The Coming MMORPG Crash, Or Not

GameSpy gives a brief review of 16 (16!) major new virtual worlds scheduled for release in the next 12 months or so. This adds to a market already loaded with big-hit recent releases Sims Online (currently re-vamping itself impressively) and Star Wars: Galaxies (clearly a high-quality offering). Meanwhile, new social worlds like Second Life and There crowd their way forward, old veterans Ultima Online and EverQuest hold on to their users, and Asian games continue to expand rapidly.

Is the growth rate of user interest fast enough to make all of these games winners? No! User interest can't possibly grow that fast. It would defy economic reason. Surely a crash looms.

Of course, if user demand doesn't rise quickly enough, we know that this crash won't be like other crashes. Worlds won't shut down. Once the development costs are sunk, it doesn't take many subscribers to keep the lights on.

Rather, the main effects would be:

1. Media coverage: Right now this medium enjoys a great deal of positive whuffie, but it won't if several major releases tank. Expect many negative stories and commentary over the next two or three years.

2. The pipeline would dry up. The main real effect of a crash will be to close off new development deals. Don't expect major new worlds in 2006 or 2007.

Here's the contrarian view: I thought the crash would be here already, in Q4 2003, and that SW:G and TSO would have been the end of UO, and that World War II Online and Earth and Beyond would have been long gone. Nope. They're all chugging along nicely; just today I saw WWII Online on local store shelves in healthy numbers. In other words, this market continues to amaze. It already defies economic reason. Maybe it will eat all of this supply glut and continue to burn onwards. That's what needs to happen to sustain exponential growth. And it just might do that.

Comments

[Dave Rickey]

1.

Doesn't help that Wish isn't on their list. Hardest part isn't making the game, it's competing for mindshare.

My estimates (and I've been pretty good at handicapping the market so far) is that the US/European market will add around 400,000 more subs by the end of the next year, and that no *more* than 200,000 of the subscription base of current games is up for grabs. That's 600,000 subs to get split up between everyone coming out in the next year. If history is any guide, 1 game will take 200K-250K of those, 3 gameswill grab around 70-100K each.

Now, that's my *conservative* estimate, my best-case scenario would have twice as many subscriptions up for grabs. And it's only the US/Europe market, the Asian market (which is much more the focus of many of those titles) is a totally different matter and I don't even want to guess at it's potential (China alone has so many unknowns involved probably even those familiar with the market couldn't make a very good guess).

But any way you slice it, some of those games, especially the fantasy RPG's, are in trouble.

--Dave

[Ren]

2.

On major one to add to the list is The Matrix (thematrixonline.warnerbros.com). To my mind this is the one that has the possibility to start to penetrate into the mainstream, reason being that I would imagine that MMORPGs are only expanding their market as new people get turned on by the idea of an MMORPG, which is a conceptual jump. The Matrix has no such jump to make as the world is The Matrix so there is instant understanding among a wide proportion of the target demographic. The Sims Online had this promise but in my view blew it big time through creating something that was neither a good game world or social world.

I get the feeling that the market with be chaotic over the next few years, if we have a bunch of new worlds coming out and the addressable market shows linear or slow exponential growth then I would imagine we will see an increase of game switching. However there may be a different outlook, Geoffrey More has this concept of Crossing the Chasm for the way that successful technology products are adopted into the mainstream, it could be the case that MMORPGs make it across if so we would get potentially increased growth.

I think the above depends on a whole bunch of dynamic factors such macro economic conditions, deals that big players do or don’t do – I think TW \ AOL are pretty key to things as they have such brand reach – IDTV and 3G \GPRS devices may also be way underutilised delivery routes (certainly in the EU where these are fairly well developed).

Also there are some givens that I’m not sure about (but would like to know if anyone has the numbers) e.g. target demographic, total market size etc.

My feeling is that from looking at the Eastern experience we could see massive growth in this are if the right social and economic conditions occur combined with games that succeed in making sense to the mainstream market.

Ren
www.renreynolds.com

[Greg Lastowka]

3.

