Bad Time to Announce A Free-To-Play Copernicus


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38_Studios_Logo
38 Studios’ logo, (via Wikipedia)

Thanks to WPRI.com reporter Ted Nesi’s Twitter pontifications, we’ve learned from Boston Magazine‘s Jason Schwartz that 38 Studios had planned to release their flagship game (codenamed “Project Copernicus“) under the “freemium” model of gaming (a portmanteau of “free” and “premium”, referring to the dual use of free and premium accounts, dominant in tech-savvy South Korea). It’s a bit like the razor blade model of business; send out the initial product for free, hook the customer, and then charges for supplemental services. Essentially, in a freemium game, players can play essentially everything with a free account; you can download the game online and then play with no additional costs. However, players can buy perks or unlock additional content for actual money, giving them a leg up on other players. Massively Multiplayer Online Roleplaying Games (MMPORGs) lend themselves particularly to this kind of business model.

This was actually a smart business move for 38 Studios. OnlyWorld of Warcraft can maintain a subscription model, mainly because they operate as the Facebook of online games; people play because their friends are there. They also benefit from the sunk cost fallacy; since players have already blown hundreds or thousands of dollars on World of Warcraft, it would be insane to stop paying and thus stop playing now. It’s a logical fallacy, but plenty of businesses profit off of it. That 38 Studios had managed to convince Curt Schilling to come around to the free-to-play model shows a willingness to adapt to changing circumstances.

Unfortunately, learning now that it would’ve been an announcement that “shocked the world” (according to Mr. Schilling’s remarks to Mr. Schwartz) is too little too late, and adds fodder to the narrative that 38 Studios was not a well-run company (one which is indelibly created from Mr. Schwartz’s previous story on 38 Studios). I was bashing 38 Studios for relying on the subscription model back in mid-February in some of my earliest writing for RI Future. It was a bad model in 2010, when the deal that moved 38 Studios to Rhode Island was started. Had 38 Studios announced that they were intending a freemium-type game much earlier (say, at any time before the company missed payroll), it could’ve given them serious boost. Plenty of projects continue on the basis of fan goodwill (plus, fanboys = identified market, which investors like to hear about).

An example of that is the venerable MechWarrior/BattleTech series of games. Beginning in 1984 as a board game, MechWarrior was the video game series, which had a great hit with 1995’s MechWarrior 2 (a personal favorite of mine), but ultimately the developer shut down in 2007 after subsequent games failed. Its founder is working with a new developer to create MechWarrior Online. It’s a free-to-play game already in its Open Beta stage of development (anyone can pay to help test the game while it’s be developed ahead of its planned release).

All of this is to miss another point I’ve made before: nothing was pointing to any great innovation on the part of Project Copernicus. In fact, that this would be the first triple-A release that was free-to-play would’ve been the first signal that 38 Studios was actually bringing something unique to a market crowded with same-samey games. But what we were getting about Copernicus is that it was essentially like Kingdoms of Amalur, a relatively old-hat type of game. In fact, World of Warcraft wasn’t particularly unique. It simply followed Apple’s model of development; rely on your dedicated fan base from other products to purchase your item and generate good buzz, let the innovators go out and do their thing, then do what they did, but better.

A poster for World of Tanks (via Wikipedia)

To compete in the online gaming arena, you need something new. The Belarusian company Wargaming.net has provided that with World of Tanks and done exceedingly well. Having played the game, it’s a incredibly fun initial experience, though there’s a bit of frustration as more skilled people turn your fun tank into Swiss cheese (I’m understating, more than once I’ve had to quit the game to let my anger over how much I suck at it subside). Wargaming.net is spinning the game off into World of Warships and World of Warplanes.

Alternatively, if new doesn’t float your boat, open is a good idea as well. Paradox Interactive is an example of a gaming company which doesn’t keep its cool stuff under its hat (they’ve recently announced they’re starting on the fourth version of Europe Universalis, their flagship game which launched the “grand strategy” genre of computer games). They’re always giving more information to fans about their games, via developer diaries with insight into the process and features, and also by fostering a lively forum community.

38 Studios seemed to neglect this strategy. What did we know about Copernicus? Not much. Perhaps Kingdoms of Amalur was to be its predecessor and tie into the world. In the end, we didn’t even know its actual name.

So yes, free-to-play was an intelligent decision for 38 Studios. It’s a shame that we’re learning it now. But Governor Lincoln Chafee didn’t mess the company up, the people tasked with running it did. Had free-to-play been announced as 38 Studios was facing bankruptcy it would’ve looked desperate. It needed to be sold that way from the start. Of course, hindsight is 20/20, but then I was saying this stuff two years ago (just not publicly on the Internet). And I still standby what the majority of Rhode Islanders believed at the time, that this deal should not have been made.

Note: I’ve used “free-to-play” and “freemium” interchangeably here. Technically, that’s not exactly correct, one relies on ads and/or micro-transactions to generate profit, the other relies on paid accounts and occasionally ads and micro-transactions to turn a profit. However, they’re near enough as to make no difference here, and many of the games I mentioned use them interchangeably as well when describing their own games.

38 Studios, Kingdoms of Amalur, and Economic Development


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Everyone is certain to remember the controversy surrounding the 38 Studios $75 million loan guarantee deal.  I, for one, was concerned about the tepid clawback provisions in the deal that would let 38 Studios off with a $400,000 fine if it didn’t create 400 jobs in the state.  In any case, Kingdoms of Amalur was released this week, and it has been receiving stellar reviews from all over the country.  Case in point is this glowing review from the New York Times.

Kingdoms of Amalur: Reckoning isn’t just good. It sings with infectious, engaging excellence. This is a game that knows exactly what it wants to be, what it wants to provide and what its players will enjoy. Then it delivers with confidence, style and, not least, fun in abundance. Kingdoms of Amalur: Reckoning is one of the finest action role-playing games yet made.

I am very excited to play this game (although it’s something I’ll have to do after the semester ends).  And my hope is that the placement of 38 Studios downtown, and the co-location of Hasbro’s children’s video games division right next to it, could result (with some significant collaboration and organizing at the state level) a new business cluster in Rhode Island.

One of the most important things the state needs to remember is that cluster development takes a long time to form and grow – there are no quick fixes to the state’s economy.  But the state can help in broader economic development trends by making strong connections among related and supporting businesses.  For instance, while the packaging was designed by 38 Studios, it needed to be created.  The manufacturing sector is still the 4th largest industry in Rhode Island, and it’s likely that there are plenty of manufacturers that have the capacity to produce the packaging.  Likewise, the actual disks needed to be pressed.  Was there a local disk maker that could have been used?  Then there is the shipping and logistics, warehousing, etc., all of which is possible in RI with connections to air and rail freight.

I’m sure that all of these additional support businesses can be found locally in the state, keeping more of the wealth created by 38 Studios in Rhode Island. We have amazing artists and designers coming out of RISD every year.  And it wasn’t an accident that New England Tech created a Video Game Design program. It would be nice to leverage these incredible assets to promote further economic development in the state, rather than just complaining about taxes and unemployment. Of course the patience and deliberation required for long-term growth runs counter to our political system and national culture of immediacy. Thinking about this as a 20 year strategy doesn’t come easy, but wouldn’t it be awesome if, in 2032, we can celebrate Rhode Island as the video game capital of America?