The Real Cataclysm

For a company to organise a huge gaming conference dedicated solely to its own products feels rather like hubris, but this is an indulgence which Blizzard has unquestionably earned. Few developers have had such a profound impact on the games market in recent years - it's with good reason that the eyes of the games industry around the world turned to southern California last week.

The big news, as you are all undoubtedly aware, was the unveiling of the third expansion for World of Warcraft, titled Cataclysm. The expansion has already won plaudits from critics for being both radical and daring, overhauling the now-familiar game in fundamental ways which should, in theory, make the experience fresh even for those who have been playing for five years.

Blizzard's goal, of course, is easy to divine - they want to hold on to their player base, preferably continuing growth (albeit slow compared to the dazzling ascent of the past few years) rather than overseeing a gradual decline in subscriber numbers.

How the rest of the industry feels about that is a little harder to gauge. Of course, the success of World of Warcraft has vastly elevated the whole MMOG space, changing it from being a niche interest for a handful of bearded, sandalled types into being a key pillar not only of PC gaming but of videogames as a whole.

WoW has revealed MMOGs as an unlikely bridge between casual and hardcore gaming, demonstrating that the right game mechanics and presentation can appeal across this perceived divide in the market. In the process, it has attracted tens of millions of dollars of investment to MMOG development and spurred the creation of dozens of pretenders to its throne.

Yet in the view of many within the industry, WoW has also locked up a huge chunk of revenue. Generating over a billion dollars a year, its sheer inertia, some argue, makes the MMOG space impossibly hostile for new contenders - while others grumble that WoW players don't invest in other games, meaning that Blizzard's GBP 9 per month is, in theory, depriving other game publishers of a full boxed game sale.

In the eyes of WoW's detractors, a decline in the game's subscriber numbers would be healthy for the games business. It would unlock millions of consumers, expanding the potential audience pool for other MMOGs - thus allowing more of them to thrive - and sending more revenue back to both traditional boxed games and new gaming business models. Eroding WoW's monolithic status would, they claim, spur variety, innovation and diversity.

The problem with that theory is that it ignores the underlying reasons for WoW's success. The games business has talked a lot in recent years about "disruptive" products, largely due to the success of the DS and the Wii - low-tech, financially accessible systems which marry a certain degree of innovation with extremely polished design and desirable content. My contention would be that while it isn't a hardware platform, World of Warcraft is every bit as much a disruptive product as anything that Nintendo has created.

It's not hard to see the parallels between WoW and products like the Wii or the iPod. It's certainly low-tech - which allows it to run happily on old hardware, lowering the bar to entry significantly - but it makes up for that with stunning polish and design. While not being amazingly innovative (its designers happily confess to the extent to which they were influenced by games such as Ultima Online, Everquest and Dark Age of Camelot), it took pre-existing ideas and polished, honed and (in some cases) simplified them into a much more marketable state. This is, in many ways, the essence of a disruptive product.

What does a disruptive product do to the market? Firstly, it's a major success within the existing market space. World of Warcraft quickly absorbed the lion's share of the existing MMORPG market, and then started gobbling up large parts of the rest of the PC games market. Next, it consolidates - building a brand identity which makes it extremely hard for competitors to entice consumers out of that ecosystem. Most importantly, though, the disruptive product grows the market. The strong brand and the same values - usability, polish, design - which made it successful within the existing market also reach out to new consumers and new demographics.

This part of the life cycle of a disruptive product - where it conquers, consolidates and expands the market - is well understood and has been discussed at great length both in the videogames industry and across the media and technology industries. However, there's another side to the lifecycle, one which we've seen far less of - what happens when a disruptive product goes into decline?

The optimistic view of WoW's detractors is that subscribers leaving the game would be absorbed into new and existing products within the videogames space, building audiences for competing games and encouraging more market diversity. The reality, however, is that while the small band of consumers who came to WoW from other MMORPGs (or other relatively hardcore PC gaming backgrounds) would probably jump ship to another service, the majority of the game's players who come from casual or non-gaming backgrounds are extremely unlikely to follow this path.

In fact, the chances are that these consumers will either stick with WoW, or fade out of the high-value gaming market (represented by subscriptions and full-price purchases) entirely. The simple reason is that WoW, in their eyes, has no realistic competitors - there is no brand with similar or greater prestige, or with sufficient inertia and promise, to pull them away from WoW. WoW has lifted a giant audience from being light consumers of free to play web games and other casual gaming experiences, but it's foolish to assume that they'll necessarily remain as more "core" consumers if WoW no longer holds their interest.

Instead, these consumers need an upgrade path - another disruptive product which will do to WoW what WoW did to the games that came before it, and pull the game's once-casual consumers further upstream, rather than letting them slip back into their previous state as largely uninvested, light consumers of games.

Despite the best efforts of other MMORPG companies - and many other companies whose strategy focuses on bridging the casual and hardcore markets - that game (or games) doesn't exist yet. There's every chance that when it does exist, it'll be Blizzard's own next MMORPG - or even a radical change to WoW itself - but the opportunity certainly exists for other companies to disrupt the post-WoW MMOG space. Disruptive products aren't like childhood diseases - just because a market has been disrupted by a product like the iPod, the Wii or WoW doesn't mean that another company down the line won't be able to do the same thing again to the new market order.

Until such time as that product exists, however, WoW's rivals should be careful what they wish for. A decline in the market leader won't necessarily release a torrent of new consumers to the game's competitors - instead, it could simply drop millions of consumers back out of the MMOG, high-income games sector entirely. The same problem exists with the Wii - were Nintendo's business to decline heavily, the Wii's consumers would not suddenly start buying Xbox consoles. Rather than taking for granted that newly converted game consumers will remain game consumers forever and praying for their wildly successful competitors' businesses to decline, the industry needs to focus its efforts on building upgrade paths to encourage these new gamers to swim further upstream.