Anyone been keeping tabs on the Toontown figures? Seems like that's an obvious example of a real VW (from a design standpoint) targeting a whole new untapped demographic niche.

I think you've simply got to see a lot of sluggish grown among the future crop of MMORPGs insofar as they are offering more of the same and the target demographic is the same one that Dave posted about earlier.

Your observation about startup v. maintenance costs is good, though, Ted. The old MUDs are still chugging along, and I expect most of these new VWs will still be with us five/ten years hence. (I'm paying an Earth & Beyond subscription that I'm actually hoping to have time to use one of these days...) The time it takes to recoup initial investment cost might tail out a lot longer with these, though.

[Hunter]

4.

So during peak times - weekday and saturday afternoons, I've seen Toontown concurrency numbers in the 2-3,000 range. By "adult MMO standards" this suggests a 15,000 user population.

Ken - my early peak at Matrix Online at E3 showed an impressive GTA-style urban setting and some other dazzling graphics. However, my belief is that a "mainstream" MMO will not come as a result of IP license, but rather changes in standard design and/or business model. The classic MMO design, no matter how elegantly implemented, has not solved the challenge of "how can i have fun playing for a few hours a week at a price which I believe to be fair."

[Dan Hunter]

5.

The other problem with franchises like The Matrix is that they have insanely high fixed- and ongoing- costs in the IP licensing (eg SW:G). As a result they have to have insanely high numbers of subscribers from early on, otherwise they hemorrage money. They're like film blockbusters: you have to make $20 million on day one otherwise you haven't "opened" and you fold quickly.

I expect that the future expansion is in smaller worlds that have relatively small fixed startup costs (licensing a physics engine these days is no longer a major stumbling block), an innovative premise, and an ability to appeal to a niche demographic. The ongoing success (albeit small) of M59 and Toontown is pretty much what you'd expect.

At some point the worlds that need 300K+ subscribers to survive must eventually run out of potential users. Surely...

[Peter Ludlow]

6.

One thing that no one knows is the potential market for these games among the very young. My daughter, who is only 8 years old, will not play the offline sims anymore and insists on using some of my online avatars in TSO. As she puts the question: "what's the point" of the offline game? Indeed, it made me wonder whether Maxis wasn't making TSO intentionally crappy because they were afraid it would canibalize their sales of the offline games.

All of this is just to say that extrapolating from current usage statistics may be selling the potential market for online games way short.

[Ren]

7.

So the general thrust so far is that:

licences => high start up costs
high start up costs => requirement for large subscriber (>300k) base

but
market growth will not sustain more large MMOs

So the future looks like niche MMORPGs ?

But this does leave the question of whether MMORPGs will ever become mainstream.

Hunter puts the question thus:
>how can i have fun playing for a few hours a week at a price which I believe to be fair

What I start to wonder is what draws an audience to these games. The rise of There and Second Life might suggest that tapping into the _social_ instinct i.e. the glorified chat room, is what is going to bring mainstream appeal. But the much large success of EQ, UO and SWG might suggest that it’s the gamer in us that is drawn.

Or to put this another way: Why is Lineage so successful ?

From what I have heard Lineage is integrated much more firmly into pre-established social networks. Can western MMOs do the same thing – from TL’s recent work it looks as if extra-game social networking is key to MMOs success. But is there something about either the social structure of the East, or people’s adaptation to technology or attitude to game \ virtual spaces that mean that the west will never \ not in the invest-able future, see the same kind of market penetration for VWs ?

Ren
www.renreynolds.com

[Cory Ondrejka]

8.

Ren - "But this does leave the question of whether MMORPGs will ever become mainstream."

My form of the question is whether a mainstream online game will be a RPG or not. Obviously, I've placed my bet :-), but perhaps looking at D&D versus Magic: the Gathering and D&D is instructive.

