To Penny Arcade:

Hopefully the welts from the ping pong balls won’t hurt you too much. I suggest wearing a cup.

p.s. I’ll bring the donuts.

- Smed

(click to enlarge)

(click to enlarge)

Today we released a white paper that features a lot of very detailed information about our Station Exchange service for EverQuest II. It contains details like the amount of revenue we generated for a fixed period between 2005 and 2006. It can be found here.

Many people may wonder why we put out all of this very confidential information. The simple truth is that we wanted to shine the light of day on the real world economics at work here. I believe very strongly that RMT is an absolutely massive part of the MMO business. By our estimates, it’s over $1 billion worldwide in the past 12 months. A lot of this is coming from Korea and China, but probably 30% of it is coming from the US. Those are numbers that no one can ignore. It’s very easy to sit back and take the “no RMT” stance, and many companies have. I understand and respect that position. We all know farming is rampant in MMOs (yes, ours included), but there is a very concerted effort in most of the major MMOs to stop it. It absolutely negatively affects people’s gameplay. I’ve had that happen to me in my own gaming, and I get every bit as frustrated as many of you. We’ve all seen the spamming of some of these guys in our games, and yes… it sucks.

We took a different approach to this. We decided that in EQ II we were going to open Station Exchange servers and allow this activity specifically on those servers. Since that time, we have seen a tangible reduction of RMT on our other servers and specifically we’ve seen it go from roughly 40% of our CS ticket volume to roughly 10%. Now I am NOT saying it doesn’t happen on the other servers (even though the companies that do this encourage people to break our EULA). It happens and it’s common. However the really serious problem cases are down by a significant amount because there is now a legitimate place to engage in this kind of practice.

This has provided us with a lot of information about the behavior involved with RMT and we think it best to share as much of this data as we can in an effort to get this all out in the open.

After having seen Station Exchange running for over a year now, I’ve come to see RMT in an entirely different light and I believe the real future of RMT is actually a really bright one if we can work on our game designs in such a way as to make it a cool part of the games. Imagine an MMO without a subscription fee that has Station Exchange built into it. However, the game is designed in such a way as to only allow the sale and transfer of non-game impacting items. What if an in-game tailor had the toolset to actually put cool designs on clothing and literally make them custom for different players, and then that person could open a virtual storefront on Station Exchange. That’s the kind of cool thing we see in the future and frankly it’s the direction we want to steer things. To create an ecosystem for players to make money from these games while they’re having fun.

Smed

As I began my post holiday catch up of various news sites, I stumbled across a NY Times piece on the Child’s Play Charity.   The piece talks about the roots of the charity and the money it has raised to date, definitely worth reading and like my blog entries, it is short.  Mike and John, alias Gabe and Tycho have done a great thing here, raising over 2 million dollars for Children’s Hospitals around the world.  Our own John Smedley is quoted in the story,

Mr. Smedley said, Child’s Play “really helps bring our industry together for the common purpose of helping kids.”

I agree.  With all of the criticism out there about video games, as well as all of the competition we have between various companies it is refreshing to see industry and fans alike come together and do something so worthwhile. 

Thanks Tycho and Gabe for starting the charity and for all the good it has done.

Just read this blog

http://www.gamesetwatch.com/2006/12/mmog_nation_how_they_are_going.php

I’m personally really excited about a Firefly MMO.

But then again I’m an optimist by nature. The first thought that ran through my mind was “that’s an awesome universe for an MMO”.

I am strongly of the opinion that cynics are in general pretty useless. That’s not the same thing as saying critics are useless. I absolutely believe criticism is an important part of the creative process.

But saying what other people are creating is GOING to suck may be a popular pastime in this day and age, but it doesn’t mean I have to like it.

