Wargaming CEO on the "beauty and the curse" of free-to-play

If you were at E3 this year, you couldn't miss the enormous booth devoted to Wargaming's MMOs, World of Tanks and the upcoming World of Warplanes. Wargaming was founded as a privately held company in 1998 and has shipped more than 15 titles in its history, but World of Tanks is the game that catapulted the company to its current size, growing from 120 employees a little over two years ago when World of Tanks was released to over 1200 employees today across North America, Europe, Russia, and Asia.

Wargaming's flagship MMO World of Tanks currently boasts 40 million registered players worldwide. Next up in the series is the air combat sim World of Warplanes, named one of the most anticipated MMOs for 2012, and World of Warships, scheduled for release in 2013. In June 2012, Wargaming announced the Wargaming.net Service, the epicenter of a battle-centric gaming universe that will gather the series under a single portal - www.wargaming.net.

GamesIndustry International caught up with CEO Victor Kislyi recently, and he spoke frankly about the game and the intricacies of running a transnational free-to-play game, sharing some of his company's key insights.

This most important thing to note about both the upcoming World of Warplanes (and its earlier sibling, World of Tanks) is that "This is all about your skills," said Kislyi. "The premium account doesn't give you any advantages on the battlefield, it just helps you advance faster. We understand that the most valuable thing that each player possesses is his time. If he doesn't want to spend any money on the game, he just plays a little bit more than those players who invested more in a premium account. We're absolutely fine with this. We do know that most of our players do not pay, and this is how the free-to-play model works."

"We understand that the most valuable thing that each player possesses is his time"

Victor Kislyi

World of Warplanes is an MMO where you have to earn the later models of aircraft. The more successful you are on the battlefield, the more experience and credits you earn, and then you can improve your planes. The game includes three nations currently: the United States, Germany, and the USSR. Japan and Britain will be added to the game soon, according to Kislyi. World of Warplanes covers the era from the late Twenties to the early Fifties. "This is the era when everything depended on the skill of the pilot, when it was not that high-tech," said Kislyi.

"We don't stick to historical battlegrounds, because this is not a historical simulation," Kislyi said. "This is like Counter-Strike; we just happen to be with planes. Locations we designed for tactical variety - there are hills, ports, canyons, and there will be Russian winter, and Ukrainian steppe. I'm dreaming about Chicago 1941 with skyscrapers. We'll need to do some technical twists to allow that. It never happened, but it will be real fun."

Battles are 15 on 15, and every battle is about five to seven minutes long. Combatants are matched according to experience levels, so your opponents will never be too far from your skill level. "The enemy is in range within thirty seconds," said Kislyi. "We deliberately brought combat a little closer to the ground than it was, and clouds closer to the ground, so that you have canyons, cliffs, structures so you can outmaneuver the enemy along a canyon."

The question for many air combat buffs is this: Just how accurate are the flight dynamics? Many air combat sims have had very simplistic flight models, to the point where differences between the aircraft were minimal. "This is the biggest challenge of this product," confirmed Kislyi. "It's easier to make a very realistic flight model, but that may only work for a limited number of players. We are shooting for tens of millions of players across the world, so this is a dilemma. The flight model is very sophisticated; it is our choice to what extent we let it happen."

"That's what we do every day: Marry the unmarryable: The brutal reality of fighting and entertainment for millions of players across the world"

Victor Kislyi

Kislyi wants to find the right blend of playability and realism. "We want you to start flying in a few minutes," Kislyi noted. "We don't announce the release date of the game because of the balance and the tuning of the controls. We have two or three parallel control scheme groups developing their own variants. You need to make the controls perfect. You have to find the right balance between making the game historically accurate, and at the same time, fun."

It's a difficult task, but Kislyi takes it in stride. "That's what we do every day: Marry the unmarryable: The brutal reality of fighting and entertainment for millions of players across the world."

World of Warplanes is part of a bigger vision for Kislyi. "We are in the final stages of development of Wargaming.net as a service. The inspiration, of course, is another service ending with .net, a well-known, big company. The point is ease of use; you have one entry point for all your games, all the statistics, all your money, all your friends. This is not rocket science, you just need to execute it neatly. But we'll have something nobody else has; we will allow you to transfer experience points from one game to another."