D&D requires a user to make a massive time investment (not to mention convincing your parents that you really needed a stack of $30 books), you need to regularly coordinate the actions of a large group, and you need to learn an incredible number of rules, names, and facts (and are ridiculed for lack of knowledge). In MtG you need to convince your parents to shell out for a bunch of $12 and $3 packs of cards (probably larger long term outlay but initial amount seems smaller), need less than an hour to play a round or two, only need to have (or find) one friend, and have a (still complicated) but much smaller rule set. Oh, and there are also those nifty cards that you can buy and sell . . .

D&D has been a strong niche product forever but it has been powned by Wizards of the Coast, who created MtG. Literally.

So, my question is whether the nature of RPG game play is antithetical to the mainstream game player. While I think massive licenses will draw initial box purchases (but look at the numbers for Enter the Matrix versus Galaxies -- does anyone think that The Matrix is a stronger license than Star Wars??) I doubt that a license will move a game into the mainstream, although there will be many articles that say "The Matrix Online Will Bring MMORPGs to the Mainstream" from the same sources that said "Star Wars Galaxies Will Bring MMORPGs to the Mainstream."

[Brian 'Psychochild' Green]

9.

Ren wrote, "So the future looks like niche MMORPGs?"

I seriously think so.

Look at it logically: the new generation of online game developers (Raph, et al) have been telling us that there are some serious problems of scale. Older, small-scale MUDs (even commercial ones) were relatively stable and had handled a lot of the problems we see today with the "larger" games. Larger games are just resulting in more problems for the player, even if they appear sexier.

In addition, we're starting to see a very active and vocal group of people jaded and disillusioned with current games. People that decry that everything is a clone of some former game, complaining that classic old games are selling off their soul in a naked grab for customers, sick of the cookie-cutter worlds that result as companies try to build content fast enough to capitalize on the audience. Take a long, hard look at the complaints of the person reviewing There in the blog entry; the major complaints are that there simply isn't anything new or interesting to do. I'll remind you that There wasn't made very cheaply! $27 million in funding last figures I heard.

Look at the games on the market or coming to market. A large majority of them are stock high fantasy games. There's a LOT of underserved genres out there. What about survival horror, for example? The sales of Resident Evil games shows that there's an interest in this genre of games. But, could you imagine playing on a server with a few thousand other players? Running into the old mansion and yelling, "Camp check!" to hear the responses of "Hallway zombie spawn!" or "Demon Queen basement chamber!"? Ack! Obviously this is something that would work better on a smaller scale, and therefore would be completely unprofitable (or, not profitable enough) to a large company like Sony, EA, Microsoft, etc.

Yet, a small company could make a game like this and serve that market. They could tailor a game to the smaller audience and give a more focused experience. "YES! We offer WHAT YOU WANT!" the smaller game can proclaim. Maybe it's permadeath, maybe it's admin-enforced role-play, maybe it's PvP. Sure, maybe they won't get an EQ-sized playerbase because of their niche focus, but it's looking like you couldn't bank on that anyway given how the market is going!

The biggest problem currently is that the flat-rate subscription model sucks for smaller-scale games. You simply cannot rely on subscription income to pay enough of the bills and grow the company appropriately. I think that we'll start seeing other, more profitable, business models in the future that serve the smaller markets better. When you can't rely on a large audience to generate millions each month in revenue, then you have to look at other revenue models.

So, yeah, I think the niche online game will come to the forefront in the near future. Yeah, maybe this means that "MMORPGs" don't hit the "mainstream". So what? Do we really want the online medium to lose its soul to the demanding beast called "ever increasing profit margins" as Hollywood has?

I'm not fond of that route myself.

Some thoughts,

[DuckiLama]

10.

"So, my question is whether the nature of RPG game play is antithetical to the mainstream game player. "

I think that RPG gameplay as it is currently implemented _may_ be that.

However, if someone were to merge the concept of time-based play (as I've read Raph call it) with the concept of tick-based play, I think you could lure in the casual/mainstream market to playing a RPG.

If noone here has played browser-based games like l33t-wars/gangwars - http://www.gang-wars.com/ (free) or http://www.l33t-wars.com/ (fee), you should take a look. I am positive this is not the game that the more experienced online game-builders would cite for this mechanic, but it's the one I played for 3 months because it offered me some of what I wanted in an online RPG.

