eSports investments need a 10-year view - Hi-Rez

The eSports market and virtual reality may not have too much in common, but Hi-Rez Studios COO and co-founder Todd Harris has the same advice for people looking to put money into either of the emerging fields.

"If you have a one-year view, you're probably going to lose money," Harris told GamesIndustry.biz last week. "If you have a 10-year view, it's probably a good thing to invest in."

Hi-Rez isn't putting any significant resources into virtual reality, but the Atlanta-area developer of free-to-play games like Smite and Paladins has been pushing competitive gaming for years. It has been running and broadcasting tournaments since 2012. Last year was the third competitive season for Smite, and the studio paid out more than $3 million to the best players of its console and PC MOBA. And for all the benefits it brings to the game's community, the return on investment for Hi-Rez has been indirect to this point.

"It's a marketing expense that sponsors are starting to be very interested in, such that some events are getting closer to cost-neutral," Harris said. "But it's certainly not a revenue center."

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Harris probably doesn't lose any sleep over that, as the long-term view has served Hi-Rez quite well to this point. The company was founded in 2005, and spent five years putting together its first title, Global Agenda, which lost double-digit millions. Its next title, Tribes: Ascend, just about broke even. It wasn't until the launch of Smite in 2014 that the company had a hit. So even if Harris was taking a 10-year view when he co-founded Hi-Rez, he was only seeing far enough for the company to start turning the corner from investment to profit.

Since that time, the growth has been impressive, to say the least. For the last three years, Hi-Rez has increased headcount by 75 employees a year and expanded its operations with satellite offices in the UK (Brighton) and China (Shenzhen), all while maintaining profitability. It has also rolled out a second hit in the hero shooter Paladins, currently on PC and entering open beta on consoles beginning today. Both Smite and Paladins are growing every month, but Harris believes the new game will soon top its predecessor.

"I expect both games to continue to grow very well, but I certainly expect a year from now there will likely be more Paladins players on all platforms than Smite, and part of that is because the game is a bit more accessible," Harris said. "Smite is a MOBA with shooting elements; Paladins is an FPS with MOBA elements, and I think that's going to make it accessible to a larger number of people. And that's what we've already seen on the PC and what we expect to happen on the console."

Perhaps most importantly, Paladins has taken into account learnings from Hi-Rez's past mistakes as well as its successes. For example, a lot of the core combat loop of Paladins was informed by what the team had done on Global Agenda. That was something that worked in a project that failed, but Hi-Rez is also learning from things that fail in projects that succeed. For everything done right with Smite, Harris pointed to a few things that the studio probably could have paid better attention to early on in development, like global appeal.

"With Smite out of the gate, without thinking that much about it, we naturally addressed the North American market, and then secondarily found success in Europe almost by accident," Harris admitted. "Then as we've evolved and grown, we're putting more attention and local marketing resources in these other territories... Smite is primarily a European and North American phenomenon, as far as its player base. The third territory in popularity would be Latin America, but it's much smaller than those. It's healthy but at least at this stage in its lifecycle, not as global in its appeal. Contrast that with Paladins, which already even early in its lifecycle is much more global in its appeal. Regions like Brazil, Russia, Southeast Asia are all very, very strong in addition to North America and Europe."

The new satellite offices in the UK and China are part of the effort are part of that more global push, and will be focusing on Paladins at first before trying to spur growth of Smite in new territories.

"I think console players want free-to-play offerings that are done correctly, and I think the platforms themselves still don't make it especially easy to do free-to-play"

Additionally, Harris said the developers started considering the console experience of Paladins much earlier in the development cycle.

"With Smite, we had a successful third-person-style MOBA which we then moved to the console," Harris said. "And the team did a great job, but with Paladins, specifically when it came to the user interface design, we were thinking PC and console from the very beginning of the cycle. In that case, Paladins benefitted from our Smite experience of knowing that console players also can enjoy a free-to-play competitive game if it's done right."

Speaking of that space, Harris went on the record a couple years ago saying the console market was a blue ocean for free-to-play MOBAs. While the console space has paid dividends to Smite, a number of other MOBAs haven't been as fortunate.

"I think console players want free-to-play offerings that are done correctly, and I think the platforms themselves still don't make it especially easy to do free-to-play," Harris said. "We've worked with those platforms and they've evolved a ton even since that original statement I made more than a year back, so they're moving in the right direction. But I think the player base wants them to move even faster, and hopefully Paladins will be successful and another demonstration of the fact that free-to-play can work on consoles."

Seeing as how it's clearly possible for a free-to-play MOBA to succeed on consoles, what's keeping the competition on that front down? Harris said free-to-play games need frequent updates to thrive, but there are still issues with the speed of the certification process and how large and inconvenient the patches can be for end users.

"Specific to that certification timeline, it's improved 200% in the last year, but it's still a bit of an obstacle, particularly if you were a new developer looking at the opportunity versus, say, Hi-Rez or another developer that has a track record with the platform holders," Harris said.

Another bottleneck Harris pointed to was the amount of control publishers have over pricing and promotion of their games on console. Whether promoting in-game events or simply running sales, free-to-play developers want a level of control over their games that console platform holders simply haven't given them yet. Harris is optimistic that might change in the future, provided platform holders are as willing to learn from their past as Hi-Rez has been.

"At the end of the day, the successful free-to-play games tend to have developers that are also the publishers and have a very direct relationship with the end consumer and are able to take action they think will benefit the end consumer," Harris said. "Consoles are moving in that direction, but just not quite there yet."