- Smed

I’m very proud to announce that SOE has launched the online version of Pirates Constructible Strategy Game (based on the collectible card game from Wiz Kids). It’s our first foray into online collectible gaming which is something we see being a key part of SOE’s games in the near future.  In addition, all proceeds generated today from Pirates CSG are going to be donated to Child’s Play Charity. For more information, visit childsplaycharity.org.

I was reading a very interesting blog here:

http://ozymandias.com/default.aspx

Essentially Ozymandias is talking about how he thinks it’s confusing to be hooked into multiple online services. I have to respectfully disagree. One of the cool things about integrating both the PlayStation Network and Xfire into our PS3 title Untold Legends: Dark Kingdom is that my friends on Xfire running on the PC can send me messages while I’m playing the game on the PlayStation 3. I can also respond to them if I want.

I can do the same thing (also from within the game) with my friends that are playing other PlayStation 3 games using my PlayStation Network friends list. We’ve integrated both into the game because we realize how important it is to be able to tie into different groups of online friends. I personally think that’s one of the best things about the PS3’s open approach. I am a member of multiple online communities. The fact that the PlayStation 3 will allow publishers the option of hooking my favorite games into these communities is a big plus to me.

I do want to point out that you aren’t just able to see if your friends are online at the cross media bar interface level.. it can happen within games too.

As for his thoughts on how this somehow relates to that lawsuit…. well… that just sounds like a pretty out there theory IMO.

Smed

Today I saw a link to this blog up on Slashdot:

http://soulkerfuffle.blogspot.com/2006/10/view-from-top.html

Over the years I have heard the loud echoes of this sort of sentiment. Just look at the headline on Slashdot

“How Warcraft really does wreck lives”

Reading this guy’s personal experience does make it sound as though it was the game itself that lead to him gaining 30 pounds, not playing the guitar anymore or doing Kung Fu.

“It’s the game’s fault.” “It’s not my fault”. “The game made me do it.” “Games encourage kids to go out on murdering sprees”… and on and on and on.

At what point do personal choices come into the picture here? This gentleman clearly made life choices about what he wanted to do with his time. I respect that. I even can respect the position that some people play these games too much, because I personally think that’s true. But the game isn’t making them do anything. The game isn’t designed to keep people playing. It’s only designed to entertain them.

I actually think it’s the other way around. People are designed that way.

When we as humans find something we like to do, we want to keep doing it.

It really is that simple.

It’s in our DNA. Are some people more prone then others to getting “hooked” on these kinds of games? Maybe. But there are plenty of people who are hooked on NFL Football and don’t want to hear from their family on Sunday’s because they are busy watching the game.

In my younger days I can say I was hooked on Dungeons and Dragons. It was an obsession. The same was true of my first online game (Simutronic’s Cyberstrike)… and Magic: The Gathering was a bigtime passion of mine and many of my friends for a long long time. I spent way too much money on buying those cards. To some of you maybe these were obsessions of yours too. I certainly don’t blame any of those games for the time I “lost” to them. They were some of the best times I had with my friends and also contributed greatly to the kinds of things I like to do now.

I think it’s all the same in the end. We all have to make our own choices. I don’t believe for a second that WoW (or any other MMO including our own) is designed to get people hooked.

It’s a game. 

It’s supposed to be fun and it is.

If it becomes an obsession for some people, that’s something they need to think about changing for themselves. As gamemakers our job is to make great, fun and challenging games. This isn’t the moral equivalent of the Manhattan Project where we have game designers saying “this is just too fun… the world will be a worse off place if we make it too fun”.

It’s a game.

Smed

I came across a Microsoft blogger this morning that had some thoughts on our just announced deal with Xfire

http://www.gametab.com/news/707581/

There is some bad information in there that I’ll get to in a sec, but it was interesting to me because it highlights some pretty core differences in the approach that the Playstation folks have taken.

