In part one of our ICO Partners interview, CEO Thomas Bidaux and PR head Julien Wera talked about the various markets for online games internationally, what sets them apart and why the UK is one of the most difficult to crack.
Here, in the concluding half of our chat, the pair discuss the forthcoming big players in the MMO market and how fine-tuning business models will be crucial to their success, as well as what advice they'd offer to Sony post-PSN crisis.
Q:Core MMOs are still a big part of your business - do they still have a bright future? Is casual and social cannibalising that audience?
Julien Wera:I think we had that discussion not too long ago in our office. Personally, I don't think that AAA, subscription, high-end MMOs are going to go away. There aren't going to be many, that's the thing. You have the top, then then you have the browser-based stuff at the other end of the spectrum. Some years ago you could have some games in the middle - subscription-based but not that high end. They could survive, but I don't think they will survive in the future, unless they really cater to the niche.
There was a lot of talk [at Nordic Game] about Eve Online, it's very high end, very deep, very complicated. It's perfect for a certain type of player. They don't need ten million players. They've got a high revenue, they've got high quality, they've got a retention rate that's crazy. I think they were saying that 50 per cent of people who bought the game at launch are still playing now. It's been eight years.
That's probably the highest retention rate of all of the online games. That's the kind of game that can actually make it. You see different games that are high end and hard core - free to play games like World of Tanks. Very niche, but very well executed so very successful in its niche. League of Legends is the same. It's extremely hardcore, but it's extremely well executed so it does very well.
So I think there's going to be changes, there are always shifts and changes, but I don't think browser-based and Facebook games are going to kill the traditional MMORPG. Thomas - you disagree? [laughs]
Thomas Bidaux:No! I think that it's going to change, but I think that big, subscription-based MMOs will not die either. I think there's always going to be an audience for those games in the same way that there's always going to be an audience for big AAA single player console games. I just think that their market share is going to change, back and forth in some ways. There'll always be a place for that.
I think that the business models are going to become more sophisticated. We came from a really dumbed-down business model which is 'give me money, I'll give you the game' to something with a lot more options.
There'll still be pay to play stuff, but it'll be that you get the game free but pay a subscription or microtransaction - it's going to be more complex, possibly, but a lot more integrated into what is each game's experience. Each experience is going to become more unique. You're not going to be able to say "my game is very different to yours but with the same business model". That's going to be like shooting yourself in the foot.
I think that's why a lot of games fail: because they try to apply business models which are fundamentally flawed for that game's experience.
That's what we've been doing with online games for the last five years, and I think that's why a lot of games fail: because they try to apply business models which are fundamentally flawed for that game's experience.
I was telling someone today about Auto Assault. In retrospect now, I think that could have been successful as a free-to-play game. Okay the budget and infrastructure weren't meant to sustain that, but from a gameplay point of view maybe it should have been a free to play game with microtransactions. Maybe that's why it failed. Maybe that heavy user commitment business model is why it ultimately failed - it doesn't match the game.
I think that having a sophisticated business model - I was also talking about the League of Legends business model - it's a very very elegant business model. It's nearly unique, very few people do it. People have done microtransactions before, but they've done it in a way that's very specific to the game. It's very elegant. Before I'd played the game, and looked at it on paper, I was very sceptical. I said it was wrong because nobody has done it before.
I was wrong. It's works really well because of the way it's integrated into that game. It's brilliant - I think that's an evolution we need to see. Then we'll see people integrate subscriptions in a very interesting way we've never seen before, that's interesting to see.
Q:What are your expectations for The Old Republic?
Julien Wera:I'm very curious. There's been a lot previews recently. They're trying to do something very different in terms of scenario, storyline. I don't know what the outcome will be. They're BioWare, but there's also Mythic that they can use. I would expect that Mythic has more in-house expertise in online than BioWare. But they're still BioWare, which means a high-end single-player RPG. So the question is, for them, will they actually make the game sticky enough to keep players for several months?
What's tricky for them is that they're putting their name on the line. They're putting their name on the box, it's a very powerful brand for gamers and they're putting it on the line. I would expect that a failure for The Old Republic might have an impact on further communication on other solo games that they do, in terms of branding. I don't know. I'll play it!
