brinking - nabeel hyatt

NY Times writes about Virtual Goods and misses the entire industry

The NY Times did a piece on virtual goods, only it's actually just another damn piece about Second Life. I posted before about why Second Life gets so much coverage, but this is really going far past that point. This is a piece focused on the buying and selling of virtual items, yet there is no mention of Maplestory, Habbo, or even Facebook and Hot or Not. For the press to remain ignorant of this being an industry and not simply a single product is now journalistic irresponsibility and they should be ashamed.

This is a member of the mainstream press that has not even managed to type "virtual goods" into Google. If they did, they would see the first three stories currently point to:

1) Sony getting into the game.
2) Susan Wu's article on Techcrunch about Virtual Goods being the next big business model for the web.
3) A link to the friggin' Virtual Goods conference, which would have mentioned all the above companies and many more.

Instead we get a completely miopic puff piece about one person selling crap on Second Life. No context of how this might effect the reader as they navigate their digital lives. No background on the history of virtual transactions, their popularity in Asia, or the fact that the #2 prepaid content card in Target behind iTunes is the Nexon card. Not even a brief mention of the RMT market, despite the fact that there was piece on it in the (much better quality) NY Times Magazine a few weeks ago.

This is not a love affair with Second Life, this is journalism that is abdicating its responsibility to inform the public. This is the same as talking about the future of Blackberry's stock and neglecting to mention the iPhone or Google Phone. Or talking about the social networking phenomena and only focusing on one teenager on MySpace without even hinting that their might be an entire industry of competitors. Just to be clear, this was an article in the New York Times Business section.

This is lazyness that borders on a lie.

[Note: The original title of this article was, "Idiots at NY Times write about virtual goods and miss the entire industry." After calming down a bit I felt that the use of idiots warranted a personal attack, which wasn't really my intent. I have left the rest of the article exactly as it was, as I think it accurately captures how viscerally I feel about this issue.]

Virtual Goods Summit Video

Video from the recent Virtual Goods Summit is up, so if you weren't able to make it you can catch up now. I'm so glad Charles did this, since I had to miss the afternoon panels, and I can clearly see I was in need of a haircut.

Above is the panel I moderated: Why Virtual Goods Matter . Another panel chock full of great facts was the first one, Virtual Goods Success Stories, where Susan Wu of CRV does a great run down of the industry, and you get good stats from Habbo, Nexon, Neopets, and Tencent.

Rest of the videos here.

Cyworld doing $80m in virtual goods annually

CyWorld was just involved in a reverse merger with Empas to go public on the Korean stock market. With the merger SK Comms now holds the #3 search engine, #1 social network, and a myriad of other online properties -- making it somewhat like the Korean little brother to China's Tencent.

Anyway out of this comes some stats about CyWorld via Gamestudy:

• $80m annually in virtual good sales (43.5% of overall revenue)
• $19m annually in real good sales (10.5%)
• $47m annually in advertising revenue (25.6%)

Unfortunately their migration to the US doesn't seem to be going as well. The traffic patterns are an easy tell of someone doing ad spends to bump traffic and then getting massive churn.

Virtual Goods 2007 wrap-up

The first Virtual Goods Summit was on Friday, and congrats to Charles and Susan for getting together an amazing group on short notice. There was remarkably little filler and a ton of real concrete discussion from the leaders in this industry.

I moderated a panel on Why Virtual Goods Matter, and there is good coverage on 3PointD. Craig, Amy Jo, Byron and the inimitable Daniel James represented a great range of perspectives on why customers care, from the social worlds to mmos to academia.

For me virtual goods represent two important things: the ability to monetize online communities in a much more effective way than advertising or subscription, and the ability to actually increase engagement of that community.

Virtual goods enable a user's ability to invest in their online identity the same way they invest in their offline one.

Read:  3PointD, Raph, and Virtual Worlds News for overall coverage of the event.

Microtransactions Actually Work, proof from MapleStory in the US

I try and ignore pronouncements about Registered Users as much as possible. They have a similar problem to SecondLife's "residents" in that they are correlative to just about nothing. So I wasn't that impressed when Nexon announced 3 million registered users for MapleStory since its US re-launch (FYI - that compares to 4.7m for SecondLife, for what that's worth).

But then burried in a BusinessWeek article this week, I found a stat that Nexon should have been screaming from the rafters:

In February, North American players spent $1.6 million on 600,000 virtual products within MapleStory.

MapleStory is the product that launched Nexon, who went on to lead the virtual goods revolution with casual massive multiplayer online games like KartRider, Audition, and BnB Crazy Arcade. That means Nexon is on-track to do at least $20m this year in virtual goods on this title for North America alone, and probably twice that if you take into account growth and seasonality.  In 2005, Nexon had worldwide revenues of $230 million, 85% of it from virtual items. Combine this with some of the other recent tid-bits on the North American micro-transaction market:

• Three Rings income = $100K per month from subs. $250K from microtransactions. (Wonderland)

   

10 Snapshots of GDC '07

I don't really think an overall summary of the "themes" of GDC really makes sense, it's kind of like when reporters try to sum up billions of individual trades into how the stock market "feels" on any given day. So instead of trying to "sum up" the Game Developers Conference I figured I would just share some of the choice snippits from the week:

On changing the terminology from user generated content to player created content.

