This article was originally published in Game Developer Magazine. It was the third in a series of business columns that I am writing for GDM.
What would the typical publishing executive do if someone came to them and said, “We’ve taken open source, 8-bit art and created a f2p, nethack-inspired MMO with permadeath. You can attain the maximum character level in just 30 minutes of play. The game currently has no means of generating revenue and can only accommodate 60 concurrent players per server. Will you work with us on it?”
That’s essentially the question posed to Spry Fox one year ago by Alex and Rob, co-creators of Wild Shadow Studios, when they presented us with an early build of Realm of the Mad God (RotMG). And I can guess what others might have said to them, because when we subsequently described the project to contacts of ours, the reaction was inevitably one of skepticism. Permadeath? In 2011? How the heck are you going to retain users? And surely you mean 600 concurrent players per server, not 60?!
A “mature” company behaving in the stereotypically mature (i.e. risk averse) manner would have passed on RotMG. Its design was unconventional and terribly hardcore. It was written in Flash and unsuitable for distribution on consoles. It was relatively expensive to operate. Its developers did not have an established pedigree in gaming. The list went on and on. Better to get behind yet another first-person shooter with slick 3D graphics and call it a day.
We (Spry Fox) had a different perspective. Here’s how we evaluated a risky project, managed that risk, and created a financial and critical success.
Alex and Rob were new to the gaming industry, but they had advanced degrees in computer science and substantial experience working on massively scalable systems at Google. They were smart, earnest and motivated, and obviously willing to buck convention. So we partnered with Wild Shadow, with the goal of refining RotMG’s design and implementing a coherent monetization plan. And, crucially, we treated the project not as a huge bet or investment that could not be allowed to fail, but as one of several experimental games in our portfolio. And as with all our other titles, we accepted — and embraced — the possibility of failure, because we do not believe that it is possible to truly innovate in any other context.
Going public early, and staying public
One technique we used to identify and fix major design issues in RotMG was to skip the “private beta” and iterate rapidly with a public audience throughout the majority of the development phase. Despite the public nature of our work, we regularly made dramatic changes to the game. Some of the changes were well-received by players; others caused riots on the RotMG forums. In each case, we did our best to explain our rationale to the game’s slowly-growing community, but we never stopped making big, public changes and observing the results. Most companies plug away at their games in secret, using (at best) highly controlled playtests to learn how to improve them. For an MMO, especially an MMO aspiring to any sort of originality, that’s an incredibly slow and taxing process. We believe that our methods were faster and more effective.
We essentially ripped the “beta” label off of RotMG when we launched it on Chrome Web Store on June 20th, 2011. Google featured RotMG on the CWS home page as well as two subpages. Shortly thereafter, the game became the subject of an ongoing series of articles on Rock Paper Shotgun, and was reviewed favorably by many other sites and individuals. The subsequent increase in traffic and publicity has been gratifying; we hope to leverage that and launch RotMG to great fanfare on many other online game portals in the months to come.
During the final phase of RotMG’s public beta, the “average user” spent approximately $1.68 per month. (There’s really no such thing as an average user; the vast majority of players spend nothing, and a very small minority spend enough to support everyone else.) Post launch, monthly ARPU has peaked at $3.40, partially because of an increase in retention, and partially because of high-value conveniences that new players tend to purchase soon after deciding they enjoy the game, like more inventory space (vaults) and the ability to use multiple characters concurrently (slots.) We expect our ARPU to eventually settle somewhere north of $2.00 but below $3.40, until we:
A) Enhance our methods of collecting revenue. With direct integration of a mobile phone payment solution, gift cards, and additional payment platforms that are locally relevant (i.e. outside the United States) we expect our ARPU to climb substantially.
B) Identify additional premium features and/or items that we can sell in RotMG without jeopardizing the spirit of the game.
C) Provide an optional subscription offering to our players, many of whom have told us that it is easier for them to sign up for a recurring billing plan than to pay piecemeal for things in a game.
We believe that a monthly ARPU of $5+ is totally achievable for a game like RotMG. That’s a heck of a lot better than selling games for 99 cents on iTunes! Our positive experience developing and commercializing RotMG is yet one more reason why we have abandoned the old world of disposable downloadable content and embraced the new (and much more satisfying) world of f2p games. The vast majority of players enjoy our content without ever paying a dime, yet we still earn more revenue than we would on XBLA, PSN, etc. What’s not to like?
And most importantly, this business model enables us to keep iterating and innovating. The Web is a huge and wonderful place where kooky ideas like RotMG can not only survive, but flourish. Technologies like Flash and HTML5, plus business models like F2P, make it entirely possible to bring original, “niche” content to millions of people.
There will always be a big market for the next derivative console game. And there will always be big publishers too risk averse to make anything other than the next derivative console game. Savvy independent developers can and should aspire to better than that.