From the very beginning the team at Sony Computer Entertainment has always had a very open view of the the networked Playstation 3. This is showcased in our game Untold Legends: Dark Kingdom. We’ve been able to integrate Xfire’s new PS3 API into the game very easily (I should also point out that this API is absolutely free… no clue where Ozymandias got that info but it’s just plain wrong). What this is going to do is allow an already huge network of online gamers on the PC continue to track their Xfire friends already as they play our (and other games in the future) PS3 game.

This is not a replacement for the PS3 friends list.

This is something over and above that. In this day and age many people are members of different communities. For example, I belong to a Battlefield 2 team and a guild for MMO’s. The two are very different and I enjoy them both. Since people spend their time multi-tasking and switching between their computers and consoles, it just seems to make a lot of sense to me that it’s inevitable that people are going to be a part of many different communities.

This open approach that allows licensed middleware providers to put hooks in PS3 games (assuming that’s what the publisher wants to do) really opens a lot of doors that a more closed approach just wouldn’t allow.

To me that’s just plain common sense.

Online console games are going to be huge. They’re growing at an extremely rapid rate and we already have several MMO’s in development for the PS3 that are cross platform with the PC. We’re working on cool new ways to allow people to communicate (online keyboard interfaces, voice-to-text and other ideas). The power of the PS3 is going to allow us to bring a lot of computing power to bear on the challenges of communicating with other players. To me the idea of an online universe of gamers as large as 100 Million or more is really exciting and is going to end up really allowing all kinds of awesome games.

Smed

Today Next Generation ran an opinion piece about the ESRB. Next Generation is a great website for the gaming industry and the opinion pieces are often thought provoking. This one caught my eye.

You can find it here: http://www.next-gen.biz/index.php?option=com_content&task=view&id=3919&Itemid=2

In it, the author Aaron Ruby essentially comes to the conclusion that the ESRB is broken. I strongly disagree. Here are some of his assertions and my thoughts on each:

Aaron writes:

“I find it alarming that the ESRB does not bother to base its ratings on the entire experience of playing a game, instead relying far too much on submitted clips—not even complete gameplay run-throughs, mind you. Even if you think the idea is unnecessary or even absurd, there’s no getting around that failing to do so lends an impression of incompleteness and an ad hoc quality to the system that invites skepticism. It’s like rating movies based on storyboards.”

This statement doesn’t make a bit of sense to me. In our business it’s impossible in many cases to completely play through a game. The ESRB requires that the submitted clips represent all extremes of gameplay. How are they ever going to be able to completely play through online games like EQ II or WoW for example? I would argue that there’s no such thing in this day and age. Take Grand Theft Auto for example – sure you can play through all of the missions, but there are often many side games that aren’t core to finishing the game. Often times this is where the content that gets a game an M rating in the first place resides.

In another part of the article, he writes:

“But the ratings system, as it stands, is surely a case of ‘more is less.’ What is the point of having a system that requires consumers to be fluent in so many subtle and often arbitrary distinctions? One of the fundamental flaws of the ESRB system, and why I believe it is so vulnerable to attack, for example, is not that it doesn’t do it’s job, but, really, that it makes little sense. And its lack of coherence makes the whole thing seem ginned up.”

Here again I strongly disagree. Parents are used to the TV system that has many descriptors. I’m a fan of the FX show “Nip/Tuck” and before every episode they have an absolute ton of descriptors. Even in the movie industry you’ll notice specific descriptors now that clearly show exactly why the movie has the rating it does. It’s simple – the core rating is there to clearly show what the rating is, and the descriptors are there to explain in more detail. As a parent of 4 kids, I often times have to decide specifically whether or not I’m going to let my kids watch a PG movie. It comes down to exactly why the movie got that rating in the first place. The same is true of descriptors for the ESRB rating system.

He does make one interesting point:

“It is from the cynical view of a ratings system as a PR tool designed to fend off regulatory encroachment from outside the industry, that the ESRB has perhaps most stunningly stumbled, of which the introduction of the Truth In Videogame Ratings Act is only the most recent evidence.”

