Questions by Tony "RadarX" Jones
Answers by Alex St. John, CEO of WildTangent
As the market for MMO games grows, so do the various types of genres which cover everything from the traditional hack and slash to a more casual interface. At the forefront of this growing industry sits Alex St. John, CEO of WildTangent. In the odd event you aren't familiar with his name, you surely know one of the products he helped design called DirectX. Currently providing online and downloadable games for conusmption at WildTangent.com he also lends his experience to numerous conferences like ION Games Conference 2008. We were fortunate enough to speak briefly with him regarding his work, and learn a little about his theories on the future of PC gaming and MMO games.
Ten Ton Hammer: Why don't you tell us a little about what you'll be covering in your keynote later today?
Alex St. John: Well, I'm the CEO of WildTangent which is the largest privately owned game network on Earth. We are also now the fourth largest overall game network in the United States (editor: this includes public companies). What that translates into, is that we sell between 3,000 and 5,000 games a day through credit cards and also sell advertising across our network. We currently have 9 MMO games we sell for and we should be announcing additional out of network companies we'll begin working with as well.
You could say WildTangent looks like a next generation game publisher. If you think of Nintendo being in the console business and enabling delivery of games to peoples homes and fill that publishing role, we do the same online for many developers of MMO games. We handle the credit card transactions, the marketing, the distribution, and ad sales which is one of the most important components.
In our world, ad sales is just another type of currency. What we've found quite interesting in the online world, is that any time you are making that premium game that is so good people want to pay for it, at least half the value of it is probably in advertising. In our network for example we sell advertising for all the premium downloadable casual games and MMO's like Bejewled and Runescape.
The value of an online ad is CPM which is cost per thousand impressions, and a typical banner ad is worth say $0.50. If it's a high quality video ad with a few seconds of footage, it might be worth $18-$20 CPM. Inside our network, WildTangent averages $140 CPM so it's the highest rating anyone we are aware has achieved. It's because of our business models we allow advertisers to buy consumers gameplay.
Ten Ton Hammer: How do you feel about the acceptance of microtransactions in the US markets?
Alex St. John: A lot of people think that online web business currency was invented in Asia, which isn't true. It was invented in the US and failed here but succeeded there for interesting reasons. The first is, in this market we have very good anti-piracy and copyright laws which sustains a market for single player games that aren't easily stolen. People are generally honest in the US and respect the copyright laws so you are able to sell content. In Asia this isn't quite the case, so there is no competition for any other business model.
The second thing is, people in Asia don't really have credit cards. The principle payment vehicle is through internet cafe's and people buying currency cards like you'd see in retail stores. So in order to sell a game in China or Korea, you visit an internet cafe or you buy virtual currency for cash through physical retail. That's a new idea in the United States as most transactions are carried out through credit cards which kids don't have.
Ten Ton Hammer: How do you feel about consoles making their way into the MMO game market?
Alex St. John: There are some interesting things about that, and let's use a few MMO games as an example. I think the US in many respects took a wrong turn, and we had an accidental success. Big architecture MMO games like Ultima Online and World of Warcraft became a hit in the US, and caused many people to learn all the wrong lessons. They've made the games huge, cumbersome, server dependent and expensive to maintain. Game accounts in particular because the cost of setting up and supporting everything is expensive.
Look at a game like Runescape which actually has more players than World of Warcraft. Based in Java, spread virally, it uses a smaller company with no marketing costs. Companies like that put out very light content for consumption, with little in the way of server requirements and it's very community friendly. It tells you a lot about where the market is right now.
World of Warcraft for example, is the tip of an iceberg that is vastly broader for all kinds of diverse community based gameplay. There are so many publishers who are focused on beating World of Warcraft by building games like it and they are taking huge risks.
Thanks again to Alex, for his insightful answers on the state of the MMO game industry and how foreign markets work. Stay tuned to Ten Ton Hammer for more about WildTangent in the future.