Last month Jagex CEO Mark Gerhard confirmed his company had ceased development of MechScape, the much-awaited browser-based follow up to its eternally popular RuneScape. The game just wasn't one his team ended up being proud of, he said. And as a company comprised first-and-foremost of gamers, the loss of several years' toil and tens of millions of pounds was the preferable option to releasing a game it wasn't fully committed to.
Gerhard readily admits it's a decision the company had the luxury of making due to its massive profitability. But he believes this profitability arises in the first place from good company's values - on a focus for games over financial success and communicating directly with its community over traditional marketing. Here he talks about these values, the changes he has made since becoming CEO earlier this year, and the business of browser-based gaming.
Q: MechScape you said would be released at some point this year. How is development of the title going?
Mark Gerhard: We've cancelled, or canned, MechScape. So the game that we were building has changed, as of about a month ago. And we're now building a new game. Initially the reason for building MechScape was that we would learn all the lessons from RuneScape, having run it for about four years at the time. So now we know how to do a good MMO. And that's what MechScape started out being. It got near completion and we discovered, oops it didn't do all of those things that we wanted it to do.
So we went back to the original design document and said let's do it again. Not everything's lost. We're able to reuse the engine and actually most of the game in fairness. A lot of the content will change, a lot of the gameplay mechanics will change, It's meant to be another MMO in a browser. We've tried to push the envelope in terms of gameplay, the look and feel of the game in comparison to Runescape. We deliberately didn't want to create RuneScape in space – I think that's what we originally set out to do. And maybe that was even the same reason we decided that MechScape probably wasn't the right name and that the project needed to start again because it just implied that.
So exactly what the game will look and feel like I don't actually know because the guys are working on it as we speak. But we've got that arsenal of lessons and everything else. So we're hoping to bring it out in a meaningful time frame (smiles)... soon, but not that soon. It's really hard to put any more to it than that because it's literally in development as we speak. It's meant to be very different from RuneScape, it's meant to learn all the lessons from RuneScape. And that's pretty much it.
Q: It's a massive decision. Is it a luxury you think you've luckily been afforded because the company is doing so well?
Mark Gerhard: Yes, it's a luxury that we are doing well and we can afford to make that decision. I didn't make the decision lightly because it's effectively cost us tens of millions of pounds. Maybe more. I had to explain to the board, not so long ago actually, that decision. But as a gamer it's crucial to me we don't just ship a title because we've built it. But that we're proud of it and it's a game that we want to play. The previous game wasn't a game that we want to play. As much as we ended up thinking of it like a baby – we were 'reasonably' proud of it, we thought it was a good experience and we'd achieved something – it wasn't a game ready for launch.
So, it was expensive. I hope never again to have to have the make the same decision twice. But it was the right decision. On that point though I should add I've been in the organisation some two years now and I've never seen that team, that studio, so excited since I joined. They've spent years of toil on this and never quite got there and now the entire team sees what the plans are to change, what the new game will be, I think it's really galvanised everyone. There's a real buzz in that studio, which is fantastic. And the guys are doing an incredible job of bringing this to market.
Q: How did you decide it was the right time to stop development of that title?
Mark Gerhard: I think there's never a wrong time to make the right decision. It was only recently, around August, we actually had the entire game assembled and said 'well this is it now. This is what it will look and feel like.' And, as I said, that wasn't what we wanted it to be. As much as we wanted it to be perfect. But it is the case that when we started this four or five years ago the engine and everything else was far more primitive than it is today. We can do so much more in terms of interface, which just wasn't even possible two years ago. So, given where we are today, we can offer a far better experience, a far better game, a highly compelling game.
Q: We hear a lot about the massive profits that Jagex is generating. Business is obviously going very well?
Mark Gerhard: We're continuing to grow. I tend not to speak much about the business because ultimately we think about the games and our community. And really, financial success is just a side effect of that. I know it's kind of the antidote for everyone else in the industry who starts saying, 'we've got a budget, we've got a game idea, and everything flows from that'. We kind of go, 'what would we like to play?' And everything flows from that. Some games aren't a success, we've got 38 in the catalogue now. We don't mind that, we're not ashamed of that. We love making games, we love to innovate and we think that financial success, everything, comes from that.
Q: Do you think that philosophy is what makes Jagex so successful?
Mark Gerhard: I think so. We've got just under 400 people who are highly passionate about what they do. We employ gamers. It doesn't matter what your job is, you need to love what you do and I think we get the best out of people. And I do think our profits and everything else are a side effect of that rather than some uber strategy to make money with games as a conduit to that - it's completely the opposite to that.
Q: Have you made many changes to the company since becoming CEO... aside from canning MechScape?
