The Biggest Threat to Online Games

Online Games Are on a Roll

The online games business is big—and growing. Several consulting firms have predicted growth numbers ranging from millions to billions of dollars of growth per year. Just compare the number of MMOGs (Massively Multiplayer Online Games) available this year with those a few years ago, and youâll see the increase. And MMOGs are only part of the story. Companies like Wild Tangent, Microsoft and Yahoo! currently sell subscriptions for all sorts of games.

It makes sense that so many companies are jumping into online games. Why put all your resources into developing a game that can only give you one-time revenue when gamers are clearly willing to not only pay the purchase price but also an ongoing monthly fee? Some games companies are even using the subscription model to help curb piracy, as it is much easier to copy a CD-ROM than hack a server. Subscription games looks like it could be the next big step in game distribution.

The Biggest Threat

So what could spoil the party? What is the biggest threat to online games today?

The biggest threat to online games today is not poor games. It is not a lack of customers. Nor is it the threat of unfriendly legislation. It is not competition.

The biggest threat to online games today is the industryâs neglect of the customer—usually a subscriber. How can a group so focused on giving the customer what they want, fulfilling their inner desires and fantasies in an online game be accused of neglecting this customer? Itâs simple. Itâs the infrastructure. It is all of those âuncoolâ details like efficient billing mechanisms, tailored marketing promotions, and solid customer service. Many online games companies act like once they have created good, compelling content it is their right to ignore the more mundane needs of their subscribers.

Of course, no one will admit to this, but actions speak louder than our words. How many games companies have done a massive launch of a new multiplayer game with barely a nod to billing — with absolutely no appreciation of the difference between a single transaction customer who buys a stand-alone box and a subscriber who must be constantly cared for and nurtured? âWe will keep it simple and just bill their credit card $9.95 a month,â often sums up many a companyâs infrastructure planning.

Abusing the Subscriber

The results of having inadequate subscription management often do not make the front pages of the newspaper, but they are very real. A recent online games company launched a very successful game but is now struggling. Tens of thousands of subscribers who preordered the game could not (sometimes for days) create an account and log into the game. Existing customers have protested that they too cannot log into the game. Subscribers have complained that their credit cards are billed twice. Others fume about lost account information or game characters. Angry postings on forums and Web logs have proliferated. The company has issued credits and free time to subscribers, but the infrastructure problems are threatening to completely overwhelm any success that the game created.

Sometimes ignoring the infrastructure does make the news. Microsoft of all companies should be positioned to handle the infrastructure requirements of online game subscribers. Yet in December 2002, Microsoft announced it had excluded Australia from the initial release of Asheronâs Call 2, leaving customers who purchased copies on the Internet high and dry. Reporter Caitlin Fitzsimmons writes that,

Microsoft Australia's product marketing manager for Xbox and PC games, Richard Hirst, says the company is starting a new billing system that supports local currencies. "We hope to roll it out to additional countries but the times have not been announced," Hirst says.

The announcement - a day before the release of the game - sparked outrage on internet discussion boards.

One wit has concluded this must be the first time that Microsoft has refused money.

Caitlin Fitzimmons, The Australian 3 December 2002.

These two examples of losing revenue are fairly obvious. Unfortunately, what are often overlooked are the opportunities to gain new revenue through meeting a subscriberâs expectations and needs.

Infrastructure Vetoes Content

Great content cannot completely make up for a poor delivery mechanism, an ineffective billing system, indifferent customer support, or haphazard marketing to subscribers. Poor infrastructure can and does outweigh good content. This is especially true for online games where much of the value is in the relationship between players and between the player and the game publisher.

People familiar with this industry recognize that the reason someone stays with an online multiplayer game has little to do with the latest gee whiz gaming trick and more to do with a sense of belonging, satisfaction, and success. One of the primary drivers of the success of online games is how they enable social connections. "Human beings want to interact with other human beings," argues Kim Taek Jin, chief executive of NCsoft. "Gaming with another person has got to be more fun than playing against a machine." (Moon Ihlwan, âThe Champs in Online Games,â Businessweek.com July 23, 2001)

Letâs explore in more detail how poor infrastructure can weaken and eventually tear apart the carefully constructed social fabric of an online game.

Subscription Management is Key

Much of the infrastructure needed to effectively support an online game is associated with subscription management. Subscription management consists of all those functions essential to subscriber relationship including acquisition, interaction, and ongoing maintenance. Specifically this includes marketing, order management, access control (authentication and authorization), billing and accounting and customer support.

The subscriber relationship is a closer, more intimate relationship than that of a one-time sale. This relationship develops over time and either breeds growing trust and respect or contempt and disdain. The subscriber wonders, âHow will the company treat personal financial information like my credit card number?â When the company accidentally double bills the card, the relationship sours and weakens. The subscriber wonders, âHow much freedom and control will the company give me over the information I give them?â When the company provides self-service Web access so that the subscriber can change passwords, view addresses, see past payments and orders, change their email address and so forth, the relationship grows and strengthens.

So What Can I Do?

So how can an online games company put in place the right infrastructure so that its customers get the treat they deserve?

First, donât assume you can build the entire game infrastructure. Trying to build it is a symptom of the arrogance referred to earlier. When it comes to subscription management including customer support, marketing, billing, accounting, and authentication find a partner with the appropriate services and software.

Second, do assume it will take some effort.

The Wall Street Journal (700,000+ paying subscribers) spent 28 million and many years developing their online subscription site, but many online games companies assume that it can be done with a couple of cracker jack programmers and 3 weeks of effort. Not every infrastructure needs to cost 28 million, but it should occupy your attention for more than ten days and cost more than a thousand dollars. If not you will spend far more fixing the problem after the fact (if it can truly be fixed).

Some games companies, like Wild Tangent, are finding that getting the right infrastructure makes all the difference. They selected an out-of-the-box subscription management solution and have been able to focus on marketing and selling their games rather than solving operational problems. In fact, they have quickly discovered that their subscribers were interested in much more than they thought. They have been able to market and sell additional games and services that have resulted in a significant gain in revenues. This is the real value of the subscription model. Subscribers are more than customers. They generally have a closer relationship and Wild Tangent is reaping the benefits.

Conclusion

So whatâs the moral of all this? Subscribers expect more than other kinds of customers and giving them adequate service is more difficult than many think. Overlooking those operational details that support the subscriber (billing, authentication, marketing, etc.) can mean the difference between disaster and success—even for a very good game. The online games industry can reach its potential only when we start treating our customers like subscribers not addicts.

In short, infrastructure is not a game.

Dale Munk is CEO of subscription management software provider Sandlot - www.sandlot.com