Boutique MMOGs – they can and do exist

Thanks to Cliffski for a link to an article about boutique MMOGs.

The article, by Allen Varney in The Escapist Magazine, has some good figures for the cost of games. He quotes this interview with Dave Rickey:

“The economics of MMOGs under the standard business model are pretty simple: For each $1M [million> invested, you need 10,000 subscriptions to pay back the initial investment in a reasonable period (two years – investors have a different definition of reasonable period). A game that costs $5M to make and maintains a 50,000-subscriber level for five years will make an overall return of $7.5M (assuming 25% is skimmed off the top for the investors). A game that costs $50M needs half a million subscribers to do the same trick. Somewhere in there, anything untried starts to look like an unreasonable risk.
“But this math works better at a smaller scale,” Rickey notes. “A team of three, investing sweat equity for a year and getting 10,000 subs for five years, will clear over $1M each, over paying themselves reasonable salaries and hiring a few CSRs [customer service representatives>. Smaller teams have less overhead, fewer managers, less inefficiency in communication, less effort wasted on office politics. 10K is only a tiny, minuscule piece of the market.”

Also this blog post, by Danc, comparing small games to touring rock bands, who have a small but faithful following:
“Let’s look at what the companies I mentioned earlier are doing.
* Three Rings produces an online game called Puzzle Pirates that focuses on casual puzzle games in a persistent online community.
* Iron Realms makes a series of text-based MUDS.
* Iron Will makes a 2D Ultima Online-style MMO.
* Jagex makes a web-based 3D MMO.
* Sofnyx makes a multiplayer Scorch Earth game called Gunbound.
* There are others, but they all operate far below the radar of the mainstream gaming press.
The similarities are worth noting. Each started with a small community numbering in the thousands. Many customers have been with the games for years. Each operates either a micropayment or a subscription model that doesnt cap the amount of money the customer wishes to spend. Though none of these companies publish their numbers, rumor has it that they are almost all profitable.
Development costs were low and initial investment came from the team members, friends and the occasional angel investor. Publishers or venture capital was almost never involved….
I call these small online multiple games ‘village games.’ They are quirky, isolated communities much like a traditional village or small town. The communities tend to be a bit more friendly and insular then their larger city-sized brethren such as Everquest or World of Warcraft. The game play tends to be a bit more unique and able to take risks.
Here are some defining factors for a village game.
* Focus on creating a small community numbering typically in the thousands.
* Either subscription or micro-payment based revenue model. Often there is no cap on the amount that a single player can spend inside the game.
* A small development team, usually numbering anywhere from 3 to 10 people.
* The game experience is addictive for a year or longer.
* The game focuses on a niche experience that is not provided by larger retail titles. ”

Varney lists several examples, which I havent had time to research:
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