(Laughs) Yes indeed. I think I've tried to go back to founding principles. Recognising who we are, re-embracing our company DNA, saying "yes, we're gamers, we're a slightly quirky British company and we're not ashamed of that". We've certainly become less corporate than we were.
Again, that probably horrifies most people who might think we should be going forward, not back. I like to believe that it's a great place to work - more so than it used to be. As a company it's always been a great place to work - no one's ever left the company since we started. Recently we were 22nd in the top 100 tech companies. [Recognitions such as] those are nice, but we don't go out looking for gongs. But it's nice to be recognised. I think we've gone back to our founding principles of building great games and having our success dictated by that more than trying to see, is there a way we can better monetise our playing population and everything else. We've re-embraced the community, rather than the business space - again, I spend more time talking to our players on forums than I do doing interviews.
Q: Are you developing new ways to monetise your customers though? Other than through subscriptions?
Mark Gerhard: We also have advertising but it makes up a small percentage - maybe five per cent. Subscriptions is really the mainstay. We're the UK's largest independent publisher and developer. We've only ever published our own titles and I think we'll start to look at working with other people similar to ourselves - more indie gamer studios - to get more titles out there. I think we can relate to them. It's where we started.
The reason we're a publisher is because eight, nine years ago no one would publish our games because we were on the internet and it was weird and we didn't have the CDs. It's interesting that this entire space has moved here and we think there's lots of other little companies like Jagex with talented guys trying to work on projects, that just need some help. We'd love to give them that help. So, in time, we will have third party titles as well. This is all for the new year. And at the same time I think, yeah, we will probably have some games in the future that will feature micro transactions.
Q: Those will be games that will be distributed through your online portal?
Mark Gerhard: Yes. I don't know the exact number, but I think we've had north of 106 million active uniques since we started. There's a lot of people who have touched the games and know the organisation even if they're not all actively engaged with the games today. We're pretty sure we can extend that reach and help other people in.
Q: The online and browser game market is growing fast. Do you have regular discussions as to how you can stay on top of that market?
Mark Gerhard: Every day. And I think that's maybe the other side to Jagex - not only are we a great gaming company but we're also a really strong tech company. Although everything that we use in-house to provide the games, develop the games are proprietary - the languages, frameworks, animation, everything is built by Jagex. Not just the games. And that was, again, needed because 5-6 years ago there was nothing in the public domain that could do a fully immersive 3D game in a browser - it didn't exist. The gap is closing - it's not there yet, or the tech isn't there yet, publically available for other people to do this, but we're conscious it will be soon and we'll continue to evolve our own platforms in order to stay ahead.
Q: Do you think the recession has helped to fuel the growth of the free-to-play market?
Mark Gerhard: Yes - I mean you hate to say you benefit from something as bleak as that, but it has. We've seen a significant uplift. Not just for free games, but in general. People are going out less, they're spending more time at home. A game like RuneScape is also quite a family game, so I think yes, that has benefited us.
Q: You've spoken previously about being interested in expanding onto other formats - possibly console formats. Is that something you're still looking at doing?
Mark Gerhard: It is. I mean our overall plan is just to be platform agnostic, so whether it's on a PC, a console, a phone, a social network site, it doesn't matter to us. We just want our products to be available in all territories on all platforms. If you've got a device that's connected to the internet, you should be able to play RuneScape and all of our other games.
Q: You're speaking today [at London Games Conference] in a panel entitled 'Daddy, what's a disc?' Do you have predictions on when that question is actually going to start being asked?
Mark Gerhard: I don't have a date (laughs) but I think it's sooner than most people think. And I think that if you look at, even the console space which has been dominated by disc, I believe they're doing more volume now through the PlayStation Network and the Xbox Live Arcade than they are through traditional retail. So I think that really speaks for itself.
If I look at our competitors in the space which do have a CD ROM offering, they also make that available through digital downloads. I think a lot use the physical medium to generate marketing and promotion around - it's an event, it's something in-store, it's something tangible. But almost all of them have an online offering as well and I think that's symptomatic of the future. I mean I don't know exactly what the ratio is between the two but certainly we haven't found that to be a barrier.
And I think next we're seeing systems ship with an internet connection and not with a CD ROM drive. It is starting to become legacy. Exactly when, who knows, but I think the growth in the online games space is really accelerating - even those that don't do anything in the online space, the traditional guys - the EAs, the Microsofts - are desperate to get into the online space because they know that's where the future is. So I kind of think the writing's on the wall as a result of that. Whether they are able to adapt their own catalogue versus develop completely new on the internet, I don't know. Time will tell.
Mark Gerhard is CEO of Jagex. Interview by Kath Brice.