Parks Associates Blog

Friday, September 26, 2008

NY Games Conference

It's raining cats and dogs here in NYC and the presence of all the presidents from around the world makes the traffic even worse. I'm staying dry inside in the Jewish Museum of Heritage, attending the NY Games Conference. BTW, the President of Iran is staying at the Ritz, which is next door to the museum, how ironic.

I just finished my panel on Online Games and MMORPGs, which followed John Smedley's Keynote (John is the CEO of SOE-Sony Online Entertainment). During John's keynote, he showed a lot of the interesting stuff they are working on, including Free Realms and DC Universe. What is interesting about Free Realms is not just the target audience, which is a lot younger than the WOW and EQ players, but also the business models and openness of the game. It's free to play, microtransaction based. It's more akin to a gaming-centric virtual world than an MMORPG. RPG is just one of the element of the game-it does have quests, guilds, monsters to fight, etc. In addition, it also have a variety of other types of genres, including puzzle, card, chess, racing, hidden objects, and soon a soccer game. It's flash based and highly accessible. The launch date is January 2009. SOE started developing Free Realms in 2005, so it's four years in the making. John also stressed the high production value of the game and during my panel discussion, he revealed that now the team behind Free Realms is 70+. I asked about the development cost, he won't tell me a number but did say it's easily north of $20 million. Other interesting tidmits during his keynote:
  • He showed two people getting married at an EQ Fanfair event in Vegas last year, which was hilarious. I believe he said SOE's CFO also found his love through EQ.
  • He also mentioned that Vivox, the VoIP tool in EQ, is being used by more than 70% of the gamers.
  • Station voice allows EQ players to dial in from a cell phone into the game through voice or text.
  • John's a self-identified geek who grew up with Dungeons and Dragons.

Back to my panel. I had a great lineup.

  • Fernando Paiz, Executive Producer, Turbine
  • Jon Radoff, CEO, gamerDNA
  • John Smedley, President, Sony Online Entertainment
  • Matthew Bellows, VP, Consumer Strategy, Vivox
  • Jonathan Strietzel, Co-founder/CCO, Big Stage Entertainment
  • Min Kim, VP, Marketing, Nexon America

Some key takeaways:

  • Freemium games really took off here in the U.S. in the last couple of years. Nexon along is $30 million last year just in the U.S. The popularity of Nexon Games really took off after cash cards appeared at Target last year. Many of the incumbents, including SOE, are also diversifying into other models, including Freemium. Microtransaction models, which account for about 15-20% of the MMO market in the U.S. today, might outgrow subscription-based MMOs in just a few more years.
  • The kids space is getting crowed, with many Virtual Worlds and MMOs popping up. Channels, production value, service, and brands will be important differentiators.
  • MMO companies, in addition to business model diversification, also need to cater to different demographics, not just the traditional players, who are more likely to be male and 18-34. Turbine and SOE both have 80% male among their existing players.
  • Console will become increasingly important. All SOE games in the future will be both PC and PS3, and potentially other platforms. Turbine is betting on the console as well. Nexon is also examining the platform. SOE has modified its MMOs for the console so that the interface is more friendly for the game controllers. All the panelists agree that console will help expand the market, not cannibalizing PC revenue. They also agree that there won't be a cross-platform MMO between PS3 and Xbox 360.
  • Maintaining a dual currency system, one earned, and one purchased, is very important for successful Freemium MMOs.

I'm trying to get some notes on the panel from the reporters and bloggers in the room. Stay tuned.

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