In Bold Move Toward Free Online Fantasy Gaming, Turbine Prepares to Throw Open the Gates to Dungeons & Dragons
Few major media markets are as lopsided as the online swords-and-sorcery game genre. World of Warcraft, owned by the Activision Blizzard division of Vivendi SA, has a population of 12 million players, each paying at least $12.99 per month to go on group quests for virtual treasure and glory. Westwood, MA-based Turbine, the maker of the next most popular subscription-based online fantasy games, The Lord of the Rings Online and Dungeons & Dragons Online, doesn’t release membership numbers—but the data I’ve seen puts it in a very distant second place. In a recent Boston Globe article, Brett Close, the CEO of Maynard, MA-based 38 Studios, which is developing its own online fantasy game, tellingly called fantasy-based MMORPGs—that’s gamer lingo for massively multiple online role playing games—a market “where there is a Coke and no Pepsi.”
Well, if you had a new cola and you wanted to compete with Coke, one strategy you might consider would be giving away your drink for free. And that’s exactly what Turbine plans to try. Starting on September 9, Dungeons & Dragons Online will join the ranks of free-to-play online games. In the new hybrid version of its game world, called “Eberron Unlimited,” most regions and adventures will be free and open to everyone, while a few premium areas will be reserved for “VIPs” who continue to pay a subscription.
It’s a strategy that game developers in other countries have been pursuing with notable success for years—the free UK-based MMORPG Runescape, for example, is reported to have more than a million players, and South Korea-born Maple Story has an astonishing 15 million. But American game companies have shied away from the free-to-play model, in part because their game systems weren’t built to allow alternative forms of revenue generation, such as microtransactions, in which players fork over small amounts of cash for virtual goods such as costumes or weapons for their avatars.
But one of the central elements in the free version of Dungeons & Dragons Online—which will replace the current “Stormreach” version—is a new Amazon-like interface where players can shop to their heart’s content, using “Turbine Points” that they can buy with real cash or earn by spending time online. And that’s not all that’s changing inside Eberron, as the mythical land that is the game’s setting is called. The overhaul, which has been in gestation for 18 months, includes so much new content and so many new features that the company recently delayed the relaunch by more than a month to allow for more testing and preparation.
(In a story later this month, I’ll write more about the games themselves, which senior producers Fernando Paiz, Kate Paiz, and Aaron Campbell demonstrated for me at length during a recent visit. This story focuses on Turbine’s business model.)
The risk Turbine is taking is that a massive influx of new free players might increase the burden on the company’s servers, and that nobody will buy anything. But it’s making an informed wager—based in part on observations of the company’s legion of beta testers—that players won’t be able to resist buying an extra sword here and a spell there, and that the revenue from microtransactions will more than make up for any loss of subscription revenue.
“Eberron Unlimited is an extraordinary event for us as a company, and industry-wide,” Jim Crowley, Turbine’s CEO, told me. “Nobody else is taking what we’d call a true premium online world into this free-to-play model, and removed those barriers to entry like we’re doing. We think it’s a great way not just to grow our business but to expand the overall pie.”
This isn’t quite a bet-the-company moment for Turbine, since it is not altering the $14.99-per-month subscription price at its premiere property, The Lord of the Rings Online. (The company says that game world, which is based on the famous J.R.R. Tolkien trilogy, doesn’t lend itself as naturally to a microtransaction-based model.) But it does reflect the evolution of the 15-year-old, 300-employee company—which is funded by Highland Capital Partners, Polaris Venture Partners, and Time Warner Investments, among other backers—into a business that’s much more focused on marketing strategies than it has been in the past, Crowley says.
Which may be precisely what the company’s board intended when it brought in Crowley two years ago, replacing former CEO Jeff Anderson. A longtime game industry insider, Anderson turned Turbine from a struggling developer with just one game, Asheron’s Call, into a major publisher with online rights to what are arguably the world’s two leading fantasy properties—-Dungeons & Dragons and the Tolkien world. Crowley, by contrast, is a former mobile-industry executive who was chief operating officer at Boston-based mobile marketing company m-Qube until its acquisition by Verisign in 2006 for $250 million; he then spent time at Highland as an entrepreneur in residence. The move to make him Anderson’s replacement was “one of many that Turbine has recently made to invest in new talent that will drive the next wave of the company’s growth,” the company said in a press release at the time.
The exact story around the 2007 shakeup is a bit murky. Anderson, who is now CEO at Foxborough, MA-based Quick Hit Games, has told me in past conversations that he became convinced while still at Turbine that World of Warcraft had sucked much of the oxygen out of the gaming world, and that the remaining MMORPG companies would have to shift to a free-to-play, less software-intensive model to compete. He thought Turbine should go in that direction, but he came to doubt whether the company was capable of making the transition. (Ironically, Quick Hit will launch its own free-to-play online game, a football simulation, on September 9—the same day as Eberron Unlimited.)
Crowley, however, says a free-to-play option has been on the agenda from the day he arrived—it just took a while to get all the pieces in place. “It’s a very compelling model and one that we think has a lot of legs for Turbine,” he says. “But it is also is not relevant to every specific property…and there is a need to have a certain organizational maturity to allow these things to drive forward and flourish. I think we’ve injected a lot of the market discipline that will allow these models to be successful.”
What’s clear is that Turbine sees the launch of Eberron Unlimited as one element in an overarching plan to become what chief marketing officer Jan Horsfall calls an “entertainment-as-a-service” company. “It’s worth noting that we don’t have a senior executive in this company, outside of Chris Dyl [the chief technology officer], who has been here more than two years,” Horsfall told me. “Which is somewhat indicative of the category. You could say we were a development shop at the early stages of our life cycle, we weren’t an entertainment-as-a-service company. And that is really what has changed here. We are putting a senior management group against this business to take advantage of the opportunities that we think are there.”
Those opportunities go well beyond free-to-play online games. Crowley summarizes his big strategy for Turbine this way: “monetize everywhere, engage anywhere, play on anything, operate globally.”
On the revenue side, that means combining microtransactions, subscriptions, and even advertising. On the engagement front, it means creating what Crowley calls a “virtuous circle” between game play and the social networking activities players pursue in their outside lives—for example, by porting the user forums for Dungeons & Dragons Online and The Lord of the Rings Online to mobile platforms such as the iPhone.
On the technology front, Crowley and Horsfall told me that Turbine is working on a console-based game—though whether it’s based on one of the existing Turbine titles, and whether it’s for the Xbox 360, the Playstation 3, or some other platform, they aren’t ready to say. The company also has plans to build Mac versions of its games, which have all been Windows-based to date. Crowley says Turbine will soon take back the global rights to all of its games, which have historically been marketed and operated through partners in Europe and other regions. Finally, Crowley and Horsfall hinted that Turbine is on the verge of acquiring an additional entertainment property—something on the scale of Tolkien and Dungeons & Dragons that will serve as the foundation for a completely new set of online games and associated services.
“We are a little bit of Hollywood on the Charles here,” Crowley says. “Okay, we’re not really on the Charles, but give me a bit of license. In many ways we are similar to Pixar, in that we have to excel at a lot of disciplines: we have extraordinary technology that is very robust and rich and cutting-edge and operates in 54 countries, in multiple languages; we have the game development itself, which requires an incredible amount of creative talent; and then we also happen to be an online company.”
With consumers now spending more on video games than they do on going to the movies, “We’re in a very sweet spot,” Crowley says. And come September, Turbine will get to see whether the free-to-play model option makes that spot a little more populous.
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