When will World of Warplanes launch? "We don't announce the date because it will ship when it is ready," said Kislyi. "Unofficially we are shooting for Q1 next year. We have this challenge to perfect the controls. Here's the problem: with World of Tanks no one was watching, no one was expecting anything. The industry was friendly and favorable to us. Now, after the tremendous success of World of Tanks, everyone is looking at us and everyone - media, players, competitors - they expect nothing short of total, utmost perfection with World of Warplanes. I can tell you that this game is going to have a development budget probably bigger than all previous flight simulators combined. We've pumped millions into this. If we do make mistakes with controls, it will piss off millions of players instantly."

Kislyi sees a bright future for the World games as e-sports. "E-sports are a tricky thing; it's not like you just make a game and call it an e-sport," said Kislyi. "The reality is you have to have millions of players, so there is a critical mass of thousands of guys who see this as a way to make a living. Right now with more than 40 million registrations across the world, we do have critical mass. It's a separate business; we have a special dedicated team at our headquarters, and also in local offices."

"This game is going to have a development budget probably bigger than all previous flight simulators combined"

Victor Kislyi

World of Tanks has an advantage over other games as an e-sport, notes Kislyi. "The thing with World of Tanks is that everything is calculated on the server, 100 percent. All movements, x-y-z, even the flight of the bullet, happens on the server. Even visibility, sight-tracing, is happening on the server. So you cannot hack in to the tanks. This is your tank, this is my tank, here's a house in-between. If you hack in and remove the house, you still cannot see me because the visibility tracing still happens on the server. This is a big, big problem for every pretty much every shooting game which is trying to be an e-sport, including Counter-Strike and Call of Duty and Battlefield - they're hackable. The moment they are out, just a couple of hours, boom, you have exploits and hacks - double-speed, headshots. This is technically not possible in World of Tanks or World of Warplanes."

Kislyi continued, "This is a fair competition; there are quick, short battles with very clear objectives and setup. This is perfect for e-sports. When we do our own league, we physically bring people to different locations. We run tournaments pretty much every week in Moscow. Of course, the preliminary things happen online, but we physically bring people to some convention center for the finals. This year World of Tanks will be featured at the World Cyber Games finals in China."

The challenge of running a game as a service is that you have to keep improving it. "If you looked at World of Tanks two years ago, when we launched, it looked like a piece of crap," Kislyi commented. "Now we have physics, and lighting, and many tanks, thousands of maps - it's a new game. A game like this, if it works nicely, will run for a minimum of five, most probably seven or eight, hopefully ten or even more years. You have to keep improving, keeping up to the standard. New players who download World of Tanks, they are not comparing it with 2008 graphics, they are comparing it to today's hit games. For our audience, which has consumed all the content we have, they want new tanks, new gaming modes, historical scenarios; they want a lot of things. You have to cater to them as well. So you have to keep developing. On the other side, if it runs for ten years you make money for ten years."

Kislyi and his company put great effort into customer service. "You go to Germany and summon 300 players to a pub, and sit and drink beer with them. I'm meeting players every three months; I'm in some drinking party in Poland or Germany or in Russia or San Francisco or Los Angeles or Korea. Of course the alcohol changes, but the essence is the same - 'Why is my tank not dominating, blah blah blah' - but that's how you connect. Those people want certain things, if you don't deliver those things they get upset and leave. It's an exciting business."

With games as a service, you have to keep people happy all the time. "That's why 600 out of our 1200 employees are service people: community management, customer support," noted Kislyi. "Millions of players generate millions of problems, so you have to handle that. Non-paying players get the same attention as paying players; support-wise we don't make a distinction. You run forums in all possible languages, you do community events, tournaments, you listen to them, you explain to them. They may want you to do something but we cannot do it technically or ideologically, so we have to explain why there's no infantry, or why we don't calculate penetration by this formula instead of that one. We have to explain to millions of players why we did this, why we changed German tanks, why we introduced this kind of mechanic. You have to sell your game over and over and over again."