In my view this is not a failure in any way on the part of the ESRB. It is a failure by our industry to lobby effectively. Mr. Ruby does make this point:

“But the fact remains that for a $25 billion dollar entertainment industry that wants to stand shoulder to shoulder with television, movies and music, it certainly is quiet. When was the last time you saw a prime-time commercial campaign or even a magazine or newspaper campaign aimed at educating the vast market the industry hopes to capture. Games are still viewed as a shadowy pastime in many cultures and it’s a shame the industry hasn’t stepped forward with so much as a flashlight in hand.”

And here I wholeheartedly agree with him. We do a lousy job as an industry at both lobbying and effectively messaging to consumers about games in general and the proactive steps we as an industry are taking. I’d certainly like to see a lot more of this approach. The ESA and the ESRB should be taking out TV ads educating consumers about the rating system we have in place and encouraging parents to follow it. This is the responsible approach and I suspect it would blunt the attacks that legislators are constantly sending our way. Let’s get proactive about this and stop letting the Jack Thompson’s of the world be the only messengers about our business.

The ESRB certainly isn’t the problem here. It’s the lazy reactive approach we as an industry have taken. For too long we have sat on the sidelines and reacted to events rather than taking a proactive and positive message about the ratings system to consumers. The ESRB may not be perfect, but they do a good job and are effective. We just need to realize that they are only as successful as our industry enables them to be. Let’s focus on spreading the message about our industry’s rating system and take the words right out of Senator’s Brownback and Clinton’s mouths.

Smed

I find myself in very strong disagreement yet again with Michael Pachter, a research analyst for Wedbush Morgan, a securities firm.

Wonder what I’m talking about? Here’s the link: http://www.gamasutra.com/features/20060911/wen_02.shtml

This is my favorite quote from the article:

“The digital distribution model is probably going to be extremely limited, and packaged products will likely rule for a long time. Digital downloads are not portable (you can’t take [them] over to your friend’s house), can’t be sold at garage sales, are limited to broadband households, and take up a disproportionate amount of disk space. I think that this will not approach more than 20% of the market for the next ten years or so.”

Here’s a great quote from back in 2005

“I don’t think there are four million people in the world who really want to play online games every month,” said Michael Pachter, a research analyst for Wedbush Morgan, a securities firm.

(source link )

And another one:

“At the end of the day, we don’t play games for social interaction … We play games to escape.” Microsoft’s strategy is “absolutely flawed,” he said.

(source link )

A couple of things are crystal clear to me:

1. Michael Pachter has not analyzed the gaming audience outside of the United States. In many countries (most notably Korea and China) PC based online gaming (which is effectively piracy proof) is where the action’s at, and it’s growing at a very substantial rate each year.
   
2. He has not seen the heavy growth of digital distribution in both console and PC based gaming. Xbox Live and the PS3’s upcoming network service are both focused squarely at the next generation of digital downloading. To say it’s not going to go over more than 20% of the market is simply to ignore the realities of the online gaming space and where games are going in general. It’s also ignoring gaming on a worldwide basis. In China and Korea, getting games digitally is the predominant method. Even here in the US we’re doing around 3x that 20% for our own games, and if you look at the broader PC gaming space more and more first-run games are coming out day and date digital with retail. Even with the large file sizes, broadband speeds are increasing at a very rapid rate and you’re going to see console games making the same leap. To say it’s not going to be more than 20% of the market 10 years from now just strikes me as dead wrong.

He’s a very smart guy and I don’t want to say he’s off on a lot of his comments regarding the gaming space. In fact, for traditional retail channels.. he know’s where it’s at. But in the online space, he’s horribly off mark and I would encourage him to look at the worldwide trends and especially to just simply go online to look around a little more.

And one final thing – Michael, I’ll be happy to make a $1000 bet to be given to the charity of your choice that you’re wrong on digital distribution. I’ll even say it’s going to happen within the next 2 years and I’ll make that bet on both console and PC.

Smed