"Let’s kill 'user-generated content.' Are they a power source, are they generators, a battery? And even if they are junkies I don’t want to refer to them as such."

- Daniel James (Three Rings)

On how to measure if you have a hit.

"At Microsoft, we would sit down play testers with the game and a can of coke. When people hit a point of frustration, they would lean back in their chair and take a sip of the coke. We called it the "time-to-sip" and I would take a note of that moment and hammer away to fix it." - Mark Terrano (Hidden Path)

On why Media Molecule (who had one of the hotter demos of GDC) went after Sony as their publisher.

"At every GDC, Sony would throw some huge party that I wanted to go to but never got invited. So basically, we went to them first because they had the best parties." - Mark Healey (Media Molecule)

What makes an online game a "casual MMOG"

What way to better signal that you are going to be the NEXT BIG THING than to say you are creating a "casual MMOG."

Everyone from big media, to venture capital, to former supply-chain logistics project managers seem to be trying to get into the world of Massive Multiplayer Online Gaming (MMOG) to ride the revenue wave of World of Warcraft and the PR wave of Second Life. But everyone also wants to be new, to be different. And what better way to say you are a newer, shinier version of an MMOG company than to say you are building a CASUAL MMO.

If 2007 is going to be the year that the term "casual MMO" descends like locusts on the US blogosphere then I think it's worth trying to at least define what the hell a casual MMO is. For instance I've heard three people in the last week mention that they were playing an Asian online game called Silkroad Online, and two of them described it as a "casual MMO." Hmm... allow me to rebut with a review of Silkroad from one of the forums:

abbaking wrote :

ommggg... what i can freaking say is that this is a great grind-fest and also the stupid quests are sooo freaking longgggggg that is all i can say

A game that is all grind, with incredibly long quests doesn't sound very casual.. now does it?

That is not to say the Silkroad cannot be successful. While data is hard to come by (especially since MMOGChart.com seems to have died) I happened by Xfire today and noticed that Silkroad came in #7 for minutes played today. So SOMEONE is playing it in the west.

But, a super-long grind fest is not casual. What is casual? Well, here are some parameters to watch for:

1. Technical barrier to entry is low - either in-browser, or a quick download
2. Free to play, with item-based sales, advertising or subscription upgrades
3. A genre, lore, or approach that is easily understandable to the target audience
4. Gameplay that allows for easy grouping and social connections, ideally asynchronously (everyone should not have to try to gather together at 11pm for a raid)
5. Attention peaks that are never too high - you can only be half-paying attention so you can hear your boss calling you

And while these all may be relative components of the equation, last night at dinner with Mark Terrano I think he hit the nail on the head as the most important trait. It's all about commitment.

You see, casual gaming is a little like casual sex. The thing that makes it casual is the lack of commitment. While you generally think of MMORPG games in terms of hours, you think of casual games in terms of minutes. A player might forgo sleeping and eating for Diner Dash, but they only had to commit to two minutes of playing at a time.

And this is actually where I think the entire term "casual MMO" might do more damage than good. I know many social gamers who don't even try MMOs simply because they view them as too addicting and time consuming. And how does a person like that react to something like this:

Again, I'm not saying this game is not going to be good, or popular. Hardcore MMOs that are free to play, such as the one's that Mgame, Gpotato, Joybox, and K2 have been releasing, are sure to attract a following of folks sick of being locked into a monthly fee. And Scions of Fate, which is the renamed version of Yulgang that will be launching in the US market in the next month, is ranked as one of the top five MMOs in China (above World of Warcraft).

What I'm fairly sure of is that the combination of words used in the Scions of Fate image above do NOT add up to a positive impression for a core gamer. It will take more than free to play, and coining a term like "casual MMORPG" to get mainstream America to play these games.

Nexon leading the "casual MMOG" charge to the Wii

Nexon is kicking ass and taking names. The Korean developer best known for Kartrider (ye of the "$180m in virtual goods in 2006") and side-scrolling MMO MapleStory (ye of the "we have six bajillion more users than Second Life"*) just announced their partnership with Nintendo for the Wii. Considering Kartrider is a pretty direct lineage to Super Mario Cart, both companies have roughly the same type of customer. I make the amazing forward prediction that they'll be pretty damn successful at this too.

This on the heals of their partnership with MTV to bring their games to the US. Not a bad year.

Technorati Tags: mmo, casual mmo, nexon, wii, mtv

PS - actually, they've got over 50m registered users.. so it's only 25 times the registered users ("residents") of SL

PPS - yes I am damn annoyed with a title that uses two ridiculous phrases, "casual gaming" and "MMOG." Somebody come up with a better name already. Social gaming, anyone? Something so I can be less annoyed with my own blog titles.