the installed base for iOS devices (iPhones, iPod Touch and iPad) in those 5 countries is just below 29 millions, of which 16 millions iPhones, while all Android devices (smartphones and tablets such as Samsung Galaxy) reached 13.4 million.

What this study doesn’t say, though, is the breakdown between iPod Touch and iPads for the remaining 13 millions of iOS installed base, and the breakdown between tablets and smartphones for Android.

Conclusion

It’s important to distinguish market share in terms of sales and the installed base of devices in a territory. It seems that sales-wise, Android is now ahead, but there is still some space ahead to catch up with iOS, which has an important advance in terms of installed base and usage. According to previous studies by AdMob, Android users have a comparable usage of mobile web and apps compared to users of Blackberry and the late Symbian, who used those features much more rarely, so it implies that it shouldn’t take too long to Android to catch up though in terms of applicable market for mobile connected games (which is our main focus here). Mobile ad network inMobi already reports that most of its impressions in March 2011 already come from Android devices (29%, vs 20% for iOS).

So, coming back to games, what’s a developer to prioritize now? At the moment, it seems that the growing market share and the reduced competition on Android make the platform slightly more attractive for smartphone focus, but still not there yet for a tablet focus. On the other hand, that space is quickly becoming even more crowded as the Apple App Store due to the simpler publishing process. Marketing games on Android is poised to become less hit-or-miss, but also more complex and time-consuming than the App Store due to the probable multiplication of channels such as the Amazon store. In the future, it could certainly open the way for more dedicated Android publishers. In all cases, now’s a good time to take a strong footing there.

While a lot can be done to improve the quality of the service of a game, I really believe that it is when a company is dedicating its most precious resource (developers) on pushing the level of the service quality that you know it has a genuine will to develop a service strategy. More than, say, opening a dedicated Customer Support department with hundreds of dedicated staff and limit the developers to only build new content and gameplay features.

It may be biased by my own personal experience, but I have seen a bit too often CS departments used as a stop gap for development shortcomings. It is too common to see a bug left unfixed by the development team, that would require a couple of days of an engineer’s time at worst, to have hundreds of hours of CS staff spent hotfixing the issue. But I digress.

First, let’s check the Rift coin lock feature.

Gold farming in MMOs is a plague. Some might argue it comes from flawed game economies, wrong business models and the like and I won’t go in that debate. Games have this type of economies because they feed the rest of the gameplay and a lot of the logic of players interactions and they are seen as good by their designers, and more often than not, by the players. Gold farmers are an unwelcome addition to these game economies, but the point of this post is not to say that they shouldn’t exist because they break the game economy. If we look at it from a service point of view, they have a strong impact on the quality of the experience through chat spam, phishing and scam targeting players, a lot of fraud through stolen credit card numbers, and more.

There are a number of ways you can try to limit the impact of gold selling companies, and none will ever be perfect, but if they can improve the quality of the user experience, then they are worth exploring.

The latest attempt in the field has been made by Trion Worlds for their Pay-to-Play MMO Rift. The feature is quite elegant on paper and while it doesn’t tackle the whole Gold Farming problem, it deals with one of its most annoying related issue: account hacking. It is called the “Coin Lock” and while many Pay to Play games have had similar limitation systems in place for a while for their Trial offers (often used by gold farmers), it goes quite further. If you happen to log in the game from a location (based on your IP) that’s dramatically different from your normal location (based on your location when you registered and usually play), the account becomes Coin Locked:

• No access to the auction house
• No ability to SEND mail. Users can still receive and view mail as well as remove items from mail
• No ability to SELL to vendors. Users can still purchase items from vendors
• No ability to salvage, runebreak or destroy items
• No ability to trade
• Users can continue to play and gain coin and items, but cannot get rid of them.
• Characters cannot be deleted while an account is Coin Locked.
• Characters cannot be deleted while an account is Coin Locked.
• Characters cannot accept Cash on Delivery mail if they are coin locked.
• Logging into an account with an existing connection will force the connected account to fully exit the game.

Overall, it reduces the nuisance capacity of the hacker and although this feature might not be perfect, it is a good attempt in my eyes. Implemented successfully, it will limit the phishing attacks to some degrees. It will also build the player base trust in the system and the will of Trion to create a healthy game environment. And this is also probably only the first iteration of the system. One can hope that they will keep refining it, making it more and more efficient as they learn the tricks that work – and those that don’t.

As a new comer to the market, Trion has much to proved, and while Rift has been successful commercially, the fact that they push for these kind of development comforts me in their capacity to thrive as an online game service company.

The second example I want to mention is the yet-unreleased Tribunal system being developed by Riot Games for League of Legends.

