D.I.C.E. 08: Visual Fight Club - Round 2

The D.I.C.E. Summit 2008 kicked off with a "Visual Fight Club," sponsored by Autodesk, in which games industry professionals took the stage to debate key issues.

In 'Round Two,' Kelly Flock - a veteran of THQ, SOE, LucasArts and others - debated Nexon's Min Kim over the issue of free distribution versus traditional publishing.

"Korea started with traditional gaming, then online subscriptions, and then free-to-play games," Kim said "I think the same thing will happen here."

Flock disagreed, saying that the free model won't support the economics needed to deliver titles such as Halo 3, Bioshock or Grand Theft Auto.

"We've looked at this at every publisher I've been atâ¦.and I've been at every publisher," he said, to laughter.

Kim pointed out that the focus of free-to-play games - specifically his company's Maple Story — is different than traditional games.

"We're not shipping a product. We are shipping a service," he said. "For the 3, 5 or 7 years you are supporting a game you are maintaining a steady revenue.

"Our business is really about creating societies and then having microtransactions in there to support what people want."

Flock said that Korea has never had a traditional retail business model because of rampant piracy. While noting that the model worked for Nexon, he said that bringing it to the US hasn't been very successful.

"We are already making money here in the US," Kim replied, noting that Target was an example of a retailer that devotes a whole endcap for Nexon's pre-paid cards — second in popularity only to iTunes.

While acknowledging that he hates the USD 60 price point for games, Flock did not think that the success of the used games market was an indication that the traditional retail model does not work: "The second-hand market is driven by successes in the first-hand market," he said,

Commenting on EA's new Asian studio, neither man thought that the company would bring the business model back to the US. Instead, it was more of an attempt to capture that separate Asian market.

Moving on to where the current generation of kids' MMOs will lead consumers, Kim believed that those playing Club Penguin and Runescape would graduate to free-to-play games; Flock on the other hand pointed instead to big-budget subscription games such as World of Warcraft as a likelier destination.

"I like the microtransactions model and I think it works for certain kind of games," Flock said. "And then I love the big, ambitious, five-years-in-development, spend-50-million-to-try-to-change-the-world games."

In his opinion, the games people get excited about are still going to be blockbusters, which require more capital than the free to play model can provide.

But Kim stated his belief that microtransactions will catch on in the US, noting the success of iTunes: "I don't remember the last time I bought a CD, but I spent over USD 400 last year on iTunes buying songs one at a time."

Noting that retail is under siege, Flock felt that both models will continue to exist - that the free-to-play model would broaden the base, but that base would eventually want more.

Kim agreed that the two would co-exist for a time: "I donât think retail is going to go away, but I think that free-to-play is going to grow in multiples," he said.