-I was able to play with my wife.
-I was able to play on my own schedule without losing "opportunity"
-I was able to "build" a character.

If I'm unclear or it's an unfamiliar term, when I say tick-based, I mean those games in which every player receives X amount of "turns" or action points every Y seconds(measured by the server in real time).
From the beginning of the round to the end, everyone will have the same opportunity to spend the same amount of action points, somewhat negating the power-gamer advantage and levelling the playing field for the casual gamer.
By the same token, the power-gamer that plays every night does have an advantage - timeliness. When opportunity knocks, he's home, so to speak.

Imagine a game that had a "baseline" advancement model, so that everyone, whether they logged in or not, would be at least Level 20 at the end of 3 months. Those that actually log in and play nightly will still have the power-gaming advantage and hit level 40 in that same 3 months, but the casual player will not be so disadvantaged as to give up.

I think time-based games necessarily limit the market. A hybridization with tick-based game mechanics, I think, would make such a time-sink/grind type game more attractive to those of us without the time to keep up with our friends. If I can't play with my friends, I'm not going to play, but I still want the arcade-game element of EQ or DAoC, so VWs like There don't quite do it for me yet.

I hope that made sense.

[Paul "Phinehas" Schwanz]

11.

Ducki> "A hybridization with tick-based game mechanics, I think, would make such a time-sink/grind type game more attractive to those of us without the time to keep up with our friends."

I agree that grind-based need not be synonymous with character advancement. I'd like to see a system that relied more on managing the character's time (i.e. even when the player wasn't logged in) than on managing the player's time. I posted something along these lines on MUD-dev a while back:

http://www.kanga.nu/archives/MUD-Dev-L/2002Q4/msg00349.php

That thread sort of derailed onto a discussion on addiction rather than the mechanics or benefits of what I was proposing, but I believe that MMORPGs will never be truly mass-market while still relying heavily on treadmill-based gameplay.

It is also interesting to consider how the eBay issue might be impacted by having character advancement based on the character's work and time instead of being so dependent upon how much time the players can invest.

--Phin

[Nathan Combs]

12.

Comments about "niche MMORPGs" feel right. As the pool of {potential} players become more sophisticated, there seems (to my view) a tendency towards games that "scratch a specific itch" versus an average (broad market appeal) game dressed up w/the MMORPG novelty.

The question I then have is what are the business ramifications of this - especially on the development side. More middleware and technology sharing amongst development houses to amortize costs?

-nathan combs

[TJVM]

13.

I think that the development of niche games will be necessary not only to expand the market, but also to retain current players. When people first start playing MMOGs, part of the appeal is the "wow" factor of MMOGs themselves -- the concept of playing in the same space as thousands of other people. But in time that novelty wears off, and people develop more specific ideas of what kind of game they want to play. Barring the possibility of something truly radical, I suspect that there is a limit to the number of mass-market MMOGs one can play before they start to feel the same.

"More middleware and technology sharing amongst development houses to amortize costs?"

There might be an opportunity for someone to develop a generic "MMORPG engine" that could be easily adapted to various settings and rule sets. You might not be able to recoup the cost with a single niche game, but if you could license it to ten small games, it might be profitable.

[DivineShadow]

14.

"There might be an opportunity for someone to develop a generic "MMORPG engine" that could be easily adapted to various settings and rule sets. You might not be able to recoup the cost with a single niche game, but if you could license it to ten small games, it might be profitable."

Someone's got a nice headstart there: IBM and the IBM Digital Media divisions along with the Extreme Blue project have developed GameGrid.

Read more here: http://www.eweek.com/article2/0,3959,1227299,00.asp

The Extreme Blue homepage is here: http://www-913.ibm.com/employment/us/extremeblue/
and the IBM Digital Media page here: http://www-1.ibm.com/industries/media/

[Alan Stern]

15.

I agree that 'niche' MMOGs are the likely outcome BUT with a few exceptions. I think some game companies will be able to capitalize on the previous success of their older games and player recognition thus generated.