League of Legends is a great game – probably the one I play the most these days. But as with any competitive game, it comes with a trash talk culture and very low tolerance threshold for your fellow beginning players. As a service provider, you don’t want your newcomers to be insulted all the time, it doesn’t feed an healthy environment and might have a negative impact on both user acquisition and retention.

On the other hand, when your game is free to play and you have reached a certain scale, moderating this environment directly, mostly through your customer support and harassment  reports, doesn’t work. It is a question of scale.

What Riot Games has announced is what they call the Tribunal, a web-based tool used to crowdsource the management of the volume of those questions. The article on Kotaku describe the system in details – you can have a look at the very complete Kotaku Article article on the topic.

The Tribunal hasn’t been launched yet – and for all its elegance on paper, it might work, or it might not. Maybe it won’t adopted by the community, or flaws will be found and abused. Who knows? But you have to salute Riot Games experiment in this field. They have identified a problem anf they have worked to develop a new component of the service to address it. This is exactly the kind of actions that shows commitment to running the game as service and not a product.

In both cases you have a difficult problem, 100% related to the service of the game rather than the gameplay. In both cases, the companies could have decided to put a band aid on the issue by hiring a lot of dedicated customer support, or just ignore most of it and accept to see the quality of the service (not the quality of the game) suffer from it. And in both cases they decided to apply development resources (programming and design mostly) to address it in a more satisfying and more scalable way.

This, for me, is what running a game as a service is about.

It proved to be impossible to fit everything in, so after the first few iterations of the presentation, I did some pruning and made it leaner (and hopefully better). The first thing I cut was the definition of service. In retrospect, that topic alone could take up a good hour of discussion, and it was overly ambitious to include it with such limited time. So, I renamed the talk to “Your Game As A Service: Designing Beyond Gameplay” and focused it on the practical side of designing the player experience.

I do think that the definition of ‘game as a service’ could use some proselytism in the industry, although I have a hard time imagining conference attendees being willing to sit through an hour of theoretical discussion about it. So, here are some of my thoughts on the subject in easily digestible form.

First, let’s look at the semantics. Service can mean different things. From the point of view of economics (http://en.wikipedia.org/wiki/Service_(economics), a service is economically equivalent to a good, with a number of key differences:

• It is intangible
• It is simultaneous
• It is variable
• It is bound to the service provider
• It is perishable

It seems to me that, by their very nature, most games already incorporate aspects that are inherently service-oriented.

• Intangible. As much as I appreciate nicely designed game boxes, they are not the game. They can be a part of the game, but they are really just a vehicle for it.
• Simultaneous. This is the most obvious quality to me. Games are meant to be played. It can even be argued that they don’t really exist when you are not playing them, that they go into ‘limbo’ between play sessions (unless they are online games of course).
• Variable. Hopefully, most games provide a unique experience during each play session, even if the differences are subtle. Only very simple games lack some kind of variety.
• Bound to the service provider. Although this is not the case with all games, times are changing and even single player games are moving towards this (although the evolution is not always elegantly handled by the publisher, who is also the service provider).
• Perishable. While it could be argued that the CPU/GPU/RAM allocated disappear once the game is played, making the resource perishable, in all honesty this doesn’t seem appropriate to apply for most games. For online games though, it works. The access to the server (or the P2P hub) is cut once the game session is over.

Online games have all these characteristics, and they are really services rather than goods (a term that is easier to oppose than ‘product’, for instance). But, considering the scope of video games through their short but dynamic history, the very first popular video games were commercialized as services: arcade cabinets. These became goods in order to satisfy the commercial need for expansion and wider accessibility.

Ultimately I think that while some games will stay ‘goods’, increasing numbers of them will become services. What does this mean for the games industry? To me, it goes back to the basic ways in which we  judge the quality of a service. The smile of the waiter, the polite chatter from the hairdresser, the rudeness of that Parisian taxi driver, the freshly baked cookies in the lobby of the hotel. The quality of the food, the style of the haircut, the arrival at your destination are very important, but you will ultimately judge the whole experience by the quality of the service. I think this still needs to be fully realized in our industry.

A number of times I have heard comments to the effect that “good service = good customer support”. I think this is wrong for two reasons. First, Customer Support is not the totality of the service experience — it represents just one part. The service experience also includes the gameplay, the art direction, the communication to the players (both in and out of the game), the accessibility, the virality, the localisation integration, everything! Second, putting the emphasis on CS feels like a way to push the responsibility for service quality away from the development team. Of all the teams, the developers have the biggest influence on service quality, yet traditionally they are the least focused on it beyond making the core gameplay fun. I have seen that mindset change over the years and I really hope it will go further, as committing to better service is a promise to create better games.