Kislyi had no reservations about revealing the company's conversion rate; the percentage of players who become payers, and whether that conversion rate has remained the same over time. "It's the same. We have a stable percentage," said Kislyi. "It differs a little bit from territory to territory, like China is the lowest, Russia is the highest. Japanese players pay the most money but we don't operate in Japan yet, so they play on an American server. It's like 25, 30 percent approximately, which is very high in the industry. Don't forget, this is a game catering to a different audience than traditional shooting games or MMOs, which are more for teenagers or younger audience. This is more for older guys who used to be fascinated by plastic models in their childhood."

Kislyi knows his customer base. "In our hearts, we are those ten-year-old boys whose heart beats fast when you hold a plastic model of a Tiger tank. What we do here is give you a virtual garage." Your models are beautifully painted, and they never break or get dirty or take up too much room in the house.

"We did not start buying Ferraris, we invested it in World of Tanks. Veteran team, determined, loyal, hard-working, good funding, good idea - that's the Molotov cocktail you want"

Victor Kislyi

Kislyi is clear that he feels it's important to make the game fun for all players. "In this type of game, it has to be fun for those non-paying schoolboys. They are a very, very important part of the ecosystem. We balance the payment features so that you're not obliged to pay, you can play forever for free and still enjoy the game."

"The premium account is the lion's share of our revenue," said Kislyi. "The premium account just gives you fifty percent more virtual currency after each battle. After each battle you earn based on what you kill or damage. We have different options, like one day, or weekend, or a month."

Kislyi doesn't believe in constantly trying to get more money from players. "When we go to those GDC lectures on how to increase monetization, how to increase ARPU (average revenue per user), how to squeeze more money - with World of Tanks we pretty much stopped caring," Kislyi said. "We know that statistically it's going to be a number typical for the territory. You can tweak it a little bit - lower when you do something wrong, higher when you do a special event - but it doesn't matter. For us what matters is if people stay and play, they generate money."

The amount of money to be made depends on the territory. "Russia's a little less, America's a little more," said Kislyi. "Japanese are crazy so they pay a lot of money if they get hooked, but they are small numbers." Kislyi believes the game is the central concern. "It all brings us back to the game. If a guy comes in, pays ten dollars and plays for two days and gets out, it's no good for us. Economically he's negative. What's good for us is if he stays for six or eight or twelve months and pays ten dollars per month or fifteen dollars per month."

Many companies spend a lot of time trying to tweak the monetization rate, but Kislyi believes his time is better spent making the game better.

"Here's our business secret," Kislyi said. "We say 'Don't try to squeeze the unsqueezable.' This is a people's game, although the King of Jordan plays World of Tanks. This is a game for the masses. What we discovered for this audience is that if you try with your monetization tricks, with special events, sales, you can get more money out of a paying user. Statistically, though, such customers get upset and leave the game because they feel they are paying too much. He's no longer a member of the community, he's not on the forums, he's not posting. Let them spend what they feel comfortable spending. Sustainability and longevity is most important."

"This free-to-play market is a Wild West now," Kislyi noted. "We are witnessing an obvious transition from old retail book/newspaper/games on DVD model towards everything digital - it's obvious. People read less paper and are more digital now. Even a schoolkid in Indonesia has a laptop. The market is unimaginable; it's pretty much the whole planet for electronic games like this. You just have to pick a niche. Whatever niche you pick, given the global scale, is huge. Given China, Europe, America, this is an unimaginable amount of players, and an unimaginable amount of potential money you can generate. We're not earning all the money we can. We look at League of Legends, World of Warcraft, and certain other titles, in certain territories they earn a filthy amount of money, and they have a filthy amount of players. The market for such games is endless, it's blue ocean. The beauty and the curse is you have to be very, very good, because you can't fool people."

That's why Kislyi is being so careful with World of Warplanes. It's important that the company's second game in the series is successful. "We are realistic about that, which is why we are working hard," Kislyi said. "Sustainability is what's difficult. Two years ago we were just 120 people, and now we are literally ten times larger after just two years. From a business standpoint, this is a huge transnational corporation to run."

"We used to have a side business six years ago, which was advertising network software, and we sold it for ten million dollars," said Kislyi. "We did not start buying Ferraris, we invested it in World of Tanks. Veteran team, determined, loyal, hard-working, good funding, good idea - that's the Molotov cocktail you want."