Thomas Bidaux:I'd say I'm on the fence on The Old Republic. I wish them to succeed because I think that a big blockbuster success online would be good for everybody. I question some of their decisions, which I think are frankly stupid. The full voice-over, I don't think, brings that much added value compared to the cost. Not just cost in terms of money, but cost in terms of flexibility. They're making a big sacrifice in terms of how reactive they can be in terms of their content.
Julien Wera:Yeah, every time they do an update they have to hire the voice actors again. It takes a lot more time and you have to be very reactive on that kind of game.
Thomas Bidaux:One thing that for me is kind of sacrilege, which may be very good because it's bringing something new to online games, is the story. I'm kind of an old-school dinosaur with MMOs because I like it when there's no story. For me that means I can be the story. My imagination can build the story and I can build the personality for my character - there's no one dictating how he's reacting to the other characters. I can fill in the blanks. There's lots of blanks, maybe too many! But the BioWare angle is that they're very much about filling in everything for you. To me, that's sacrilege - but at the same time it'll bring something fresh to online which nobody has done. I love it and hate it.
I can work out what I do like, though - what Riccitello said the other day about wanting to go full steam on games as a service. The notion of games as a service is something I've been living and breathing for eleven years now. It's something I believe. It'd be a really good idea for our industry to go that way. So the execution is very important, and I don't know how they'll do that at EA, but the fact that they have this strategy makes me very happy.
Star Wars? BioWare? I don't think they'll lose money, even if it's just so-so. I hope they'll do very well because that will be really good for a lot of people, especially in the US and the Austin area, which has a big pool of talent and needs a big success story to keep going on. Injecting talent into the industry is always good - it makes a change from the stories of studios shutting down which we've been talking about.
Q:There's been a lot of talk about the budget spiralling out of control - do you think it represents a financial high-water mark for an MMO?
Thomas Bidaux:MMO's need good tools. You can save a lot of money with good tools. I think in terms of price - I don't see why anyone would spend that much money. I don't see things plateauing in terms of quality or content, there's lots of ways to improve on toolsets, how content is created and how it's put into games.
I know there are big projects, there's the Zenimax project that nobody knows about that's going to be big - a lot of people can probably guess what it's going to be! For me, that's going to be, not the last big MMO, but one of the last, along with one of the NCsoft games. NCsoft hasn't played all of its cards yet, it still has really impressive stuff to show - stuff that's been in development for a long time - I know because I was still there when it was in development!
MMO's need good tools. You can save a lot of money with good tools.
But they'll never die out, they'll never disappear, but I think they'll fade compared to the releases we have on the free-to-play side. I also believe that, if you look at Tera, in Europe, it has potential but I think it's going to fail, because of its business model. It's really good, but it's probably not quite good enough to be subscription, but too good to be free-to-play, in some ways. I think it's the kind of game where people say, yes, it's AAA, and free-to-play isn't a bad word to attach to AAA - we need to make that shift. I think that's going to become more common - we will see things that aren't huge, but are high quality, they'll come out free-to-play.
Julien Wera:Some games, like Allods Online, there should be around $15 million in their production budget now, they're improving, adding loads of content and that kind of thing. I think that's the beginning of the AAA free-to-play era, which does make sense. After that, where do you put a game like LOTRO? It has very high production values, was subscription, is now freemium. Where do you put it? Is it subscription, free-to-play? It's kind of in the middle, raising the bar. You see products arriving from Korea right now, that will be in the West in two or three years - they're really, really good.
Q:Where does the squeezing of the middle ground leave a company like Funcom? How do you think it'll affect a game like The Secret World?
Thomas Bidaux:Funcom doesn't put all its eggs in one basket, that's the interesting thing about that company. They were the the first to take their pay-to-play game into a free-to-play business model. They were the first to try to integrate in-game advertising. They didn't get a lot of big success, but they have tried a lot of things, and it's worked out for them.
Now they don't put all their eggs in one basket. Okay they've got The Secret World, we'll see how that works out for them, but they also have their kids game, Pets Versus Monsters, a strategy space game, they have five or so games, not as expensive as The Secret World. So I would definitely not write them off, for now. They've definitely proved that they're a company who evolve, more so than other companies. I know it's tough to evolve.
Funcom is a very dynamic, flexible company. They do okay, they're still around and they still have money, so they must be doing something right. I'm curious about The Secret World. I definitely think that it's the sort of game that shouldn't be a boxed product. I don't think they've announced anything about that yet.
