GameDAILY BIZ: The MMO market has obviously experienced a good deal of growth in recent years. How would you describe its current state?
John Smedley: The MMO market is currently experiencing its greatest upswing since SOE helped to define the genre in the late 90s. Games like WoW, EverQuest II, Star Wars Galaxies and City of Villains are bringing in more new players to the space every day in
North America. In Asia, where there really is no console penetration outside of Japan, online gaming is what the audience is growing up with, and millions of people are playing hundreds of different games. We are in the early stages of the online renaissance that we helped to start.
BIZ: Is the subscription-based MMO market being limited by monthly fees? Is this turning people away?
JS:
Subscriptions are one way to go and it's currently the biggest revenue driver in online gaming. I believe you will see upsell models (i.e. buying items, character appearance upgrades) begin to grow in a big way. Imagine being able to have a completely non-subscription based MMO that makes its money only from these upsells. We're already working on a game with that model that's going to release next year.
BIZ:
Do you believe that offering a "free" MMO is something that SOE needs to do to broaden the market or is it more that you just wanted to test the waters?
JS: Absolutely. We think online gaming is a major new form of entertainment, and for now the most important thing is going to be to get as broad an audience as possible. This means trying new business models to attract people that are nervous about paying a monthly subscription. After they try this style of gaming even for a little while, we're convinced we can overcome that initial resistance.
BIZ: Obviously the "free" model has been tried before with games like Guild Wars. How is SOE going to make this model even more efficient?
JS: We do like Guild Wars at SOE --
there are a lot of people playing it here -- but we don't technically consider that game an MMO. What they've done is great, but it's much closer to a game like Diablo II than to EverQuest (which makes sense, when you consider the team's background). For us, we're exploring the concept of a truly free game, a game without a retail component at all, that would have an executable small enough for people to literally email to each other.
BIZ: If this business plan is a big success, will SOE make the switch to providing nothing but "free" MMOs or do you believe that you'll always offer both subscription-based and "free" games?
JS: You will see both types of games -- and more -- from SOE in the future. The right way to go is to offer our players as many choices as possible.
BIZ: Will selling in-game items in the "free" MMOs really be enough to make up for the loss of the subscription revenue?
JS: Yes. In fact, we've seen evidence of this already in different things we're already offering. Over 33% of our audience for EverQuest II signs up for Station Players (web based services like character profiles, guild forms, guild chat).
We charge $.99 per feature or $2.99 for bundle of all the services. We also see a high dollar average from our Station Exchange (player-to-player auction service) for EverQuest II. We strongly believe we could potentially make more money and offer the core game for free.
BIZ: The MMO business model you described sounds perfect for the console world, especially on Xbox Live with Marketplace. Is this
something that SOE is considering, and do you believe that MMOs in general will be successful on consoles?
JS: Yes, we think that ultimately the MMO business will come to be a major part of the console gaming world. We tried it first in North America with EverQuest Online Adventures for the PS2, which is still running and being played. We were a bit ahead of o