The whole philosophy of Game as a Service underlines that a game is a holistic experience, and to make a game right means caring about the quality of every element of that experience. This starts from the initial game teaser and proceeds to include everything related to the game – its website, account creation system, monetisation model, forum platform, bug reporting system, harassment reporting tool, friend list manager, everything.

It always starts with good gameplay, but it certainly doesn’t end there…

The recently launched RIFT, a big-budget subscription MMO, has been offering a very deep discount for 3- and 6-months subscriptions set up early (the Founder pricing, normally valid for the first 2 weeks after release, which has been extended to the end of March). Discounts for longer subscriptions are the norm in the industry, and such an offer has been proposed before by other games. These limited offer at a very low price are really interesting.

If you sign up for 6 months subscription for Rift relatively early, you would pay $9.99 / 9.99€ / £5.99 a month instead of the normal price of $14.99/ 12.99€/ £8.99, a discount of respectively 33% for US and UK players and 23% for the German and the French. (Side note : There might be payment processing fees-related reasons other than just getting away with making Euro players pay more – even if, since most of the competition is doing it, it is indeed possible to get away with it. Similarly, the common price for a MMO subscription is now 25% undervalued in GBP, as this “standard” price was decided at WOW’s release, when the pound was worth about 1.45€,  compared to now when it’s only worth 1.15€. At today’s rates, $14.99 should translate to 10.5€ and 9.1£. But by now, the European players are used to paying more and the British to paying less, and anyone lowering the Euro price would leave money on the table while anyone increasing it in the UK would not be competitive*. Fun stuff, and end of side note.)

This type of offer, similarly to the « lifetime subscriptions » used by other subscription MMOs (a lump sum, generally available only before or shortly after the launch of an MMO), have an evident goal : trading a part of the profits in exchange for certainty, thus sharing the risk between the operator and the player. If the player loves the game and ends up playing it for a very long time, the studio loses a share of the margin. But if the player leaves the game sooner than what he commited to (the duration of the subscription, or the break-even point in case of lifetime subscription), or if the game closes before that, then the operator has earned more than it should have. In all cases, if cash-flow is uncertain, as it can be really common after a long development, generally over time and budget, and in a context of anxiety about launch results, the cash is more valuable to the studio sooner than later.

RIFT's founder subscription options.

In addition to this economic risk-shifting game, it is also very probable that the simple fact of committing early to the game by purchasing a long-term plan is a big boost to retention for the early period. Most players are likely to give the game more time, and be more acceptant of bugs and early game issues, if they have paid for 6 months, compared to the situation where the choice they make about committing is at the end of the first month (as is the norm for most retail MMOs, where the first month of subscription is included in the box). Since few MMOs can boast a very smooth launch and first month, these deals are a way for the operators to buy time and entice players to be more patient. I would suspect that long-term subscriptions are more effective for retention compared to lifetime, as there’s the addition of knowing your investment was for a limited time only. Lifetime subscriptions tend to let players think that they can always come back to the game at any point, rather than giving them the pressure of making the most of their investment now.

This retention effect is especially striking when looking at Free-to-Play games, which, in the absence of such commitment, have to be very careful in their early player experience in order to hook the players enough for them to keep playing, let alone trying to convert them into paying players. A lot of F2P games shower the newbies with welcome packs, limited-time free mounts, etc. The goal is double : make the early gameplay experience more palatable, but also give a taste of what using the paying items feels like. Similarly, most F2P games will try to make the user pay as soon as possible; social games also often give cash currency away in order to « educate » the player to pay – once « committed », having done it once, they’re much more likely to pay again, as have shown some studies, for example this one by Social Gold (56% of one-time spenders will purchase a second time, 25% three times or more) . For that same reason, first-time currency purchase discounts are also a good idea.

Getting players to commit to the game is not only financial : social commitment is also a strong tie. For that same reason, social media marketing campaigns asking players to write favourably about the game on their Facebook wall, on Twitter, etc, in exchange for in-game items or benefits have also probably more than just a viral or social proof effect : once players have publicly recognized they like the game, they are indeed more likely to really mean it.

Cialdini, in his famous « Influence » bestseller, called the commitment bias the « hobgoblin of the mind » (after a quote by Emerson) to emphasize the power it has on human psychology. If the hobgoblin can be bought for a few quids, it might well be worth it.

*Provided that the games are sufficiently similar to justify price-based competitivity. EVE Online’s subscription Euro price is the highest on the market at 14.95€/month, but I doubt many EVE players would switch to another game in order to save 2€ a month. The subscription pricing is maybe not always thoroughly thought about, with also few games offering price discrimination to those who would pay more, but that’s another story.