Julien Wera:Well, they announced that they were partnering with EA Partners for distribution, if you need distribution, there's going to be a box, that's for sure.
Thomas Bidaux:I'm more curious about World of Darkness, from CCP. Mostly because we don't know anything about it, but also because it's CCP and they've done a lot of things right.
Q:But they're also taking a huge risk with DUST 514...
Thomas Bidaux:Okay, I was going to say - I have huge respect for them, because they've made so many good decisions and they've taken them so far. Dust is the first thing that, on paper - and I've been proven wrong before - looks wrong. On paper it looks really wrong. It looks wrong to do that game on console exclusively.
Julien Wera:The console deal does look really weird.
Thomas Bidaux:It looks wrong and makes me worry. They're going to go head to head with every single FPS game on Xbox, to fight against these people... That means they need to reach a new audience, start again with a very high barrier of entry, lots of competition. People are more versatile on PC, it's easier for them to go from one sort of game to another than on console.
For me it's against the very nature of the thing. Plus, on console, if you need to speak to people, if you need to arrange your mercenary group or whatever, you can't create that community fabric. That level that sits in the background. You can't build that on console. You don't have forums, you don't have fansites - not that are accessible from the main device. People have to go back and forth between PC and Xbox all the time. Why not do it on PC directly? I have a couple of ideas about why they made that decision, but for me it's counter-intuitive. It's a bit unnatural.
I'm excited about Dust - I think there's lots of good ideas. I believe it'll bring the added value to online worlds that I want to see in action - Dust is going to be the first to do that, so I'm really excited. But I'd be ten times as excited if it was a PC game.
Q:It's massively ambitious, and they've not really spoken about how the interaction between console and PC players will take place yet...
Julien Wera:If you look at the speculations from EVE players, following the recent patches that have added planetary interactions for players... They've added the ability to develop planets, build infrastructure and gather and so on. There are things that the EVE players don't really know what they're for. They're assuming that it's for Dust, so we'll see. It's one to watch, that's for sure.
That might even damage the whole Sony brand, not just the PlayStation brand.
Julien Wera on the PSN hacking crisis.
Q:A huge part of your business must be advising people on how to build a community and foster trust within it - something which the hacking crisis suffered by Sony must have done enormous damage to. What would your advice be to them now?
Thomas Bidaux:Do you have another two hours? [laughs]
Julien Wera:I definitely, when I think about the Sony crisis, think the hell their community people and their PR people must be going through at the moment. I'm really happy I'm not in their shoes, doing what they do because there's going to be lots to do! From my point of view, not being a PS3 player, in terms of the communication of brands - is the TV coverage. A couple of days before the royal wedding there was a report on Sky about the PSN hack. They invited a young games blogger on and he was talking about the PSN hack - many people who don't know Sony, certainly who don't play PS3, will hear about that. That might even damage the whole Sony brand, not just the PlayStation brand.
That's a shame because Sony is one of the companies who were really pushing for online content and free-to-play on console. They'd just launched Free Realms just before, I was very curious to see how it would do!
Thomas Bidaux:It's very easy to sit in the lobby of a nice hotel and say "if I was Sony I would do this". First thing I would say is, "we don't store your credit cards details anymore, we go through a specialist company who deal with all that." I would give away PSN Plus. I would take the time that it was down, multiply it by three, and that's what I would give away, because you need to be generous. It's not being overly generous, because it has a cost, but not that big a cost.
It has to be something that sounds big to people because the problem was big so the compensation has to be big. Then I would push the option, if people don't trust us, of pre-paid cards that you can buy in a shop. Do as many things as possible to buy the trust, because that's the biggest damage. I think they're going to also have a hard time with the developers. People launched games a week before the service went down - I would be desperate, crying! I'm not sad about Sony, it's a big company with big shoulders, it's painful but they can survive. Imagine the small developers, they have a good game and they lose out because of third, fourth parties. That's terrible.
It reminds me of 2002, when I was running Dark Age of Camelot in Europe, we had a hack. Quite a serious breach. We took the service down for a week. It was one of the longest weeks of my life. We didn't lose any critical information, because we weren't storing it, but it was our only source of revenue. We survived that and we came out stronger, but I can tell you, you hate the hacker. You really, really hate those guys.
Thomas Bidaux is CEO and co-founder of ICO Partners, Julien Wera is head of PR and marketing.