Specifically I'm thinking of 'World of Warcraft' (WoW) by Blizzard. A lot of the people I've spoken with in previous and current guilds plan on trying WoW, as do I. Similarly, Everquest II is likely to have a good subscription base initially and potentially good staying power if the game is good enough. (Distinguishing from Asheron's Call II whose subscription base dwindled before and after initial release.)

One current example of a 'successful' MMOG, largely due to name-recognition, is SWG. Most people, myself included, picked it up and tried it BECAUSE it involved Star Wars characters and settings, not because 'it would be a good game.'

Perhaps the MMOG market is in a holding pattern awaiting the release of the next-generation? Very few MMOGs have dramatically improved on the initial model if at all. Maybe once that one "Doom" or "Quake" of the MMOGs comes out, people will shift to it and it's immediate successors?

[Brian 'Psychochild' Green]

16.

I'll disagree, Alan. Not to say that big games will never work again, but I think that the ones you mentioned aren't sure-fire hits.

Specifically, I think sequels are a waste of time. I think one of the biggest problems with Asheron's Call 2 is that it didn't know who its audience was. People who like the AC universe are happily playing AC1. People who disliked AC1 were unlikely to play another game calling itself "Asheron's Call".

I think EQ2 is likely to run into similar problems. Most people who play online games know about EQ. People happy playing EQ are going to play EQ. People who had bad experiences with EQ1 are unlikely to play EQ2. In movies, a sequel is usually assumed to do worse than the original. The exceptions are notable (Terminator 2), but rare. The main reason sequels get made is because you can usually predict how well they'll do, and budget appropriately.

Beyond that, licensed worlds aren't a sure bet. Star Wars is one of the biggest, most recognizable brand names, but the online game hasn't done nearly as well as the movies do. As a developer, you also are highly restricted in what you can do with a license. Witness the big discussion about Jedi surrounding SWG. The dev team had the hard decision of going against canon in order to make something fun. Even then, not everyone was happy.

Again, I think niches will rise up. Perhaps the "niches" will grow, but I honestly don't think we'll see the day when one online RPG brings in the same sized audience as even a mediocre TV show.

My opinions,

[Nathan Combs]

17.

Brian wrote:

"I think EQ2 is likely to run into similar problems. Most people who play online games know about EQ. People happy playing EQ are going to play EQ. People who had bad experiences with EQ1 are unlikely to play EQ2."

Interesting point - a quibble I might have would be that I suspect ex-players who became bored (but otherwise enjoyed it while it lasted) might find it within themselves to try the new version.

But you bring up an interesting problem, the problem of growing a successful franchise (however it should arise in the first place).

How to grow the universe and bring along all the old players... The argument that a product balkanized amongst a bunch of version "islands" can glean any synergy seems weak to me. Problem then would be to provide a mechanism by which players can escape and upgrade. The assumption here is that many have invested too much time in their niche to go quietly. Seems to me a limitation for all online games.

An elegant solution would probably be good for the business as a whole.

-nathan combs

[Paul McInnes]

18.

MMOG middleware is already available, ranging from specialised server solutions to integrated client, tools and server packages (our BigWorld technology, currently in use in a number of games, fits into the latter category).

Part of the rationale for developing middleware is to reduce the initial costs and risks for smaller niche titles, and allow small to medium-sized teams to create niche products.

We should be thinking of online persistent shared worlds as a medium, not simply a genre of game.

Paul

[Simon]

19.

Well WoW and EQ II is out and looks like the 'game-switching' scenario is upon us. Regardless, an open-source 'free' mmorpg project gained 10000 account in a week. I would be more afraid of what open source can pull out , considering MUDs ran on open source principles since i remembered, if i was in the business of 'selling' an MMORPG to the masses

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20.

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21.

As i know that MMORPG's truly become massive and not instanced garbage for a handful but on to check out the latest of these exciting updates coming to a server near you , so thats ok but i like your thought , Thanks

AngelinaJacob
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